818 F. Supp. 2d 853
E.D. Pa.2011Background
- Nationwide provided auto insurance with UM/UIM coverage; compensatory damages not defined in policy.
- Plaintiff recovered $133,201.96 in a tort award, allocated as $85,000 compensatory and $48,201.96 delay damages under Pa. Rule 238.
- Nationwide paid $85,000 but refused $48,201.96 delay damages under the policy.
- Plaintiff filed a declaratory judgment action and a bad-faith claim in Berks County; case removed to federal court on May 20, 2010.
- Court addresses whether delay damages are within the UM/UIM “compensatory damages” coverage and whether Nationwide acted in bad faith by denying them.
- Judgment issued September 28, 2011: denial of bad-faith claim; partial denial of Nationwide’s motion to dismiss; claim for delay damages covered, leading to a potential judgment on Count I.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are delay damages within compensatory damages under UM/UIM coverage? | Heebner argues delay damages are compensatory. | Nationwide argues delay damages are not compensatory. | Delay damages are covered (ambiguous policy). |
| Is the policy language ambiguous on coverage of delay damages? | Policy read to include delay damages as compensatory. | Policy unambiguously excludes delay damages. | Policy is ambiguous; construed in insured’s favor. |
| Does Pennsylvania precedent treat delay damages as part of compensatory damages? | Laudenberger/Colodonato/Costa support compensatory nature. | Pennsylvania precedent not controlling for this policy. | PA precedent supports treating delay damages as compensatory. |
| Did Nationwide act in bad faith by denying delay damages? | Nationwide acted in bad faith by misinterpreting policy. | No bad faith; reasonable, though incorrect, interpretation. | Bad-faith claim dismissed; not facially plausible. |
Key Cases Cited
- Laudenberger v. Port Authority of Allegheny County, 496 Pa. 52 (Pa. 1981) (delay damages are compensatory extension of damages)
- Colodonato v. Consolidated Rail Corp., 470 A.2d 475 (Pa. 1983) (delay damages supplement compensatory damages to make plaintiff whole)
- Costa v. Lauderdale Beach Hotel, 626 A.2d 566 (Pa. 1993) (delay damages primarily compensatory; not punitive; aligns with Laudenberger)