195 A.3d 930
Pa. Super. Ct.2018Background
- In 1999 financial adviser Robert Kovalchik recommended Gary and Mary Gregg surrender Prudential life policies and purchase a new IDS variable life policy and move IRAs into IDS; Greggs relied on his advice and paid premiums/rollovers.
- Kovalchik diverted some Prudential proceeds and monthly contributions into other accounts (IRAs and an AXP Growth Fund) that generated him higher commissions; Greggs were unaware and received less funds into the IDS policy than told.
- Greggs also declined a military survivor benefit based on advice that IDS coverage was better and cheaper.
- Greggs sued alleging fraudulent and negligent misrepresentation and a violation of the UTPCPL catchall provision (deceptive conduct creating likelihood of confusion/misunderstanding). A jury returned defense verdicts on the common-law misrepresentation claims.
- The trial judge, in a non-jury proceeding on the UTPCPL claim, found the insurance companies violated the UTPCPL catchall provision, awarded rescissory damages and attorney fees; defendants appealed arguing preclusion by the jury verdict and that the award should be offset by the benefit of coverage provided.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a defense jury verdict on fraudulent/negligent misrepresentation precludes a UTPCPL catchall claim (res judicata/collateral estoppel) | Gregg: UTPCPL catchall is distinct and may be proven by deceptive conduct without common-law state-of-mind elements | Companies: Jury rejection of misrepresentation necessarily bars UTPCPL claim | Court: Denied preclusion; UTPCPL catchall is broader and strict-liability-like, separate from tort claims; TAP and Bennett support no preclusion |
| Proper measure/set-off for UTPCPL rescissory damages (whether insurer’s provision of coverage offsets award) | Gregg: Statutory UTPCPL remedies govern; rescission by refunding premiums restores pre-transaction position; no off-set where insurer paid no death benefits | Companies: Should offset value of insurance coverage provided (approx. $24,027.55) per Restatement of Restitution principles | Court: Rejected set-off; statutory remedies control and trial court found insurers suffered no loss (no death benefit paid); awarded full refund of premiums consistent with DeArmitt |
Key Cases Cited
- Bennett v. A.T. Masterpiece Homes, 40 A.3d 145 (Pa. Super. 2012) (adopts consumer-friendly construction of UTPCPL catchall; post-1996 amendment broadened scope beyond common-law fraud)
- Commonwealth v. TAP Pharmaceutical Products, 36 A.3d 1197 (Pa. Cmwlth. 2011) (jury defense on misrepresentation does not preclude a separate UTPCPL catchall adjudication)
- DeArmitt v. New York Life Insurance Co., 73 A.3d 578 (Pa. Super. 2013) (authorizes full refund of deceitfully obtained life insurance premiums when no death benefits paid)
- Dixon v. Northwestern Mutual, 146 A.3d 780 (Pa. Super. 2016) (holds negligent misrepresentation may support a UTPCPL claim; discussion contains dictum on forms of deceptive conduct)
- Commonwealth v. Percudani, 825 A.2d 743 (Pa. Cmwlth. 2003) (recognizes 1996 amendment expanded UTPCPL catchall beyond requiring fraud)
- Richards v. Ameriprise Financial, Inc., 152 A.3d 1027 (Pa. Super. 2016) (reiterates liberal construction of UTPCPL and broad remedial authority for consumer protection)