TREADWAYS LLC, Appellant v. The TRAVELERS INDEMNITY COMPANY; the Charter Oak Fire Insurance Company; Travelers Property Casualty Company of America.
No. 11-2596.
United States Court of Appeals, Third Circuit.
March 12, 2012.
143
Submitted Under Third Circuit LAR 34.1(a) March 9, 2012.
Thus, for the reasons expressed above, we will affirm the judgment of the District Court.
Carolyn M. Angelaccio, Esq., Bonnie S. Stein, Esq., Curtin & Heefner, Morrisville, PA, John N. Ellison, Esq., Douglаs R. Widin, Esq., Reed Smith, Philadelphia, PA, Terry L. Trantina, Esq., TBC Corporation & Affiliated Companies, Palm Beach Gardens, FL, for Appellant.
Christine S. Celia, Esq., Francis J. Deasey, Esq., Henri Marcel, Esq., Ward A. Rivers, Esq., Deasey, Mahoney, Valentini & North, Philadelphia, PA, for the Travelers Indemnity Company; the Charter Oak Fire Insurаnce Company; Travelers Property Casualty Company of America.
Before: McKEE, Chief Judge, SCIRICA, and AMBRO, Circuit Judges.
AMBRO, Circuit Judge.
This appeal arises from an automobile accident involving an employee of Appellant Treadways, LLC. At the time of the accident, Treadways was covered by insurance policies issued by Travelers Property Casualty Company of America and The Travelers Indemnity Company (collectively, “Travelers“).1 Based on these policies, Travelers denied coverage. Treadways filed an action agаinst Travelers, asserting coverage based on Travelers’ bad faith, and by waiver and estoppel based on Travelers’ breach of its duty to indemnify (the “estoppel claim“). The District Court dismissed the bad faith claim on Travelers’ motion for summary judgment. As to the estoppel claim, a jury returned a verdict in favor of Travelers. Treadways appeals the grant of summary judgment and certain of the Court‘s rulings during the trial regarding the estoppel claim. It requests that we reverse the grant of summary judgment and vacate the Court‘s entry of judgment for Travelers on the jury verdict. Instead, we affirm.2
Claims Under the Insurance Policies Relating To The Accident
Because we write solely for the parties, we recite only the facts necessary to our decision. Travelers issued two insurance policies to Treadways, a commercial automobile insurance policy (the “Auto Policy“), and a worker‘s compensation and employer‘s liability insurance policy (the “WC/EL Policy“). During the term of these policies, one of Treadways’ employees, Todd Gonsar, was struck by an uninsured motorist while he was unlоading tires from a rented delivery truck in the course and scope of his employment. Treadways reported the accident to Travelers. Travelers paid Gonsar workers’ compensation benefits under the WC/EL Policy.
Gonsar filed a writ of summons against Treadways in the Court of Common Pleas of Philadelphia County (the “Gonsar Suit“). Treadways notified Travelers of the Gonsar Suit, whereupon Travelers established a claim under the Auto Policy and retained counsel to defend Treadways in the suit. On receiving Gonsar‘s complaint, Travelers advised Trеadways that it believed the Auto Policy might not cover the claims asserted. Travelers nonetheless continued to retain counsel to defend Treadways.
Near the close of discovery, Travelers sent a letter to Treadways denying coverage of the Gonsar Suit under the Auto Policy and withdrawing its defense of Treadways in that action. Travelers stated that the Auto Policy did not cover the accident because the policy only covered automobiles owned by Treadways and Gonsar was driving a rented truck on the date of the accident.
The Gonsar Suit ended approximately six months later with a judgment against Treadways. Based on this judgment, Treadways submitted a claim to Travelers under the WC/EL Policy. Travelers sent a letter to Treadways denying coverage on the basis that the WC/EL Policy did not cover the claims asserted in the Gonsar Suit.
District Court Action
Over a year later, Treadways filed its action against Travelers. Following the close of discovery, both parties moved for summary judgment. They agreed that neither policy covered the claims asserted in the Gonsar Suit. Noting that Pennsylvaniа‘s applicable standard for bad faith re
The Court, however, allowed the estoppel claim to procеed to trial. Four of its rulings prior to or during the trial are at issue on appeal. The first two rulings regard testimony and evidence. First, the Court granted Travelers’ motion in limine to preclude the testimony of its corporate designee and other evidence regarding Travelers’ alleged violations of its internal claims handling procedures. Importantly, Treadways admitted that it did not have access to these procedures. The Court held that the testimony and evidence were irrelevant and prejudicial under
The remaining two rulings regard Treadways’ proposed jury instructions. It sought the following instruction regarding a presumption of prejudice: “In Pennsylvania, when the insurer undertakes the defense of an insured and requires the insured to relinquish management of the litigation to the insurer, the insurer may not later disclaim coverage after a verdict of judgment.” Appendix (“App.“) at 836. The District Court denied the instruction based on its ruling that relevant case law provided that prejudice must be shown in the circumstances of the case.
Treadways also requested that the jury be instructеd with regard to
II. DISCUSSION
Dismissal of Bad Faith Claim
We review a district court‘s grant of summary judgment de novo. Ray v. Twp. of Warren, 626 F.3d 170, 173 (3d Cir.2010). Summary judgment is proper when, viewing the evidence in the light most favorable to the non-moving party, there is no genuine issue of material faсt and the moving party is entitled to judgment as a matter of law. Id.
The District Court dismissed Treadways’ bad faith claim based on its holding that Pennsylvania‘s standard for bad faith in the insurance context requires, as a prerequisite, the existence of coverage under a policy. Treadways argues that this holding ignores that a bad faith claim may be premised on bad faith in actions other than denial of coverage and that the existence of coverage is not a predicate of a bad faith claim. We disagree.
“Bad faith” under Pennsylvania‘s bad faith statute—
Treadways doеs not argue that Travelers wrongly denied coverage under the policies. Indeed, it admits that the policies precluded coverage. This alone was sufficient for the District Court to dismiss the bad faith claim. Because the claims asserted in the Gonsar Suit were not covered by the policies, Travelers had good cause to deny coverage and cease defending the litigation.3
Evidentiary Rulings
We generally review a district court‘s evidentiary rulings for abuse of discretion, but apply a plenary review to determinations based on the interрretation of federal rules. United States v. Green, 556 F.3d 151, 155 (3d Cir.2009).
Evidence is relevant if “(a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action.”
To recap, two evidentiary rulings are at issue. First, the District Court excluded as irrelevant and prejudicial testimony of Travelers’ corporate designee and other evidence regarding Travelers’ alleged violations of its internal claims handling procedures. To establish an estoppel claim, Treadways had to prove an inducement to believe certain facts, justifiable reliance, and actual prejudice. See Guardian Life Ins. Co. v. Zerance, 505 Pa. 345, 479 A.2d 949, 954 (1984). Estoppel thus focuses on an insurer‘s knowledgе and conduct and the insured‘s reliance on that conduct. Because Treadways did not have access to Travelers’ claims handling procedures, testimony and other evidence regarding these procedures were irrelevant to the estoppel claim. The District Court properly excluded it.
Second, the District Court prohibited the introduction of Travelers’ letter denying coverage under the WC/EL Policy. Treadways tendered its claim, and Travelers denied coverage, under this policy after entry of the verdict in the Gonsar Suit. More than six months prior to entry of the verdict, Travelers informed Treadways that the claims asserted in suit were not covered by the Auto Policy, the policy
Jury Instructions
We review a district court‘s refusal to give a requested jury instruction for abuse of discretion. United States v. Weatherly, 525 F.3d 265, 269-70 (3d Cir.2008). “A court errs in refusing a requested instruction only if the omitted instruction is correct, is not substantially covered by other instructions, and is so important that its omission prejudiced the defendant.” United States v. Davis, 183 F.3d 231, 250 (3d Cir.1999).
First, Treadways argues that the Court improperly denied its requested instruction regarding a presumption of prejudice if an insurer undertakes the defense of an insured and later disclaims coverage after the rendering of a verdict. Prejudice may be presumed in an estoppel context if an insurer defends an insured to verdict, without reservation of rights, and then denies coverage after entry of thе verdict based on the policy‘s inapplicability to a particular loss. See Goulding v. Sands, 355 F.2d 230, 232, 233 (3d Cir.1966). In contrast, if the insurer withdraws from defending the insured prior to the verdict, prejudice is not presumed. See W.O. Hickok Mfg. Co. v. Unigard Mut. Ins. Co., 15 Pa. D. & C.3d 593, 595 (Pa.1979).
Travelers denied coverage and withdrew its defense of Treadways in the Gonsar Suit аpproximately six months prior to entry of the verdict. Treadways thus was required to demonstrate prejudice. The District Court properly denied the proposed instruction presuming prejudice to Treadways.
Second, Treadways argues that the Court improperly deсlined to give an instruction with regard to
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For these reasons, we affirm.
Elvira Guallpa Mayancela De PERGUACHI; Manuel Ignacio Perguachi Cuji, Petitioners v. ATTORNEY GENERAL OF The UNITED STATES, Respondent.
No. 11-3256.
United States Court of Appeals, Third Circuit.
Submitted Pursuant to Third Circuit LAR 34.1(a) Marсh 14, 2012.
Opinion Filed: March 22, 2012.