Pratter v. Penn Treaty American Corp.
11 A.3d 550
| Pa. Commw. Ct. | 2010Background
- Penn Treaty Network America Insurance Company (In Rehabilitation) is under statutory rehabilitation under Article V of the Pennsylvania Insurance Department Act, with the Insurance Commissioner acting as rehabilitator.
- Penn Treaty American Corporation (PTAC) is Penn Treaty's parent company and sole shareholder; PTAC is named as the defendant.
- The Rehabilitator sues PTAC on Penn Treaty's behalf to recover a total tax refund claim of $1,505,813 tied to Penn Treaty's 2005–2007 tax payments.
- PTAC allegedly agreed to reimburse Penn Treaty for a portion of paid PTO liabilities; Penn Treaty seeks reimbursement of $521,396 already paid.
- Counts I–IV address the Tax Refund Claim (breach of contract, unjust enrichment, conversion, fiduciary duty); Counts V–VI address the PTO Claim (breach of contract, estoppel).
- The court sustained PTAC’s preliminary objection only to Count V for lack of specificity; all other preliminary objections were overruled and an amended pleading for Count V was ordered within 20 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority of rehabilitator to sue for unjust enrichment | Rehabilitator may pursue all appropriate legal remedies under 516(c). | 516(c) limits actions to expressly identified claims; unjust enrichment is not listed. | Rehabilitator may pursue unjust enrichment under 516(c) as an appropriate legal remedy. |
| Authority of rehabilitator to sue for promissory estoppel | Promissory estoppel is within 516(c) as a contract-like remedy. | Promissory estoppel is not expressly identified in 516(c). | Promissory estoppel may be pursued under 516(c) on Penn Treaty's behalf. |
| Gist of the action for Counts III & IV | Gist doctrine should not bar tort claims that arise from alleged tax refunds. | Gist of the action should bar tort claims when contract governs the duties. | Gist of the action not dispositive at this stage; demurrer denied for Counts III & IV. |
| Specificity of Count V (PTO Claim) | Oral agreements details sufficient to plead breach. | Pleadings lack date and participants; insufficient specificity. | Count V lacking specificity; sustained; amended pleading required within 20 days. |
| Conversion claim sufficiency | Penn Treaty owns the tax refund portion and PTAC’s withholding harms property rights. | Tax refund belongs to PTAC per Tax Sharing Agreement; no property deprival. | Conversion claim overruled? Not at this stage; Penn Treaty pled facts to state a claim; ownership issue unresolved. |
Key Cases Cited
- Peat Marwick Main & Co. v. Mutual Fire, Marine & Inland Insurance Co., 587 A.2d 382 (Pa. 1991) (rehabilitator may pursue claims on behalf of insureds and creditors; liberal construction of Article V)
- Reliance Ins. Co. v. Commonwealth, 586 Pa. 269 (2006) (statutory interpretation guiding Article V; broad powers to rehabilitator)
- Yocca v. Pittsburgh Steelers Sports, Inc., 806 A.2d 936 (Pa. Cmwlth. 2002) (misfeasance/nonfeasance test for gist of the action analysis)
- Grode v. Mutual Fire, Marine & Inland Ins. Co., 623 A.2d 933 (Pa. 1993) (gist of the action framework; contract vs. tort)
- Crouse v. Cyclops Indus., Inc., 745 A.2d 606 (Pa. 2000) (promissory estoppel treated as contract-related for limitations purposes)