Mishoe v. Erie Ins. Co.

824 A.2d 1153

573 Pa. 267

Edward MISHOE, Appellant, v. ERIE INSURANCE COMPANY, Appellee. and Nancy L. Hamer, Appellant, v. Federal Kemper Insurance Co., Appellee.

Supreme Court of Pennsylvania.

Argued November 14, 2001.

Decided May 30, 2003.

Eric L. Keepers, Joseph Roda, Lancaster, for Edward Mishoe.

John M. Gallagher, for The Pennsylvania Trial Lawyers' Association.

Randy Lee Varner, Thomas B. Schmidt, Donna Louise Fisher, Harrisburg, for Erie Insurance Company.

Thomas L. Isenberg, Harrisburg, Robert E. Kelly, for Pennsylvania Defense Institute.

Joseph John Nypaver, Altoona, for Nancy Hamer.

Dara A. DeCourcy, Pittsburgh, for Federal Kemper Insurance Company.

Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN and SAYLOR, JJ.

OPINION OF THE COURT

Justice, NIGRO.

The question presented in this case is whether there is a right to a jury trial in a bad faith action pursuant to 42 Pa.C.S. § 8371. We hold that there is not.

In the first of these consolidated cases, Appellant Edward Mishoe suffered permanent injuries in an automobile collision in Lebanon County, Pennsylvania. Mishoe recovered the maximum amount of coverage available to him under the other driver's insurance policy, and then requested $600,000.00 in underinsured motorist benefits from his own insurer, Appellee Erie Insurance Company ("Erie"). Erie first offered to settle the matter for $75,000.00 and later increased its offer to $125,000.00. Dissatisfied with both of these offers, Mishoe invoked the arbitration provision in the insurance policy. The arbitrators awarded Mishoe $1,185,000.00, or about nine times the amount of Erie's highest offer. Consequently, Mishoe sued Erie in the Court of Common Pleas of Lebanon County, claiming that Erie had acted in bad faith pursuant to 42 Pa.C.S. § 8371. Mishoe demanded a jury trial, but the trial court struck the jury demand.

In the second case, Appellant Nancy L. Hamer was injured in an automobile collision in Blair County, Pennsylvania. After-receiving the maximum amount of coverage to which she was entitled under the other driver's insurance policy, Hamer sought underinsurance benefits from her own insurer, Appellee Federal Kemper Insurance Company ("Kemper"). Kemper offered to settle the matter for $5,000.00, but Hamer rejected this offer and chose to proceed to arbitration. The arbitrators awarded Hamer $66,000.00, or about thirteen times the amount of Kemper's offer. As a result, Hamer filed suit against Kemper in the Court of Common Pleas of Blair County, claiming that Kemper had acted in bad faith under 42 Pa.C.S. § 8371. Hamer demanded a jury trial, but the trial court refused the jury demand.

On appeal, the Superior Court consolidated the two cases, reversed the trial court orders refusing the jury demands, and remanded the cases for jury trials. Erie and Kemper filed a petition for allowance of appeal and, in a per curiam order, we remanded the matter to the Superior Court for reconsideration in light of our decision in Wertz v. Chapman Township, 559 Pa. 630, 741 A.2d 1272 (1999). 561 Pa. 604, 752 A.2d 401 (2000). On remand, the Superior Court applied Wertz and affirmed the trial court orders, holding that neither section 8371 nor the Pennsylvania Constitution provide for the right to a jury trial for claims arising under section 8371. 762 A.2d 369 (Pa.Super.2000). We granted Mishoe's and Hamer's petitions for allowance of appeal, 566 Pa. 666, 782 A.2d 547 (2001), and now affirm.

Section 8371 of the Judicial Code provides as follows:

§ 8371. Actions on insurance policies

In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:

(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%.

(2) Award punitive damages against the insurer.

(3) Assess court costs and attorney fees against the insurer.

42 Pa.C.S. § 8371. Mishoe and Hamer advance two claims in support of their conclusion that the right to a jury trial applies in cases arising under this section: that the section itself provides for the right to a jury trial, and that the Pennsylvania Constitution guarantees a jury trial for claims under section 8371.

With respect to Mishoe and Hamer's statutory argument, we note that our role in statutory interpretation matters is to give effect to the intent of the General Assembly.¹See 1 Pa.C.S. § 1921; Pantuso Motors, Inc. v. Corestates Bank, N.A., 568 Pa. 601, 798 A.2d 1277, 1281-82 (2002). Thus, if possible, statutes must be construed so that every word is given effect. See 1 Pa.C.S. § 1921(a); Pantuso Motors, 798 A.2d at 1282. In giving effect to the words of the legislature, "we should not interpret statutory words in isolation, but must read them with reference to the context in which they appear." O'Rourke v. Department of Corr., 566 Pa. 161, 778 A.2d 1194, 1201 (2001). Moreover, the words and phrases used in each statute are ordinarily to be construed according to their common usage. See 1 Pa.C.S. § 1903(a); Bowser v. Blom, 569 Pa. 609, 807 A.2d 830, 835 (2002); Pantuso Motors, 798 A.2d at 1282. Where terms have acquired a specialized meaning, however, we must apply those terms according to such connotations. See 1 Pa.C.S. § 1903(a); Pantuso Motors, 798 A.2d at 1282. If, after applying the foregoing principles, we find that a statute is unclear, we may ascertain the General Assembly's intent by considering a variety of other statutory construction factors. See 1 Pa.C.S. § 1921(c); O'Rourke, 778 A.2d at 1201-05. On the other hand, if a statute is "clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit." 1 Pa.C.S. § 1921(b); see also Bowser, 807 A.2d at 835; Ramich v. Worker's Comp. Appeal Bd. (Schatz Elec., Inc.), 564 Pa.656, 770 A.2d 318, 322 (2001).

In Wertz, which prompted our remand to the Superior Court in the instant case, this Court was asked to determine whether the Pennsylvania Human Relations Act ("PHRA") provides for the right to a jury trial. See Wertz, 741 A.2d at 1273. Specifically, the following PHRA provision was at issue:

If the court finds the respondent has engaged in such discriminatory practices charged in the complaint, the court shall enjoin the respondent from engaging in such unlawful discriminatory practice and order affirmative action which may include, but is not limited to, reinstatement or hiring of employes, granting of back pay, or any other legal or equitable relief as the court deems appropriate....

Id. at 1274 (quoting 43 P.S. § 962(c)(3)). In arriving at our conclusion that the foregoing language does not provide for the right to a jury trial, we relied on three criteria. First, we put substantial emphasis on the fact that the PHRA was silent regarding the right to a jury trial. See id. As we explained, "the General Assembly is well aware of its ability to grant a jury trial in its legislative pronouncements," and therefore, "we can presume that the General Assembly's express granting of trial by jury in some enactments means that it did not intend to permit for a jury trial under the PHRA." Id.; cf. Hoy v. Angelone, 554 Pa. 134, 720 A.2d 745, 748 (1998) (the General Assembly's use of specific language to permit punitive damages in numerous statutes reflects intention to allow such damages only when expressly provided). Second, we focused on the General Assembly's use of the term "court" in the PHRA, which we stated was "strong evidence that under the PHRA, it is a tribunal, rather than a jury, that is to make findings and provide relief." Wertz, 741 A.2d at 1274. Finally, we considered it important to our statutory analysis that there was nothing in the legislative history of the PHRA to support the notion that the General Assembly intended for the PHRA to contain a right to a jury trial. See id. at 1274-75.

Significantly, in section 8371, as in the PHRA, the General Assembly is silent regarding the right to a jury trial. See id. at 1274. In addition, the legislature chose to use the term "court" in section 8371, rather than "jury." See id. Finally, there is no legislative history supporting the position that a section 8371 plaintiff is entitled to a jury trial. See id. at 1274-75. Accordingly, the very factors that led us to conclude that there was no right to a jury trial in Wertz are also present in this case. Thus, applying our analysis in Wertz, we conclude that section 8371, like the PHRA, does not provide for the right to a jury trial.²Accord Younis Bros. & Co. v. Cigna Worldwide Ins. Co., 882 F.Supp. 1468, 1474 (E.D.Pa.1994); Thomson v. Prudential Prop. & Cas. Ins. Co., No. 91-4073, 1992 WL 210088 at *3, 1992 U.S. Dist. LEXIS 12627, at *7-*8 (E.D.Pa. Aug. 24, 1992); Godak v. Nationwide Ins. Co., 35 Pa. D. & C. 4th 481, 484 (Com.Pl.1997); see also Fahy v. Nationwide Mut. Fire Ins. Co., 885 F.Supp. 678, 680-81 (M.D.Pa. 1995) (expressing agreement with reasoning of Younis Bros. and Thomson).³

Mishoe and Hamer argue, however, that this case is different from Wertz because, unlike the PHRA, section 8371 is subject to the Judicial Code's definitions section, which states that "court" "[i]ncludes any one or more of the judges of the court who are authorized by general rule or rule of court, or by law or usage, to exercise the powers of the court in the name of the court." 42 Pa.C.S. § 102 (emphasis added). According to Mishoe and Hamer, this inclusive definition is broad enough to include juries because the word "includes" is open-ended, suggesting that meanings other than those specified are also valid. Additionally, they contend that it is illogical to read "court" to mean only "judge" because the Judicial Code separately defines "court" and "judge" and thus assigns independent significance to each term.⁴ See 1 Pa.C.S. § 1921(a) (statutes must be...