Grossi v. Travelers Personal Insurance Co.
79 A.3d 1141
Pa. Super. Ct.2013Background
- Grossi, a passenger in a Tarquinio Brothers Bakery vehicle, was severely injured in a 2006 accident; Tarquinio had $3,000,000 liability coverage and Grossi was an insured under his parents' Travelers policy ($1,000,000 medical benefits and $300,000 UIM).
- Travelers paid first-party medical benefits and wage loss; Grossi demanded full UIM limits of $300,000 with future earnings loss analysis exceeding several millions.
- Travelers kept a $1,000 reserve on the UIM claim and ultimately did not independently evaluate Grossi’s future earnings loss; the claim was transferred to MCU and arbitration yielded a $4,000,000 UIM award, with Travelers paying $300,000.
- Grossi filed a bad-faith action under 42 Pa.C.S.A. § 8371; trial court held in Grossi’s favor, awarding interest, fees, costs, and $1,252,325 in punitive damages, then reduced verdict by $2,000 in costs, entering judgment for $1,478,815.94.
- Travelers appealed the bad-faith determination, the punitive damages, and costs; Grossi cross-appealed on interest, evidentiary issues, and costs, with the appellate court consolidating the appeals and affirming in part, vacating in part, and remanding for a corrected verdict.
- The court ultimately directs molding of costs excluding expert-witness fees and affirms the bad-faith finding and most aspects of the punitive damages, with remand to adjust costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether bad faith finding supported | Grossi argues Travelers acted in bad faith by under-reserving, delaying investigations, and ignoring evidence. | Travelers contends the evidence does not prove bad faith and that its actions were reasonable. | Bad faith proven; judgment affirmed in part. |
| Whether punitive damages were proper and properly quantified | Grossi maintains punitive damages warranted given egregious conduct. | Travelers argues conduct was not sufficiently reprehensible and amount excessive. | Punitive damages upheld; amount not vacated. |
| Whether expert-witness fees can be recovered as court costs under § 8371 | Grossi seeks inclusion of expert fees as costs under § 8371. | Travelers argues expert fees are not recoverable as costs under § 8371. | Expert-witness fees not recoverable; costs molded to exclude them (reduction to $2,729.66). |
| Whether interest on the UIM claim should be based on $300,000 or the full arbitration award | Grossi argues interest should accrue on the full verdict | Travelers argues interest should be based on the UIM limits. | Interest on $300,000 UIM coverage affirmed; not on the entire verdict. |
| Whether evidentiary hearsay issues on claims- file should affect the bad-faith finding | Grossi argues certain hearsay evidence should be considered admissible for bad faith. | Travelers contends the hearsay evidence should not affect the verdict. | Moot/need not address; not dispositive to the bad-faith ruling. |
Key Cases Cited
- Hollock v. Erie Ins. Exch., 842 A.2d 409 (Pa. Super. 2004) (bad faith elements; punitive damages framework; due process guideposts)
- Brown v. Progressive Ins. Co., 860 A.2d 493 (Pa. Super. 2004) (assessment of damages and insurer’s good faith valuation; no bad faith where reasonable under the circumstances)
- Condio v. Erie Ins. Exch., 899 A.2d 1136 (Pa. Super. 2006) (bad faith includes lack of good faith in investigating facts; insurer may question claims)
- Zappile v. Amex Assur. Co., 928 A.2d 251 (Pa. Super. 2007) (claims-manual context; independent evaluation when evaluating bad faith)
- Terletsky v. Prudential Property and Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994) (early definition of bad faith; frivolous or unfounded refusal to pay)
- O’Donnell v. Allstate Ins. Co., 734 A.2d 901 (Pa. Super. 1999) (insurer must have reasonable basis; self-interest requirement)
- Berg v. Nationwide Mut. Ins. Co., Inc., 44 A.3d 1164 (Pa. Super. 2012) (bad faith includes lack of good faith investigation; self-interest factors)
- Zappile v. Amex Assur. Co., 928 A.2d 251 (Pa. Super. 2007) (use of insurer’s claims manual in bad-faith analysis)
- Marlette v. State Farm Mut. Auto. Ins. Co., 10 A.3d 347 (Pa. Super. 2010) (delay damages framework; later clarified by Marlette II)
- Marlette v. State Farm Mut. Auto. Ins. Co., 57 A.3d 1224 (Pa. 2012) (Marlette II; delay-damages limitation to policy limits absent bad faith)