Articles & Updates

Despite 21 Million Reasons, No Supreme Court Decision in Bad Faith Case

Aug 26, 2020 | Articles & Updates

The Supreme Court of Pennsylvania was unable to reach a majority disposition in Berg v. Nationwide and dismissed the appeal, effectively upholding the Superior Court’s decision in favor of the insurer.  See Berg v. Nationwide Mutual Insurance Company, 2020 WL 5015642 (Pa. Aug. 25, 2020).

Berg arises from a 1996 car accident that caused damage to the insured’s leased Jeep Grand Cherokee.  The insurance company determined that the vehicle was repairable rather than a total loss, paying approximately $12,000 in repairs.  The insured alleges that the Jeep was beyond repair and that the insurance company knew that the Jeep was returned to him in an unsafe and uncrashworthy condition.  The case went to trial in December 2004. The jury found that the insurance company violated the Unfair Insurance Practices and Consumer Protection Law and awarded Berg $295. Ten years later, following appellate practice, a non-jury trial on the bad faith claim proceeded in the Berks County Court of Common Pleas.  On June 21, 2014, the trial court found in favor of Berg on the bad faith claim, and ordered the insurer to pay $18 million in punitive damages and $3 million in attorney’s fees.  On appeal, the Superior Court vacated the judgment and remanded the case for entry of judgment in favor of the insurance company. The Superior Court held that “[t]he trial court engaged in a limited and highly selective analysis of the facts and drew the most malignant possible inferences from the facts it chose to consider.”

The insured appealed to the Supreme Court of Pennsylvania.  The Supreme Court ultimately dismissed the appeal because the Court was unable to reach a majority disposition.  In doing so, the Superior Court’s decision in favor of the insurer, vacating the $21 million judgment, was upheld.

Chief Justice Saylor issued an Opinion in Support of Affirmance (“OISA”).  The OISA found that there was a colorable claim of partiality and judicial bias on the part of the trial judge, such that the trial court’s opinion was entitled to a lesser degree of deference.  Additionally, the OISA noted that there is “very good reason for implementing a rule—which appears to be the majority approach in other jurisdictions—that evidence of post-litigation conduct is generally inadmissible in insurance bad faith litigation.”

Justice Wecht issued a sixty-page Opinion in Support of Reversal (“OISR”).  The OISR gave great deference to the trial court’s findings and ultimately concludes that the insurer, “with knowing and reckless disregard, elevated its own financial interests above the interest of its insured, and placed its insured and the public at risk of injury or death, in order to save itself money on a collision claim.”