Mohney, T. v. American General Life ( 2019 )

J-A08011-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
TIMOTHY A. MOHNEY : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
AMERICAN GENERAL LIFE : No. 760 WDA 2018
INSURANCE COMPANY, AS :
SUCCESSOR BY MERGER TO :
AMERICAN GENERAL ASSURANCE :
COMPANY, AS SUCCESSOR IN :
INTEREST TO U.S. LIFE CREDIT :
INSURANCE COMPANY :
Appeal from the Judgment Entered May 14, 2018
In the Court of Common Pleas of Armstrong County
Civil Division at No(s): 1995-0764-Civil
BEFORE: PANELLA, P.J., STABILE, J., and McLAUGHLIN, J.
MEMORANDUM BY PANELLA, P.J.: FILED OCTOBER 10, 2019
Timothy A. Mohney, appeals from the judgment entered after the trial
court entered a non-jury verdict against Mohney’s insurance bad faith claims
against Appellee, American General Life Insurance Company (“American”).
Mohney had sued American as a successor company to U.S. Life Credit
Insurance Company (“U.S. Life”), based upon allegations of insurance bad
faith against U.S. Life. The trial court ruled that Mohney had failed to carry his
burden of proving the claims by clear and convincing evidence. Mohney raises
six issues on appeal, which can be loosely grouped into two categories: (1)
challenges to the trial court’s decisions on discovery matters, and (2)
J-A08011-19
challenges to the trial court’s evidentiary rulings. After careful review, we
affirm.
The torturous course of the proceedings before the trial court were
protracted and problematical. Mohney’s original complaint involved multiple
claims based upon numerous theories and was dismissed after U.S. Life filed
preliminary objections. After the trial court granted, in part, U.S. Life’s
preliminary objections to Mohney’s first amended complaint, Mohney filed a
second amended complaint, which forms the basis for the proceedings
currently under review.
After this Court twice remanded this case to the trial court for further
proceedings, the only remaining issue is based upon Mohney’s claim that U.S.
Life exercised bad faith in denying his claim for total disability benefits under
his insurance policy with U.S. Life. This claim had been twice dismissed by the
trial court, once pre-trial and another after trial. In both instances, this Court
reversed and remanded for further proceedings
A second bench trial was held in September 2017, presided over by then
Senior Judge William J. Ober (retired). Senior Judge Ober entered a verdict
following the trial, finding that Mohney did not prove that U.S. Life, American’s
predecessor, had knowingly or recklessly “disregarded the lack of a reasonable
basis for its” denial and termination of the payment of credit disability benefits.
Adjudication and Verdict, 12/20/17 at 2-3.
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After Mohney’s filed post-trial motions, the case was reassigned to the
Honorable Chase G. McClister of the Court of Common Pleas of Armstrong
County, Pennsylvania, because Senior Judge Ober had retired. On May 4,
2018, Judge McClister denied the post-trial motions. Later, Judge McClister
filed a comprehensive Memorandum Opinion, comprised of 16 pages, on July
20, 2018, fully explaining the reasons supporting Senior Judge Ober’s verdict.
Appellant raises six issues on appeal:
1. Reversal of discovery sanctions tends to make it more
advantageous for the offending party to withhold
information. Instantly, long after expert witness
disclosures were required, just before trial, Defendant
disclosed its insurance expert. The first trial judge found
Defendant's offending conduct was willful, intentional and
ongoing, striking Defendant's insurance expert. After
appeal and remand, Defendant sought reversal of the
discovery sanctions, which the third trial judge granted.
Was it error for the third trial judge to reverse the sanctions
entered by the first trial judge?
2. An insurer must have a reasonable basis to terminate
disability benefits. This Court previously determined that
Defendant unreasonably relied upon an equivocal medical
opinion to terminate Mohney's [d]isability [b]enefits.
Defendant's expert rejected this finding by opining that
reliance on the equivocal medical opinion was proper
according to industry standards. The [t]rial [c]ourt
accepted this testimony and found that Defendant did not
act recklessly or with a knowing disregard of its lack of a
reasonable basis. Did the trial court err in finding that
Defendant's reliance upon the equivocal medical opinion
complied with industry standards?
3. During claims handling, if an insurer makes
misrepresentations to the insured, the insurer violates
industry standards. The misrepresentations are evidence
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that the investigation of the claim was neither honest nor
objective. This Court determined that Defendant made
misrepresentations to the insured during the investigation.
The trial court determined that Defendant's claims
handling complied with industry standards and therefore
Defendant's conduct could neither be reckless nor
knowing. Did the trial court err?
4. Expert Opinions must be supported by credible facts and
not be based upon speculation. Defendant's expert opined
that Defendant met industry standards by providing
adequate training on legal interpretations of policy terms,
and by providing the adjusters with direction as to when
they should seek guidance (i.e., legal research) from the
available staff attorneys. Defendant's expert relied upon
the adjuster's testimony. The adjuster's testimony about
training was vague and superficial. Did the trial court err
by relying upon the unsupported opinion of Defendant's
expert?
5. The analysis of an insurer bad faith claim is dependent on
the conduct of the insurer, not its insured. Instantly, this
Court held: "on remand, evidence of Mohney's post-denial
conduct should not be admitted." During the second bad
faith trial, Defendant was permitted, over Plaintiff's
objection, to introduce evidence of post-denial conduct of
the Plaintiff. Did the trial court err by admitting evidence
which this court previously determined to be inadmissable?
6. A reasonable investigation to determine whether a claim
should be paid requires the insurer to review all available
information whenever it is received. Bad faith conduct can
occur before, during, and after litigation. Plaintiff sought
discovery to learn what investigation Defendant conducted
on the disability claim based upon information the insurer
received after the breach of contract claim was filed,
litigated, and appealed. The trial court refused to compel
Defendant to respond to this requested discovery. Did the
trial court err?
Appellant’s Brief, at 5-6 (footnote omitted).
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In reviewing the outcome of a nonjury trial, we are limited to
determining whether the trial court's factual findings are supported by
competent evidence, and whether the court properly applied the pertinent
law. See Prestige Bank v. Investment Properties Group, Inc., 825 A.2d
698, 700 (Pa. Super. 2003). “[A]bsent an abuse of discretion, the reviewing
court is bound by the trial court's credibility determinations.” De Lage
Landen Financial Services, Inc. v. M.B. Management Co., Inc., 888 A.2d
895, 898 (Pa. Super. 2005). Those findings must be afforded the same weight
and effect as a jury verdict and will not be disturbed on appeal absent an error
of law or an abuse of discretion. See Prestige Bank, 825 A.2d at 700.
After a thorough and meticulous examination of the record, and a careful
review of the briefs, we find that the Adjudication and Verdict of December
20, 2017, the Order of May 4, 2018, and the Memorandum Opinion of July 20,
2018, adequately address all of the issues raised by the Appellant, and are
more than sufficiently supported in the record. Therefore, we affirm on the
basis of the aforesaid decisions by the trial court.
Judgment Affirmed. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/10/2019
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v:J�·
Received 6/18/2018 2:38:52Circulated
PM Superior Court Western
09/18/2019 District
11:27 AM
Filed 6/18/2018 2:38:00 PM Superior Court Western District
IN THE COURT OF COMMON PLEAS OF ARMSTRONG COUNTY, PENNSYLVANIA60WDA2018
TIMOTHY A. MOHNEY,
Plaintiff,
vs.
No. 1995-0764-CIVIL
AMERICAN GENERAL LIFE INSURANCE
COMPANY, as successor by merger
to AMERICAN GENERAL ASSURANCE
COMPANY, as successor in
interest to U.S. LIFE CREDIT
INSURANCE COMPANY, C)�
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Defendant.
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ADJUDICATION and VERDICT -- -�--
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AND NOW, this �;I� day of December, 2017,
jury trial of Count VI of Plaintiff's Second Amended Complaint
claiming bad faith under 42 Pa. Cons. Stat. Ann. § 8371, as
remanded by the Superior Court of Pennsylvania, I find as
follows:
1) The legal standard for bad faith has been set forth by
our Supreme Court in Rancosky v. Washington Nat'l Ins. Co., 170
A.3d 364, 365 (Pa. 2017) {citing Terletsky v. Prudential Property
& Cas. Ins. Co., 649 A.2d 680 (Pa. Super. Ct. 1994)). In order
to recover in a bad faith action, the plaintiff must present
clear and convincing evidence 1) that the insurer did not have a
reasonable basis for denying benefits under the policy, and 2)
that the insurer knew of or recklessly disregarded its lack of a
reasonable basis for denying benefits under the policy.
2) The parties have stipulated that the first element of
that standard has been satisfied as a matter of law.1
3) I considered all of the evidence and testimony
presented at trial. I reviewed this in light of each of the
parties' suggested findings of fact and conclusions of law.
4) At the remanded bad faith trial, unlike at the
previous bad faith trial, each party presented expert testimony
regarding knowing or reckless disregard of a reasonable basis to
terminate benefits. I find that U.S. Life's expert, Barbara J.
Sciotti, was well-qualified in insurance claims management and
offered more credible testimony than that of the Plaintiff's
expert witness, John A. McCandless, Esq. She opined, inter
alia, as follows:
a. U.S. Life had provided Mr. Carroll with adequate
training and support with regard to claims adjusting
practices;
b. Mr. Carroll complied with industry practice; and
c. U.S. Life did not place its own interests ahead
of those of Plaintiff.
NOW THEREFORE, the Court finds that Plaintiff has failed to
prove, by clear and convincing evidence, that U.S. Life knew of
1
Although the Superior Court of Pennsylvania appears to have concluded, and
the parties have stipulated, that the first prong of the bad faith standard
has been satisfied, it would otherwise be the appropriate responsibility of
this Court to make the factual determination of whether a reasonable basis
existed for U.S. Life's denial of benefits. See Rancosky, 170 A.3d at 377.
or recklessly disregarded the lack of a reasonable basis for its
determination. The Court hereby DIRECTS the Prothonotary to
enter judgment in favor of Defendant, and against Plaintiff, on
Count VI of the Second Amended Complaint. It further is ORDERED
that Plaintiff's requests for punitive damages and attorneys'
fees be and hereby are DISMISSED, as moot.
By the Court:
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William J. Ober, S.J.
IN THE COURT OF COMM:ON PLEAS OF ARMSTRONG COUNTY, PENNSYLVANIA
TIMOTHY A. MOHNEY, )
Plaintiff, )
)
vs. )
AMERICAN GENERAL LIFE
)
)
No. 1995-0764-CIVIL
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INSURANCE COMPANY, as successor) �
by merger to AMERICAN GENERAL ) I
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in interest to U.S. LIFE CREDIT ) :x
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ORDER
AND NOW, this id:&. day of May, 2018, upon consideration of Plaintiffs
Motion for Post-trial Relief, Defendant's response in opposition thereto, and the
briefs and argument of the parties, and having reviewed the entire record in this
matter, including the proposed findings of the parties and the trial transcript, the
Court makes the following conclusions:
1. There was no error or abuse of discretion in the Court's
permitting Defendant's expert, Barbara J. Sciotti, to testify regarding whether U.S.
Life knowingly or recklessly disregarded the lack of a reasonable basis for
terminating benefits.
2. There was no error or abuse of discretion in the Court's finding
Ms. Sciotti's testimony more credible than Plaintiffs expert, John A. McCandless,
Esq., on the issue of whether U.S. Life knowingly or recklessly disregarded the lack
of a reasonable basis for terminating benefits.
3. There was no error or abuse of discretion in the Court's finding
that Plaintiff did not present clear and convincing evidence that U.S. Life
knowingly or recklessly disregarded the lack of a reasonable basis for terminating
benefits. The Court considered all of the evidence presented, including the de nova
testimony of the claims handler, Mr. Carroll, and made credibility determinations.
There was evidence in the record indicating, and the Superior Court previously
held, that U.S. Life lacked a reasonable basis for terminating benefits, and its
communications with both Dr. Miller and Plaintiff contained certain omissions and
inaccurate statements of fact. This evidence, if considered alone, would be
suggestive of a knowing or reckless disregard. When considered in light of the
entire record, including the testimony of Ms. Sciotti and Mr. Carroll, it fell short of
clear and convincing evidence, i.e., evidence that is so clear, direct, weighty, and
convincing as to enable the trier of fact to come to a clear conviction, without
hesitancy of the truth of the precise facts in issue. See Berg v. Nationwide Mutual
Ins. Co., __ A.3d __ , 2018 WL 1705274, at *4 (Pa. Super. Ct. April 9,
2018)(citing Grossi v. Travelers Pers. Ins. Co., 79 A.3d 1141, 1165 (Pa. Super. Ct.
2013)). Thus, there was no error or abuse of discretion in the Court's finding that
Plaintiff had failed to carry this high burden of proof.
NOW THEREFORE, on these bases, it is ORDERED that Plaintiffs Motion
for Post·trial Relief be and hereby is DENIED.
By the Court:
Oit/w(dkUL tL.bi
Chase G. McClister, J.
Circulated 09/18/2019 11:27 AM
IN THE COURT OF CO:Ml\10N PLEAS OF ARMSTRONG COUNTY, PENNSYLVANIA
TIMOTHY A. MOHNEY, )
Plaintiff, )
)
vs. )
)
AMERICAN GENERAL LIFE ) No. 1995-0764-CIVIL
INSURANCE COMPANY as successor )
by merger to AMERICAN GENERAL )
ASSURANCE COMP ANY, as successor)
in interest to U.S. LIFE CREDIT )
INSURANCE COMPANY, )
Defendant. )
1925(a) MEMORANDUM
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IN THE COURT OF CO:Ml\10N PLEAS OF ARMSTRONG COUNTY, PENNSYLVANIA
TIMOTHY A. MOHNEY, )
Plaintiff, )
)
vs. )
)
AMERICAN GENERAL LIFE ) No. 1995-0764-CIVIL
INSURANCE COMP ANY as successor )
by merger to AMERICAN GENERAL )
ASSURANCE COMPANY, as successor)
in interest to U.S. LIFE CREDIT )
INSURANCE COMPANY, )
Defendant. )
1925(a) MEMORANDUM
McClister, J.
Plaintiff Timothy A. Mohney ("Mohney") appeals from the judgment on the
verdict entered on May 14, 2018, in favor of Defendant American General Life
Insurance Company, as successor by merger to American General Assurance
Company, as successor in interest to U.S. Lue Credit Insurance Company ("U.S.
Life"). On December 28, 2017, Senior Judge William J. Ober entered an
Adjudication and Verdict, after non-jury trial, on Mohney's claim for insurance bad
faith, finding that he had failed to carry his burden of proving the claim by clear
and convincing evidence. Mohney thereafter filed a motion for post-trial relief on
January 5, 2018, which this Court denied on May 4, 2018. Mohney then praeciped
for entry of final judgment, which was accomplished on May 14, 2018. Mohney filed
his notice of appeal on May 21, 2018, after which the Court directed him to file a
Rule 1925(b) Concise Statement within 21 days. He timely complied on June 13,
1
2018. Given the protracted history of this case, its procedural posture, and the
several opinions authored in this Court and the Pennsylvania Superior Court, the
Court herein will review only those facts and procedural history that are material to
the issues raised in the instant appeal.
A. Procedural History
This case involves an insurance dispute. I am the fourth trial court judge to
consider the merits of the bad faith claim. The case originally involved multiple
claims sounding in various theories. All counts of Mohney's Second Amended (and
still operative) Complaint, filed October 28, 1998, were dismissed except for the
breach of contract (Count III) and bad faith (Count VI) claims. Then-President
Judge Kenneth G. Valasek found in Mohney's favor on the breach of contract claim
by adjudication filed December 27, 2006, and judgment in the amount of $20,772.58
was entered on April 2, 2007. Judge Valasek previously had entered summary
judgment on the bad faith claim, which determination was reversed by the Superior
Court. See Nonprecedential Decision, filed July 1, 2008. U.S. Life's subsequent
petition for allowance of appeal to the Pennsylvania Supreme Court was denied on
December 10, 2008.
After remand, the parties engaged in discovery on the bad faith claim. The
first bad faith trial, before Senior Judge Joseph A Nickleach, occurred in April
2013. Judge Nickleach found in favor of U.S. Life on the bad faith claim, which
decision was reversed, and a new bad faith trial ordered, by the Superior Court on
May 8, 2015. U.S. Life's subsequent petition for allowance· of appeal to the
2
Pennsylvania Supreme Court was denied on December 8, 2015. Approximately five
months later, no action on the case having been taken by the parties, specially-
assigned Senior Judge William J. Ober scheduled a status conference. After the
conference and with the consent of the parties, Judge Ober ordered the case to
mediation. The case did not resolve at mediation. Thereafter, the parties engaged
in discovery. A case management order was entered on December 21, 2016, setting
the dates for trial, the completion of discovery, and additional pre-trial conferences.
The case proceeded to trial in September 2017, after which Judge Ober entered his
adjudication finding that Mohney had not carried its burden to prove, by clear and
convincing evidence, that U.S. Life had knowingly or recklessly disregarded a lack
of a reasonable basis for terminating the payment of credit disability benefits.
Judge Ober's judicial commission expired on December 31, 2017, after which this
Court was assigned to the case. After my disposition of Mohney's post-trial
motions, this appeal followed.
B. Errors Complained of on Appeal
Mohney asserts seven assignments of error on appeal, each of which the
Court will address separately."
1. Compliance with Industry Standards
Mohney argues in his first issue that Judge Ober "erred by finding Defendant
met industry standards, when [the Superior Court] previously determined
1 Several ofMohney's issues challenge specific evidentiary and discovery rulings by Judge Ober
without identifying the particular testimony or ruling being challenged. The Court has reviewed the
entire record and has identified what it believes to be the issues raised on appeal.
3
Defendant unreasonably relied upon an equivocal medical opinion to terminate
benefits." First, Judge Ober did not anywhere in his findings determine that the
medical opinion provided by Dr. Miller and relied upon by U.S. Life's claims
adjuster, Lawrence Carroll, was not unequivocal. Nor did Judge Ober determine
anywhere in his findings that U.S. Life's basis for terminating benefits was
reasonable. Rather, Judge Ober had before him a narrow and discrete issue,
namely, whether Mohney had proven, by clear and convincing evidence, that U.S.
Life knowingly or recklessly disregarded a lack of a reasonable basis for its
termination decision. Judge Ober expressly acknowledged that the first prong of
the bad faith standard already had been met. See Adjudication and Verdict, at ,r 2
n. 1. Thus, at the outset, Mohney's construction of Judge Ober's findings is not
accurate.
Judge Ober's express finding was that U.S. Life's expert, Barbara Sciotti, was
both well-qualified in insurance claims management and offered credible testimony.
Judge Ober did not rely on the opinion of Mohney's proffered expert, John A.
McCandless, Esq., which he found to be less credible. Mohney has not challenged
that credibility determination on appeal. Even were he to challenge that credibility
finding, it was sound in any event. Mr. McCandless has no firsthand experience in
first party claims handling, of credit disability claims or otherwise. He has never
himself made, in the first instance, a first-party claim determination. All of his
experience working directly in the insurance industry amounts to three years with
Nationwide Insurance Company, which experience pre-dated the enactment of the
4
bad faith statute and only involved claims that had escalated to litigation. Mr.
McCandless has been actively engaged in plaintiffs·side bad faith litigation,
although he does, at times, serve as "coverage counsel." Since this case has been
filed, and particularly since the prior bad faith trial, Mr. McCandless has instituted
new bad faith lawsuits on behalf of plaintiffs. He advertises his practice to include
a "special interest in representing people who are the victims of insurance bad
faith." He has testified in court as an expert on bad faith in only one other case, in
which he was engaged by Mohney's counsel in this case, Thus, Judge Ober's
finding that Mr. McCandless's testimony was less credible is both amply supported
by the record and not at issue on appeal.
Judge Ober's finding that Ms. Sciotti was qualified and credible also is amply
supported by the record. Ms. Sciotti worked directly in the insurance industry as a
claims adjuster for many years. She then began a consulting business in which she
performs reviews of claims to determine the propriety of insurer conduct. She has
maintained this business for approximately 23 years and has reviewed at least 450
cases. She maintains a consistently objective approach to her reviews, having
rejected approximately one· half of the cases presented to her, from both insureds
and insurers, because she did not believe their position had any merit. She has
been qualified as an expert in insurance practices 18 times, and her testimony has
never been excluded. She also has been invited by the Pennsylvania Bar Institute
to be a presenter and faculty member in presentations and trainings on insurance
practices. Ms. Sciotti's business overall has involved more plaintiffs'·side work
5
than defendants'