Allegheny Plant Servs., Inc. v. Carolina Cas. Ins. Co.

ALLEGHENY PLANT SERVICES, INC., Plaintiff, v. CAROLINA CASUALTY INSURANCE COMPANY;

THE LAW OFFICES OF FLOYD G. COTTRELL, P.A., Defendants.

THE LAW OFFICES OF FLOYD G. COTTRELL, P.A.,n/k/a Cottrell, Solensky & Semple, P.A. Third-Party Plaintiff, v. WELLS FARGO INSURANCE SERVICES USA, INC., Third-Party Defendant.

Civ. No. 14-4265 (KM)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

March 17, 2016

OPINION

KEVIN MCNULTY, U.S.D.J.:

Introduction

This action grows out of a state court motor vehicle collision action against Allegheny Plant Services, Inc. ("Allegheny"). Allegheny, plaintiff here, sues its insurer, Carolina Casualty Insurance Company ("Carolina"). Carolina, says Allegheny, allowed a verdict that exceeded the limits of Allegheny's general liability policy. Allegheny asserts against Carolina claims of breach of fiduciary duty (Count 1), breach of contract (Count 2), and bad faith under 42 Pennsylvania Cons. Stat. § 8371 (Count 3). Allegheny also sues the attorney that handled the personal injury case, the Law Offices of Floyd G. Cottrell, n/k/a Cottrell, Solensky & Semple, P.A. ("Cottrell") for breach of fiduciary duty and professional negligence. Cottrell has filed a third-party claim for contribution against Wells Fargo Insurance Services USA, Inc. ("Wells Fargo").

Now before the Court are two motions:

(a) the motion (ECF no. 78) of defendant Carolina for partial summary judgment dismissing Count 3 of the Amended Complaint ("AC", ECF no. 14); and

(b) the motion (ECF no. 90) of Third-Party Defendant Wells Fargo to dismiss the Third-Party Complaint ("3PC", ECF no. 75) filed by Cottrell.

For the reasons expressed herein, both motions will be denied.

Background

Allegheny, a Pennsylvania motor carrier, obtained a policy of commercial transportation insurance from Carolina, a Florida insurer. On January 18, 2007, Robert Whitmore, an Allegheny employee, was involved in a collision in Maywood, New Jersey. The other vehicle involved was driven by Robert Curley; Curley's passenger was named Louis Capurso.

Curley sued Allegheny in Superior Court, Essex County, New Jersey. Curley v. Allegheny Plant Services, Docket No. L-7721-08 (the "Curley Lawsuit"). Carolina retained Cottrell, a law firm located in Newark, New Jersey, to defend the Curley Lawsuit. The jury returned a verdict of $1,440,000. That turned out to be $673,162.21 in excess of Allegheny's remaining policy limit.

Allegheny brought this action in the Western District of Pennsylvania. (Venue was transferred here.) Allegheny alleges that Carolina did not inform it of Curley's claims or multiple demands for settlement which, if accepted, would have settled the lawsuit within the policy limits. Allegheny alleges that Cottrell's substandard performance also caused it to be incur liability beyond the policy limits.

Cottrell has brought a third party claim against Wells Fargo. Cottrell does not acknowledge liability, but alleges that, if he is liable, Wells Fargo isliable for contribution. According to Cottrell's Third Party Complaint, Wells Fargo is an insurance broker that also provides its clients with risk management services, claims assistance, and claims analysis. (3PC ¶ 6) On behalf of Carolina, Wells Fargo monitored and rendered services as to the Curley claim and trial. (3PC ¶¶ 14-19) Wells Fargo, which knew the claims exceeded the policy limits, allegedly had a duty to manage the claim prudently, but failed to do so, thus contributing to the loss for which Allegheny sues. (3PC ¶¶ 25-36)

I. CAROLINA CASUALTY'S MOTION FOR PARTIAL SUMMARY JUDGMENT

A. Summary Judgment Standard

Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000). In deciding a motion for summary judgment, a court must construe all facts and inferences in the light most favorable to the nonmoving party. See Boyle v. Cnty. of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998). The moving party bears the burden of establishing that no genuine issue of material fact remains. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). "[W]ith respect to an issue on which the nonmoving party bears the burden of proof ... the burden on the moving party may be discharged by 'showing'—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325.

Once the moving party has met that threshold burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opposing party must present actual evidence thatcreates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; see also Fed. R. Civ. P. 56(c) (setting forth types of evidence on which nonmoving party must rely to support its assertion that genuine issues of material fact exist). "[U]nsupported allegations ... and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see also Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001) ("A nonmoving party has created a genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its favor at trial."). If the nonmoving party has failed "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, ... there can be 'no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex, 477 U.S. at 322-23).

In deciding a motion for summary judgment, the court's role is not to evaluate the evidence and decide the truth of the matter, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S. Ct. 2505. Credibility determinations are the province of the fact finder. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).

B. Analysis

On this motion for partial summary judgment, Carolina makes one simple contention: Count 3, asserted under a Pennsylvania insurer bad faith statute, 42 Pa. Cons. Stat. § 8371, must be dismissed because New Jersey, not Pennsylvania, law applies. Finding that these two states' laws present no true conflict, I will deny the motion.

1. Applicable choice of law standard

"[I]n a diversity action, a district court must apply the choice of law rules of the forum state to determine what law will govern the substantive issues of a case." Warriner v. Stanton, 475 F.3d 497, 499-500 (3d Cir. 2007) (citing KlaxonCo. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). The "forum state," however, has a particular meaning when venue has been transferred from another district. In such a case, the transferee court must apply the choice of law rules of the transferor district. Ferens v. John Deere Co., 494 U.S. 516, 110 S. Ct. 1274 (1990); Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S, Ct, 252 (1981). The overarching policy is that a change of venue is just a change of courtrooms that should not alter the substantive law governing the case, whether directly or via a change of choice of law rules.

This action was originally filed in the Western District of Pennsylvania. By so-ordered Stipulation, the action was transferred to this District. (ECF nos. 44, 45) I must therefore apply Pennsylvania's choice of law principles to determine whose law applies to the Allegheny's bad faith claim.

The Pennsylvania Supreme Court's leading choice of law decision is Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (1964). SeeLacey v. Cessna Aircraft Co., 932 F.2d 170, 187 (3d Cir. 1991). In Griffith the court abandoned the traditional lex loci delicti conflicts rule for "a more flexible rule which permits analysis of the policies and interests underlying the particular issue before the court." Griffith, 203 A.2d at 805. In commenting on the development of Pennsylvania's flexible rule, we have indicated:

this new conflicts methodology has evolved into a hybrid approach that 'combines the approaches of both Restatement II (contacts establishing significant relationships) and "interest analysis" (qualitative appraisal of the relevant States' policies with respect to the controversy).'

Lacey, 932 F.2d at 187 (quoting Melville v. American Home Assurance Co., 584 F.2d 1306, 1311 (3d Cir. 1978)).

The Pennsylvania Supreme Court has not rendered any opinion after Lacey impugning the validity of Lacey's exposition of Pennsylvania's flexible choice of law rule. Moreover, the Pennsylvania Supreme Court has summarized succinctly its major choice of law rules as follows:

(1) This Court in Griffith v. United Air Lines, Inc., held that in resolving a potential conflict between the application of state laws we must consider the policies and interest underlying the particular issue before the court. Id. at 21, 203 A.2d at 805.

(2) As further explained in McSwain v. McSwain, 420 Pa. 86, 215 A.2d 677 (1966), we must analyze ... the extent to which one state rather than another has demonstrated, by reason of its policies and their connection and relevance to the matter in dispute, a priority of interest in the application of its rule of law.

(3) Furthermore, in evaluating the interests of one jurisdiction over another, we must view the factors qualitatively as opposed to quantitatively, Cipolla v. Shaposko, 439 Pa. 563, 267 A.2d 854 (1970).

Myers v. Commercial Union Assurance Companies, 506

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