Dercoli v. Pennsylvania National Mutual InsuranceDercoli v. Pennsylvania National Mutual Insurance
Lead Opinion
Aрpellant Dorothea Dercoli appeals from an order of the Superior Court affirming an order of the Lawrence County Common Pleas Court which sustained a demurrer to her complaint and dismissed her lawsuit against appellees Pennsylvania National Mutual Insurance Company (Penn National) and Grange Mutual Casualty Company (Grange) for breach of fair dealing and good faith. In her appeal the appellant frames two issuеs: (1) whether our decision in Hack v. Hack,
The issues presented by the appellant arise out of the following factual background: On the morning of July 21, 1980, the appellant was riding as a passenger in an automobile being operated by her husband, David R. Dercoli. The automobile was travelling on U.S. Route 422 in Lawrence County when, apparently, Mr. Dercoli became drowsy and fell asleep. With Mr. Dercoli asleep at the wheel, the automobile crossеd over the centerline of the highway and crashed into the rear wheels of an on-coming tractor-trailer. Mr. Dercoli was killed instantly. The appellant was severely injured.
At the time of the tragic accident Mr. Dercoli was insured under two automobile insurance policies. One of the policies was with appellee Penn National and the other was with appellee Grange. Both insurers were notified of the accident and the injuries and losses resulting therefrom. In the claim process that followed, the appellant relied upon the advice of the appellees’ agents to receive the benefits
On July 14, 1981, approximately one year after the accident and while appellant was receiving benefit checks and relying upon appellees’ agents for advice, this Court decided the case of Hack v. Hack, supra. In Hack we abolished the defense of interspousal immunity as a bar to an action for personal injuries caused by the negligence of the injurеd victim’s spouse. The appellant did not learn of the removal of this bar to suit until sometime after March of 1985.
In January, 1986, appellant filed a complaint in civil action against the appellees averring, inter alia, a breach of appellees’ duty of fair dealing and good faith. Specifically, the appellant sets forth, as relevant allegations in her complaint, the following:
16. [U]pon notice of said motor vehicle accidеnt by or on behalf of Plaintiff, Defendants PENN NATIONAL and GRANGE, through their authorized Agents, cooperatively and equally undertook the handling, processing and payment of Plaintiff’s benefits under said Contracts.
17. At all times herein material, Plaintiff was not represented by legal Counsel, and Defendants’ Agents represented to and assured Plaintiff that her claim would be processed without the need for Plaintiff to be independently represented.
18. Plaintiff reasonably relied entirely upon the advice of Defendants’ agents as to the nature and extent of benefits which were due to her under said insurance contracts. Further, Defendant’s agents were fully cognizant of Plaintiff’s said reasonable reliance and lack of independent representation.
19. At all times material herein, and by reason of said insurance Contracts, Defendants PENN NATIONAL and GRANGE were each charged with a duty of good faith and fair dealing in respect of determinаtion of entitlement, processing, and payment of Plaintiffs benefits under said Contracts. This duty included, among other things, the obligation on the part of said Defendants to pay or advise Plaintiff as to any and all benefits to which Plaintiff reasonably appeared to be entitled under said insurance contracts.
20. By reason of the nature of said insurance Contracts, Defendants PENN NATIONAL and GRANGE occupied the position of a fiduciary with respect to determination of entitlement and payment of Plaintiffs benefits thereunder.
25. Upon the decision of Hack vs Hack, Supra, Defendants were thereby placed in a position of conflicting interests, in that presentation or consideration of any claim by or on behalf of Plaintiff and based upon the negligence liability of her said husband would have created a substantial additional risk of loss or liability to each Defendant.
26. Under the circumstances referred to above, and by reason of their sаid duty of good faith and fair dealing and their fiduciary relationship which they occupied with respect to Plaintiff, Defendants were each obligated to advise Plaintiff of her apparent right to benefits for liability coverage under said insurance Contract, in order that Plaintiff would have realized the maximum amount of benefits to which she reasonably appeared to be entitled.
27. Defendants PENN NATIONAL and GRANGE, and each of them, have breached the sаid insurance Contracts and the corresponding fiduciary duties and duties of good faith and fair dealing in that said Defendant had failed to advise Plaintiff as to her apparent entitlement to claim for benefits under the liability coverage of said insurance Contracts, of Defendants’ conflict of interests in advising or continuing to advise Plaintiff regarding her entitlement to benefits or of her possible need for independent legal counsel, and Defendants furthеr failed to pay or offer to pay to Plaintiff any benefits under the liability coverage of said Contracts.
In response to appellant’s complaint the appellees filed preliminary objections in the nature of a demurrer. After argument on appellees’ demurrer, the lower court concluded that the appellee-insurers had no duty to inform appellant of the Hack decision and the effect, if any, that decision had on appellee’s ability to obtain benefits under the liability provisions of the applicable policies. In reaching this conclusion the lower court cited the case of Taglianetti v. Workmen’s Compensation Appeal Board,
Since this is an appeal from the sustaining of a demurrer, we accept as true all well-pleaded material facts set forth in the complaint as well as all inferences reasonably deducible therefrom. Guy v. Liederbach,
The appellant argues that as the spouse of David R. Dеrcoli and as a resident of the same household with him, she is a “named insured” under the terms of the relevant insurance policies. She argues that by virtue of the relationship that existed between her and the appellee-insurers,
In spite of the fact that appellant was assured by appellees’ agents that they would see to it that appellant received all benefits to which she was entitled, appellees’ agents failed to advise hеr of her right to seek liability damages. The appellant argues that this failure was a breach of appellees’ duty of fair dealing and good faith. In addition, appellant argues that when Hack abolished the bar of interspousal immunity, a conflict of interest arose with the appellees’ agents who were advising the appellant. On the one hand these agents were aware of appellant’s injuries and expenses and of her reliance on them for advice and guidance in her claims. On the other hand they knew that if they would advise appellant of the Hack decision and of her right to proceed against her husband’s estate for damages, such proceedings would substantially increase the financial exposure of the appellee-insurers. Nonetheless, the appellees’ agents continued to deal with the appellant on the same basis and continued to permit her to rely on them for all that she was entitled to under the policies. Considering all of the well-pleaded material facts in appellant’s complaint and the reasonably deducible inferences therefrom, we believe that the appellant’s arguments have merit.
We have long recognized that: “the utmost fair dealing should characterize the transactions between an insurance company and the insured.” Fedas v. Insurance Company of the State of Pennsylvania,
The appellees, relying on the decision in Taglianetti v. Workmen's Compensation Appeal Board,
The remaining issue raised in this case is whether Hack v. Hack, supra is to be applied retroactively to appellant’s claim for damages. That is to say, did the abolition of the defense of interspousal immunity as promulgated in Hack apply to appellant whose claim arose out of an accident that occurred approximately one year prior to the Hack decision? Neither the trial court nor the Superior Court addressed this question in that each court found no duty to inform on the part of the appellees. Since, however, we have concluded that the appellees breached their duty of fair dealing and good faith in failing to inform the appellant of her apparent right to seek damages after the Hack decision, we are constrained to consider this issue. If Hack does not apply to appellant’s claim, that decision would be of no benefit to her. It would follow then that the appellees’ failure to inform appellant of Hack would not constitute a breach of their obligations toward her. If, however, Hack applies to appellant’s clаim, then the failure on the part of the appellees to inform appellant of that decision would amount to a breach of fair dealing and good faith in that she was denied a claim to which she was entitled.
A judge is mindful of the traditional antipathy toward retroactive law that springs from its recurring association with injustice and reckons with the possibility that a retroactive overruling could entail substantial hardship. He may nevertheless be impеlled to make such an overruling if the hardships it would impose upon those who have relied upon the precedent appear not so great as the hardships that would inure to those who would remain saddled with a bad precedent under a prospective overruling only ... [T]he outworn precedent may be so badly worn that whatever reliance it engendered would hardly be worthy of protection. Traynor, R., La Rude Vita, La Dole Giustizia; Or Hard Cаses Can Make Good Law, 29 U.Chi.L.Rev. 223, 231-32 (1962).
Balancing the hardships in this case would require that Hack be applied retrospectively to the appellant’s claim. The Hack decision eliminated the defense of interspousal immunity which acted as a bar to suit when one was injured at the hands of a negligent spouse. At the time of the Hack decision appellant’s claim was well within the applicable statute of limitations. Thus, with the bar removed and the claim being viable and within the time limitations, it would be unfair to continue the bar as to the appellant. Further, there is no equity favoring the appellees’ position that would dictate the opposite conclusion.
The order of the Superior Court is reversed and this case is remanded to the Court of Common Pleas of Lawrence County for proceedings consistent with this opinion.
Concurrence Opinion
concurring.
While I concur in the judgment of the Court and generally agree with the reasoning set forth in the majority opinion, I write separately for two rеasons. First, I wish to disassociate myself from the pronouncement made in that opinion to the effect that Taglianetti v. Workmen’s Compensation Appeal Board,
Second, I must expressly take issue with Mr. Justice Flaherty’s dissent.
I.
In the instant case, insurers breached a voluntarily assumed fiduciary duty to provide Appellant with all available benefits, which duty necessarily involves taking action in accordance with changes in the law. In Taglianetti, supra, we agreed with the contention that an employer was under no legally imposed affirmative duty to provide information of possible worker’s compensation benefits to a deceased employee’s spouse where there was no evidence of fraud, intentional deception, or the making of misleading statements. This case involves a duty voluntarily assumed by an insurer; Taglianetti presented a stituation where we held that by law no duty to inform exists or may be impоsed on an employer. Both legally and factually, the two cases are distinct. If Taglianetti, so recently decided, is unsound, this is neither the time nor the place to say so. Subject to the above qualification, I agree with the majority opinion.
As to Mr. Justice Flaherty’s dissent, I find it unfortunate that he complicates a simple proposition of law into an earthshaking dilemma that would serve as an excuse to deny justice and fair play to a bereaved, dеfenseless, unsuspecting and trusting widow. Mr. Justice Flaherty’s dissent, if it became law, would snatch from a poor widow the benefits she was entitled to receive but for the knowing and intentional misguidance of the insurers that induced her to place her entire trust and confidence in the insurers to see to it that she received all of the benefits to which she was entitled. Once the insurers knowingly and purposefully talked the widow out of seeking independent legal counsel, thе insurers voluntarily placed themselves in the position of protecting the widow and obtaining for her all benefits that were reasonably due under the facts and state of law known to the insurers.
Our majority opinion does not transform insurance companies into legal service advisors for claimants, as feared by the dissent. On the contrary, in this case, the insurers themselves voluntarily transformed themselves into legal advisors to the widow. This accommodatiоn offered by the insurer would certainly inure to the monetary benefit of both parties. Unless the dissenting opinion is suggesting that legal representation per se harms the interests of widows, orphans and others similarly situated, I believe that the approach cutlined in the majority opinion will benefit everyone. After all, the law does not favor a volunteer. It is simple black letter law that where one gratuitously undertakes to render legal or other services and then dоes so in a careless or negligent way, causing harm, liability attaches. Pascarella v. Kelley,
Had privately retained counsel committed the same omission committed by the insurers here (not recognizing and acting upon the decision in Hack v. Hack,
Dissenting Opinion
dissenting.
I dissent. Until today an insurance company on the facts pleaded in this case has had no fiduciary duty to an insured, even when it advised its insured that he does not need a lawyer. But if, under the guise of “fair dealing and good faith,” we are now to decide that insurance companies have a fiduciary duty to advise of every possible claim, surely insurance companies will cease even to talk to claimants for fear of breaching this new judicially declared duty. However, with such a duty, if they do continue to talk to claimants, what will their obligations be? Are they obligated to advise of innovative claims against themselves? Are they obligated to inform claimants of an improbable but perhaps conceivable claim that they themselves would not agree to pay? Are they, as in this case, obligated to be on the lookout for changes in the law which might be favorable to a claimant? Until today, insurance companies have had none of these obligations.
As much as we all would like to see unfortunate victims of automobile accidents compensated fully, such compensation cannot be achieved at the cost of dismantling the insurance industry. It has always been the case that insurance companies, insureds and claimants are potential adversaries. An insured knows or should know this upоn entering into an insurance contract, and a contract is what it is. When a loss occurs, it has always been the prerogative of an insurance company to make offers of settlement, and it has always been the prerogative of the insured to accept or reject them. Whether to accept or reject the offer, however, is a decision that only the claimant can make. If for some reason, the offer does not satisfy him, he is perfectly