Egan v. USI Mid-Atlantic, Inc.
92 A.3d 1
| Pa. Super. Ct. | 2014Background
- Plaintiffs (police officers) were injured by an uninsured motorist while on duty; Bristol Township had a Zurich commercial fleet policy placed through USI.
- Bristol Township allegedly decided to reject UM/UIM coverage but failed to execute proper waiver forms; a signed waiver was backdated after the accident (March 1, 2005 printed as the inception date though signed in 2006).
- USI employees knew the waivers were backdated and did not disclose that fact to plaintiffs’ attorneys or Zurich; Zurich later paid benefits after learning of the backdating.
- Jury found USI defendants liable for fraud, intentional interference with contractual rights, and breach of the covenant of good faith and fair dealing; punitive damages were initially withheld by the trial court.
- Trial court later granted a new trial solely on punitive damages; appellants challenged jury instructions, evidentiary rulings, and sought JNOV on multiple claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Section 1731 (written UM/UIM waiver) applies to commercial fleet policies | Plaintiffs: Section 1731 requires written waiver for commercial policies; defendants violated it | USI: MVFRL waiver provisions (1731/1738) don’t apply to commercial fleets (by analogy to Everhart) | Court: Section 1731 applies to commercial fleet policies (followed prior Superior Court precedent); waiver requirements govern non-stacked UM/UIM |
| Jury instruction on stacked UM/UIM (Section 1738) | Plaintiffs: industry custom required written pre-loss waivers for stacking; jury could rely on that | USI: Stacking under §1738 does not apply to commercial fleets (Everhart) — instruction was erroneous | Court: Instruction on stacking was legally flawed but harmless error because both waivers were on same document and the jury was properly instructed as to §1731 (non-stacked) |
| Exclusion of punitive damages from jury verdict | Plaintiffs: having proven intentional fraud and related torts, punitive damages should have been submitted to jury | USI: punitive damages inappropriate / not supported | Court: Trial court erred by submitting intentional tort claims but denying punitive damages; granting new trial on punitive damages was not an abuse of discretion |
| Sufficiency of evidence; denial of JNOV on fraud, intentional interference, breach of good faith, delay, emotional distress | Plaintiffs: evidence supports tort claims and damages (delay, emotional harm) | USI: insufficient evidence, claims time-barred or precluded by waiver, lack of reliance/damages | Court: Viewed evidence in plaintiff's favor, found sufficient credible evidence to sustain jury verdicts; denial of JNOV affirmed |
Key Cases Cited
- Everhart v. PMA Ins. Group, 938 A.2d 301 (Pa. 2007) (statutory ambiguity re: stacking in commercial fleets; Supreme Court held §1738 does not govern stacking for commercial fleet policies)
- National Union Fire Ins. Co. v. Irex Corp., 713 A.2d 1145 (Pa. Super. 1998) (held §1731 applies to commercial automobile policies; strict compliance required for rejection)
- Toy v. Metropolitan Life Ins. Co., 928 A.2d 186 (Pa. 2007) (justifiable reliance in fraud context; no duty to investigate fraudulent misrepresentations unless falsity known or obvious)
- Lesoon v. Metropolitan Life Ins. Co., 898 A.2d 620 (Pa. Super. 2006) (evidence of willful, widespread deceptive practices can create jury question on punitive damages)
- Noyes v. Cooper, 579 A.2d 407 (Pa. Super. 1990) (error to submit intentional fraud to jury while denying punitive damages)
- Hart v. Arnold, 884 A.2d 316 (Pa. Super. 2005) (gist of the action doctrine; distinguishes contract vs. tort claims for purposes of tort recovery including punitive damages)