Berg v. Nationwide Ins. Co.

This case is making its second trip to the Pennsylvania Supreme Court, which agreed to hear the current appeal in March 2019. Briefing is underway, with the Court expected to rule later this year or early next.

The facts of the case are relatively simple, but it suffers from an unfortunately long and convoluted procedural posture. After a 1996 auto accident, plaintiffs claimed damage to their auto. When the litigation was commenced in 1998, the insureds argued that their insurer had wrongly refused to pay for a total loss of the vehicle, instead paying only for repairs which rendered the vehicle unsafe. The first trial in the case occurred in 2004, with the jury finding in favor of the insurer on almost all claims, with the exception of an unidentified violation of a Pennsylvania unfair or deceptive acts and practices statute. The insureds were awarded just over $2,000. Three years later, the trial court took up the bad faith claim, finding in favor of the insurer. That judgment was appealed and affirmed by an appellate court. It was then reversed and remanded by the Pennsylvania Supreme Court in 2010. On remand, the appellate court found that the trial court had erred and further remanded the case back to the trial court in 2012.

In round two, the trial court (with a new judge assigned to the case) found in favor of the insureds, awarding them $18 million in punitive damages and $3 million in attorneys’ fees in 2015. That judgment was also appealed. The appellate court overturned the award, finding insufficient evidence in the record to support bad faith, essentially substituting its judgment on the issue for the trial court’s (and noting in the process that the trial judge may have been biased against the insurer). This is the case currently pending before the Pennsylvania Supreme Court where that Court will need to decide to what extent and under what circumstances can an appellate court may overturn findings of bad faith by trial courts.

While bad faith claims are typically fact dependent (and in this case, the passage of over 20 years and the expenditure of millions of dollars in legal fees did not help), the ultimate resolution in the case may have a strong impact on future insurance coverage litigation in Pennsylvania. We will, therefore, follow the case with interest.