EILEEN M. GIBSON; ROBERT P. GIBSON, h/w v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
No. 20-1589; No. 20-1609
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
April 8, 2021
PRECEDENTIAL
On Aрpeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 2:18-cv-4919)
Magistrate Judge: Honorable Timothy R. Rice
Argued January 21, 2021
Before: HARDIMAN and ROTH, Circuit Judges, and PRATTER,* District Judge
(Opinion Filed: April 8, 2021)
Alfred V. Altopiedi [ARGUED]
Donna A. Casasanto [ARGUED]
902 Old Marple Road
Springfield, PA, 19064
Joseph M. Fioravanti
217 North Monroe Street
P.O. Box 1826
Media, PA 19063
Counsel for Eileen M. Gibson and Robert P. Gibson
Michael Saltzburg [ARGUED]
Katherine C. Douglas [ARGUED]
Sarah E. Crosley
Bennett Bricklin & Saltzburg
1500 Market Street, Center Square
32nd Floor
* Honorable Gene E.K. Pratter, District Judge, United States District Court for the Eastern District of Pennsylvania, sitting by designation.
Philadelphia, PA 19102
Counsel for State Farm Mutual Automobile Insurance Company
Elizabeth M. Tarasi
Tarasi & Tarasi, P.C.
510 Third Avenue
Pittsburgh, PA 15219
Counsel for Amici the Pennsylvania Association for Justice in support of Appellees/Cross Appellants
Bryan M. Shay
Jeffrey M. Brenner
Post & Schell, P.C.
Four Penn Center, 13th Floor
1600 John F. Kennedy Boulevard
Philadelphia, PA 19103
Counsel for Amici the Pennsylvania Defense Institute in support of Appellant/Cross Appellee
PRATTER, District Judge.
Underinsured motor vehicle coverage (“UIM“) is designed to help defray the cost of an accident with an uninsured or underinsured motorist. Although basic UIM coverage is for an amount equal to bodily injury limits set in the policy, an insured in Pennsylvania can reduce premium costs by opting for a lower amount of underinsured motorist coverage. To accomplish that, Pennsylvania law requires only that the insured make a “request in writing.”
The question here is whether Eileen Gibson‘s three-page application for insurance with State Farm in which she opted for $100,000 in stacked UIM coverage for three cars and $250,000 in bodily injury coverage was sufficient to satisfy
Because we find that
I. BACKGROUND
The Gibsons previously had a GEICO auto insurance policy for $300,000 limits in stacked bodily injury coverage and $300,000 limits for underinsured motorist
The last page of the pre-printed application referenced other documents, listed as “required” documents, including an acknowledgement of coverage selection form for UIM which again listed UIM coverage of $300,000. State Farm did not provide these additional forms to Ms. Gibson when she applied for insurance in April.
Soon after signing the application, Ms. Gibson was seriously injured in an accident. Roughly three weeks after her accident, the Gibsons returned to the State Farm office to sign the other documents referenced in her application. State Farm presented her with, among other things, an acknowledgement of coverage selection form. This form stated that UIM benefits “are available with limits up to the Liability Coverage limits for bodily injury.” It further stated that the applicant “acknowledge[s] and agree[s] that I have been given the opportunity to purchase Underinsured Motor Vehicle Coverage with limits up to my Liability Coverage limits for bodily injury but instead I select lower limits of $100,000 (per person)/$300,000 (per accident) in lieu of the higher limits made available to me.” Ms. Gibson signed this form confirming her election of lower UIM limits (i.e., $300,000), as well as the other “required” documents in May 2016 which was post-accident. There is no evidence that she questioned, or that she objected in either April or May, to the documents she signed containing lower UIM coverage limits.
Following the accident, the Gibsons demanded coverage for injuries. Negotiations were unsuccessful. The Gibsons later sued State Farm for underinsured motorist coverage, breach of contract, and bad faith under
State Farm successfully moved for partial summary judgment on the bad faith claim. The Magistrate Judge1 found that State Farm “reasonably based its settlement offer” on the materials provided by the Gibsons. As a result, the court found that no reasonable juror could conclude that State Farm lacked a reasonable basis for failing to further investigate the Gibsons’ claim. Because the Magistrate Judge found no facts establishing bad faith by State Farm, he entered summary judgment on this claim.2
The parties proceeded to trial. The jury awarded the Gibsons $1,750,000 in damages. State Farm moved to mold the verdict to the UIM policy limit, arguing that the UIM policy limit was $300,000—which was the amount listed on the application
The Magistrate Judge granted the Gibsons’ motion to mold the $1,750,000 verdict to the higher $750,000 limits on the grounds that Ms. Gibson did not validly elect the lower $300,000 UIM limits under Section 1734 of the MVFRL,
State Farm now appeals the trial court‘s molding of the verdict to $750,000 instead of $300,000. The Gibsons appeal the denial of their motion for reconsideration of their bad faith claim.
II. STANDARD OF REVIEW
We exercise jurisdiction over these appeals pursuant to
We review a denial of a motion for reconsideration for abuse of discretion. Max‘s Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 673 (3d Cir. 1999). To the extent the denial is based on legal issues, we review that determination de novo. Id. However, factual findings are reviewed for clear error. Id.
III. DISCUSSION
A. The Gibsons’ Application Was A Valid Election Under § 1734
The parties do not dispute that Ms. Gibson signed a writing that elected the lower, $300,000 UIM limit—the three-page application which lists the $300,000 in stacked UIM coverage. What matters is whether that writing complies with
We begin, as always, with the plain text of the statute. Rotkiske v. Klemm, 890 F.3d 422, 424 (3d Cir. 2018) (en banc), aff‘d, 140 S. Ct. 355 (2019).
Section 1731 of the MVFRL obligates an insurance comрany issuing a policy in the Commonwealth to provide uninsured and underinsured motorist coverage in an amount equal to bodily injury limit coverage except as provided in Section 1734. Should an insured reject UM/UIM coverage entirely, the insured must execute a separate document in the specific form provided by
Section 1734 is a limited exception to Section 1731 that serves a limited purpose. It requires action on the part of the insured to take effect. Although compliance with Section 1731 requires the insured to execute a separate written rеjection using the form provided in the MVFRL to disclaim all UM/UIM coverage, see
We previously found that Section 1734 is intended to provide a “very simple, clear-cut rule for an insurance company to follow to lower the limits [of underinsured or uninsured motorist coverage] it must insist on a written authorization signed by the named insured.” Nationwide Ins. Co. v. Resseguie, 980 F.2d 226, 232 (3d Cir. 1992) (holding an “oral” request to lower UIM coverage was not a rеquest “in writing“). Predicting then how the Pennsylvania Supreme Court would interpret
The Pennsylvania Supreme Court has emphasized that Section 1734‘s requirements are minimal. It too found that
The Pennsylvania Supreme Court recognized that insurance companies can exceed the requirements in the MVFRL. Id. An insurer could choose to include additional information on UM/UIM coverage, such as cost comparisons, as it sees fit. But the court saw “no purpose in requiring a separate statement when it is clear from the coverage selected that the insured intended reduced UM/UIM coverage.” Id. To require otherwise lacked support in MVFRL‘s unambiguous text. An insurance company‘s decision to include additional information and more forms does not rewrite the foundational requirements of the statute. Nor does industry practice reform the law to require more than what the legislation dictates. So, Orsag can best be understood as reiterating what must be
Absent a statutory provision requiring an insurer to provide an additional form or certain magic words, we will not read in such a requirement here. Indeed, there are no such magic words or documents. The Pennsylvania Supreme Court has repeatedly rejected the argument that a separate writing is required to elect lower UIM limits. Id.; Lewis v. Erie Ins. Exch., 793 A.2d 143, 155 (Pa. 2002) (Section 1734 writing need not be on a separate page). We agree with this logic which highlights the statutory differences between the еxpress form requirement to waive all coverage under
With that understanding, we find that Ms. Gibson validly selected lower UIM coverage in her application. The Gibsons have not shown that
Despite the similarities between this case and Orsag, the Magistrate Judge declined to follow Orsag, interpreting
Nor do we find, as the Gibsons argue, that this case calls for an application of a panel of this Court‘s prior ruling in Freeth v. Zurich Am. Ins. Co., 645 F. App‘x 169 (3d Cir. 2016). The policy application here is distinct and thus compels a different result. In Freeth, the panel held that a summary application form seeking to reduce UM coverage in multiple states was not a “request” in writing under
Failure to return the signed Uninsured/Underinsured Motorist (UM/UIM) Selection/Rejection Summary Form and required state-specific forms prior to the policy inception date(s) will result in the policy being issued with coverage limits imposed by operation of state law. . . . THIS SUMMARY IS NOT A SUBSTITUTE FOR REVIEWING EACH INDIVIDUAL STATE‘S SELECTION/REJECTION FORM FOR UM AND UIM COVERAGE. YOU ARE REQUIRED TO DO SO.
Id. at 171. We read this plain language to mean what it said: the summary form explicitly and repeatedly warned that signing it alone was insufficient to effect a reduction in coverage. Id. at 172. The form required the insured to fill out separate, state-specific forms to complete an election of reduced UM/UIM limits. Id. So the
The result the Court reaches today is not in tension with Freeth. To the contrary, the panel stressed in Freeth that that the decision should not be read to suggest that short summary documents can “never suffice to reduce coverage under section 1734.” Id. It simply did not suffice under the unique circumstances in Freeth. Id. at 173. The Summary Form “clearly and repeatedly stated that signing thе Summary Form was insufficient to effect a reduction in coverage.” Id. There is no such disclaimer in State Farm‘s three-page document here that would suggest to the insured that signing just that document would not operate to reduce coverage. Nor is it the case that Ms. Gibson did not knowingly elect lower coverage in the Commonwealth when the very heading in the application she signed in April read “Signature Document—Pennsylvania.” App. 615.
Freeth did not interpret Pennsylvania law to require insureds do anything more than sign a preprinted document. Id. at 172-73. Orsag did not so require, and the Pennsylvania Supreme Court has not since amended its interpretation of
We pause briefly to consider the Magistrate Judge‘s finding that State Farm‘s labeling the acknowledgement form as “required” introduced ambiguity into the application. The Gibsons did not raise this argument throughout the proceedings. Rather, it surfaced for the first time only in the post-trial ruling.
The best articulation of the argument is that State Farm referring to additional documents in the application as “required” suggested to the Gibsons that they were entitled to additional information. Because these additional documents were, for whatever reason, neither presented to nor signed by Ms. Gibson at the same time she signed the three-page aрplication, the Magistrate Judge found that the three-page document was not intended to constitute an offer of reduced UIM coverage. But in so finding, he elided two separate—albeit related—concepts. There may well have been ambiguity as to whether State Farm would supply additional information, along the lines considered but not required by the Orsag court. We can appreciate the Magistrate Judge‘s sense that State Farm could perhaps have been more dedicated to the highest standards of clarity. But focusing on what is important here, we do not find the amount of UIM/UM coverage the Gibsons selected to itself be ambiguous. Cf. Olender v. Nat‘l Cas. Co., No. CIV.A. 11-4098, 2012 WL 3590693, at *1 (E.D. Pa. Aug. 14 21, 2012) (construing ambiguity in policy in favor of insured where insured requested UIM coverage at both $100,000 and $35,000 limits in same policy).3
B. The Magistrate Judge Correctly Denied the Gibsons’ Bad Faith Claim
The Gibsons also appeal thе Magistrate Judge‘s denial of their motion for reconsideration hoping to revive their statutory bad faith claim post-verdict.4 A motion for
reconsideration requires the movant to show (1) an intervening change in the controlling law; (2) new evidence that was not available when the court issued its order, or (3) the need to correct a clear error of law or prevent manifest injustice. Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir. 2010). The Gibsons contend that “new” evidence—State Farm‘s post-accident attempt to cabin the рolicy limits—and the need to avoid manifest injustice warrant reconsideration.
As a threshold matter, the Magistrate Judge properly disregarded the jury verdict of $1.75 million as irrelevant to the bad faith claim. Indeed, at oral argument, the Gibsons admitted this fact. Instead, the Magistrate Judge looked only at the actions and omissions of State Farm to evaluate Ms. Gibson‘s claim when it was submitted and then processed.
In support of their motion, the Gibsons argued that Ms. Gibson‘s failure to sign the UIM coveragе selection form until after the accident was “new” evidence of State Farm‘s bad faith. The Magistrate Judge correctly declined to consider these facts as “new.” State Farm had consistently maintained that the application established the UIM policy limit and provided the Gibsons with access to relevant documents. So, the supposed “post-trial revelation” of State Farm‘s alleged bad faith was not “new” evidence that would be appropriate for a motion for reconsideration. See United States ex rel. Schumann v. AstraZeneca Pharm. L.P., 769 F.3d 837, 849 (3d Cir. 2014) (affirming denial of reconsideration where evidence could have been submitted at motion to dismiss stage).
The Gibsons shade their argument on appeal to argue that the “new evidence” is State Farm‘s “deceptive conduct” to hide the “actual UM/UIM limits.” Gibson Br. at 9, 11. Because State Farm maintained that its exposure was at most $300,000, the Gibsons contend State Farm had less of an incentive to resolve the case earlier. The Gibsons аlso rely on the intervening time between signing the April application and the additional documents in May to claim that State Farm “intentionally misrepresent[ed]” the UIM policy limits. Id. at 16.
At its core, this is the same argument that the Gibsons raised before the Magistrate Judge. And like the Magistrate Judge, we also find it unavailing.
Pennsylvania provides for a statutory remedy for an insurer‘s bad faith in acting upon an insured‘s claim.
Here, State Farm believed the Gibsons’ applicatiоn complied with
We are not persuaded that State Farm “intentionally misrepresented” the policy limits when the documents executed after the accident reflect the same lower UIM amounts as in the April application. This may well have been a closer casе if there were some material differences in the coverage amounts or if Ms. Gibson had objected to the lower coverage limit in May. But she did not.5 So, the Magistrate Judge properly denied the motion to reconsider when there was no “new” evidence proffered.
As to the Gibsons’ second argument, motions for reconsideration are not a vehicle to argue facts or issues that were not raised. See, e.g., Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (holding a Rule 59(e) motion “may not be used to relitigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment“). But that is what seems to have happened here.
The Gibsons admittedly failed to request certain documents in discovery (including the “Best Practices
Manual“) and have not persuasively justified this failure. Likewise, the joint Rule 26(f) report presented to the Magistrate Judge explicitly discusses coverage limits and State Farm‘s position that Ms. Gibson elected the lower UIM сoverage. Thus, the issue was front and center and ripe for discovery activities.
Moreover, even with this information at their disposal pre-trial, the Gibsons did not argue bad faith based on an alleged misrepresentation of coverage. They chose instead to base their bad faith claim on an alleged failure by State Farm to investigate the Gibsons’ claim. Their failure to challenge the amount of their coverage pre-trial, when the information about the Gibsons’ UIM election was included in the discovery report authored and presumably read by both parties’ lawyers, does not now afford the Gibsons a second bite at the insurance apple.
State Farm‘s actions did not misrepresent the applicable coverage limits. The Magistrate Judge correctly denied the Gibsons’ motion for reconsideration when the only basis was what the Gibsons should, could, and ought to have raised earlier but did not.
For the foregoing reasons, we will affirm the Magistrate Judge‘s order insofar as he denied the Gibsons’ motion for reconsideration of the grant of summary judgment. We will reverse the order granting the Gibsons’ motion to mold the verdict to $750,000 and remand with instructions to mold the jury verdict to the $300,000 UIM limit under the Gibsons’ policy.