Justia Contracts Opinion Summaries

This appeal required the Pennsylvania Supreme Court to determine whether a “household vehicle exclusion” contained in a motor vehicle insurance policy violated Section 1738 of the Motor Vehicle Financial Responsibility Law (“MVFRL”), 75 Pa.C.S. 1738, because the exclusion impermissibly acted as a de facto waiver of stacked uninsured and underinsured motorist (“UM” and “UIM,” respectively) coverages. In 2012, Appellant Brian Gallagher was riding his motorcycle when William Stouffer ran a stop sign in his pickup truck, colliding with Gallagher’s motorcycle, causing Gallagher to suffer severe injuries. At the time of the accident, Gallagher had two insurance policies with GEICO; one included $50,000 of UIM coverage, insured only Gallagher’s motorcycle; the second insured Gallagher’s two automobiles and provided for $100,000 of UIM coverage for each vehicle. Gallagher opted and paid for stacked UM and UIM coverage when purchasing both policies. Stouffer’s insurance coverage was insufficient to compensate Gallagher in full. Consequently, Gallagher filed claims with GEICO seeking stacked UIM benefits under both of his GEICO policies. GEICO paid Gallagher the $50,000 policy limits of UIM coverage available under the Motorcycle Policy, it denied his claim for stacked UIM benefits under the Automobile Policy. GEICO based its decision on a household vehicle exclusion found in an amendment to the Automobile Policy. The exclusion states as follows: “This coverage does not apply to bodily injury while occupying or from being struck by a vehicle owned or leased by you or a relative that is not insured for Underinsured Motorists Coverage under this policy.” According to Gallagher, by denying him stacked UIM coverage based upon the household vehicle exclusion, GEICO was depriving him of the stacked UIM coverage for which he paid. The Pennsylvania Supreme Court held the household vehicle exclusion violated the MVFRL, and vacated the Superior Court’s judgment, reversed the trial court’s order granting summary judgment in favor of GEICO, and remanded to the trial court for further proceedings. View "Gallagher v. GEICO" on Justia Law

This case was one in a longstanding dispute between major health services providers operating in Western Pennsylvania: UPE, a/k/a Highmark Health and Highmark, Inc. (collectively, Highmark) and UPMC (University of Pittsburgh Medical Center). Highmark and UPMC separately entered into Consent Decrees with the Commonwealth's Office of Attorney General (OAG). In this case, an issue arose concerning the obligations imposed by the Consent Decrees relative to UMPC's attempt to terminate ten hospital Medicare Acute Care Provider Agreements it had with Highmark. Pertinent here, UPMC's Consent Decree required it to treat Highmark's Medicare Advantage Plan consumers as in-network through the end date of the Consent Decree. UPMC allowed Provider Agreements with Highmark to renew annually in satisfaction of its in-network obligation. UPMC informed Highmark in accordance with the notice provisions, it would terminate the Provider Agreements on December 31, 2018, but would nonetheless continue to comply with all terms and obligations of those agreements through June 30, 2019, pursuant to the Decree runout provision. Highmark filed for an injunction and to hold UPMC in contempt. The Commonwealth granted OAG's petition to enforce, rejecting UPMC's contention that the six-month runout provision of the Provider Agreements satisfied its obligation to remain in "contract" with Highmark. The Pennsylvania Supreme Court reversed, finding the runout provision of the Provider Agreement satisfied UPMC's obligation to contract for in-network access to its facilities for Highmark's MA Plan subscribers through June 30, 2019. View "Pennsylvania v. UPMC, et al" on Justia Law

Dr. Susan Kegerise sought reinstatement as superintendent of the Susquehanna Township School District, as well as back pay and benefits. In January 2010, Kegerise was appointed superintendent. In 2013, the District’s Board of Directors extended Kegerise’s contract for a three-year term after agreeing, at Kegerise’s request, to include a resignation provision in her employment contract. Kegerise alleged this resignation clause was necessary to protect her interests in light of several Board members’ inappropriate behavior. Kegerise further alleged that, this clause notwithstanding, and in an effort to force her resignation, several Board members persisted in hostile actions including, inter alia, physical intimidation and verbal abuse, even after the contract was executed. In 2014, Kegerise informed the Board that she was receiving medical care and would be unable to return to work until April 21, 2014. While Kegerise was on medical leave, the Board received several letters from Kegerise’s counsel asserting that Kegerise had been constructively discharged. The Board responded by affirming that Kegerise remained the Superintendent of Schools, and that “[h]er time away from the District since that day has been recorded as sick leave derived from Dr. Kegerise’s pre-existing sick leave accumulation.” On April 17, 2014, Kegerise filed a complaint at the United States District Court, alleging, inter alia, that the Board had constructively discharged her. Kegerise asserted that, “although no formal termination has taken place, [she] cannot perform the job duties of Superintendent,” due to the Board’s behavior toward her. Kegerise sought damages in excess of six million dollars, including compensatory and economic damages “for loss of contractual salary and other emoluments of employment” and consequential damages for “damage to professional reputation and loss of future salary as an educational administrator.” The trial court held an evidentiary hearing to determine whether Kegerise had intended to resign when she filed her federal complaint, after which, it ordered the Board to reinstate Kegerise to her position with back pay and benefits. The Board appealed to the Commonwealth Court; the Commonwealth Court affirmed the trial court’s grant of mandamus. The Pennsylvania Supreme Court, however, found Kegerise did not demonstrate to a clear legal right to reinstatement. Accordingly, the orders reinstating her as superintendent with back pay and benefits was reversed. View "Kegerise v. Delgrande, et al," on Justia Law

This matter arose from a wrongful death lawsuit filed by the Estate of Richard Eazor deriving from a motor vehicle accident. The Eazor Estate was represented by Attorney William Weiler, Jr., who entered his appearance in the matter in March 2005. By December 1, 2005, Weiler became associated with Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. Weiler brought the Eazor Litigation with him and Meyer Darragh attorneys worked on the Eazor Litigation for over seventy hours over a nineteen-month period. In May 2007, Weiler resigned from Meyer Darragh. At that time, Meyer Darragh understood it would continue as lead counsel in the Eazor Litigation along with Weiler at his new firm. Written correspondence at the time of Weiler’s separation from Meyer Darragh indicated that Meyer Darragh would receive two-thirds of the attorneys’ fees arising out of the Eazor Litigation, and Weiler would retain one- third of the fees. In an earlier decision in this case, the Pennsylvania Supreme Court held Meyer Darragh, as predecessor counsel, was not entitled to breach of contract damages against successor counsel, the Law Firm of Malone Middleman, P.C., where a contract regarding counsel fees did not exist between the two firms. The Supreme Court granted discretionary review nunc pro tunc to determine whether Meyer Darragh was entitled to damages in quantum meruit against Malone Middleman, where the trial court initially held such damages were recoverable, but the Superior Court reversed. After review, the Supreme Court reversed the Superior Court and remanded to the trial court for reinstatement of its award of damages in quantum meruit to Meyer Darragh against Malone Middleman. View "Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C." on Justia Law

This matter arose from a wrongful death lawsuit filed by the Estate of Richard Eazor deriving from a motor vehicle accident. The Eazor Estate was represented by Attorney William Weiler, Jr., who entered his appearance in the matter in March 2005. By December 1, 2005, Weiler became associated with Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. Weiler brought the Eazor Litigation with him and Meyer Darragh attorneys worked on the Eazor Litigation for over seventy hours over a nineteen-month period. In May 2007, Weiler resigned from Meyer Darragh. At that time, Meyer Darragh understood it would continue as lead counsel in the Eazor Litigation along with Weiler at his new firm. Written correspondence at the time of Weiler’s separation from Meyer Darragh indicated that Meyer Darragh would receive two-thirds of the attorneys’ fees arising out of the Eazor Litigation, and Weiler would retain one- third of the fees. In an earlier decision in this case, the Pennsylvania Supreme Court held Meyer Darragh, as predecessor counsel, was not entitled to breach of contract damages against successor counsel, the Law Firm of Malone Middleman, P.C., where a contract regarding counsel fees did not exist between the two firms. The Supreme Court granted discretionary review nunc pro tunc to determine whether Meyer Darragh was entitled to damages in quantum meruit against Malone Middleman, where the trial court initially held such damages were recoverable, but the Superior Court reversed. After review, the Supreme Court reversed the Superior Court and remanded to the trial court for reinstatement of its award of damages in quantum meruit to Meyer Darragh against Malone Middleman. View "Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C." on Justia Law

The Third Circuit Court of Appeals certified a question of Pennsylvania law to the Pennsylvania Supreme Court. Appellant Jobe Danganan’s contracted with Appellee Guardian Protection Services (“Guardian”), a Pennsylvania-headquartered business, for home security equipment and services at his then-home in Washington, D.C. The contract signed by Appellant, a standardized form agreement employed by Guardian, contained, inter alia, a choice-of-law provision, stating that the “Agreement shall be governed by the laws of Pennsylvania.” Another clause required that any suit or legal proceeding pertaining to the Agreement be brought in the other party’s district or county of residence and mandated that the parties consent to jurisdiction in such venue. Prior to the expiration of the Agreement’s purported three-year initial term, Appellant moved to California and sold his Washington, D.C. house, notifying Guardian of his intent to cancel the contract and related home protection services. However, Guardian continued to bill Appellant, citing provisions of the Agreement that it claimed authorized ongoing charges through the contract’s term, regardless of cancellation attempts. Appellant filed a complaint in the Court of Common Pleas of Philadelphia County on behalf of himself and a putative class of nationwide plaintiffs who were subject to the same form contract. His claims for relief were predicated exclusively on Pennsylvania statutory grounds, namely, the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL") and Pennsylvania’s Fair Credit Extension Uniformity Act. The matter was removed to federal district court, and Guardian moved to dismiss, arguing that Appellant had not, pursuant to the UTPCPL, demonstrated a "sufficient nexus" between the Commonwealth and the improper conduct alleged in the complaint. In response to the first certified question, the Pennsylvania Supreme Court held that a non- Pennsylvania resident may bring suit under the UTPCPL against a Commonwealth-headquartered business based on transactions that occurred out-of-state. Furthermore, the Court concluded that its answer to the first issue eliminated the predicate to the second question certified for review. The matter was thus returned to the Third Circuit Court of Appeals. View "Danganan v. Guardian Protection Svc." on Justia Law

Appellant SCF Consulting, LLC lodged a civil complaint against Appellee, the law firm of Barrack, Rodos & Bacine, in the common pleas court. Appellant averred that it had maintained a longstanding oral consulting agreement with the law firm, which the firm purportedly breached in 2014. According to Appellant, the arrangement was for the solicitation of institutional investors to participate in securities class actions, and remuneration was to be in the form of a two-and-one-half to five-percent share of the firm’s annual profits on matters “originated” by Appellant’s principal or on which he provided substantial work. Appellant claimed the consulting agreement qualified as an express exception to the anti-fee-splitting rule for an employee “compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.” Alternatively, Appellant argued Appellee’s attempt to invoke public policy as a shield was an “audacious defense” which, if credited, would perversely reward the law firm by allowing it to profit from its own unethical conduct. The county court agreed with Appellee’s position concerning both the nonapplicability of the exception to Rule 5.4(a)’s prohibition and the unenforceability of the alleged agreement. The Pennsylvania Supreme Court concluded the ultimate outcome of this case might turn on factual findings concerning Appellant’s culpability, or the degree thereof, relative to the alleged ethical violation. The Court held only that the contract cause of action was not per se barred by the purported infraction on Appellee’s part and, accordingly, the county court’s bright-line approach to the unenforceability of the alleged consulting agreement should not have been sustained. View "SCF Consulting, LLC. v. Barrack Rodos & Bacine" on Justia Law

The Pennsylvania Supreme Court granted allowance of appeal in this case to determine when the statute of limitations begins to run on an uninsured motorist (UM) claim under an insurance policy. Specifically, the issue reduced to whether the statute of limitations begins to run on an insured’s ability to initiate a court action to enforce a UM claim in a policy containing an arbitration agreement. The Superior Court held that, for the purpose of UM and underinsured motorist (UIM) claims, the statute of limitations begins to run when a claimant injured in an automobile accident first learns that the other driver is uninsured or underinsured. However, the Supreme Court determined this conclusion was not adequately grounded in the pertinent statutory text, prevailing statute of limitations doctrine, or significant public policy concerns. Accordingly, the Court held that statute of limitations principles attending contract claims apply, and that the running of the statute was commenced upon an alleged breach of a contractual duty, which in this case would be occasioned by the insurer’s denial of coverage or refusal to arbitrate. The Court therefore reversed the Superior Court’s order to the contrary. View "Erie Insurance Exchange v. Bristol" on Justia Law

In this discretionary appeal, and in a matter of first impression, the Pennsylvania Supreme Court considered the elements of a bad faith insurance claim brought pursuant to Pennsylvania’s bad faith statute, 42 Pa.C.S. section 8371. In 1992, while working for the United States Postal Service (“USPS”) Appellee LeAnn Rancosky purchased a cancer insurance policy as a supplement to her primary employer-based health insurance. The cancer policy was issued by Appellant Conseco Health Insurance Company (“Conseco”). To pay for the policy, Rancosky’s employer automatically deducted bi-weekly payments of $22.00 from her paycheck. The policy contained a waiver-of premium provision, which excused premium payments in the event Rancosky became disabled due to cancer. In 2003, Rancosky was diagnosed with ovarian cancer and underwent surgery and chemotherapy. Though, Rancosky did not return to her job with USPS following her hospital admission, she remained on her employer’s payroll for several months because she had accrued unused vacation and sick days. Consequently, Conseco continued to receive payroll deducted premiums from Rancosky until June 24, 2003, when Rancosky went on disability retirement. Premium payments were made in arrears; the final premium payment extended coverage under her policy to May 24, 2003. Unbeknownst to Rancosky, her physician statement inaccurately specified her date of disability as beginning on April 21, 2003, rather than on February 4, 2003. 5 Believing that the premiums had been waived and that no further premiums were due on the policy because of her disability from cancer, Rancosky’s final premium payment came from her June 24, 2003, payroll-deducted premium. Over the next two years, as Rancosky experienced several recurrences of her cancer, she continued to submit claims to Conseco. Conseco eventually started denying Rancosky’s claims for further benefits based upon her failure to pay premiums. The Supreme Court adopted the two-part test articulated in Terletsky v. Prudential Property & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994) in order for a plaintiff to recover in a bad faith action; proof of an insurance company’s motive of self-interest or ill-will is not a prerequisite to prevailing in a bad faith claim under Section 8371, as was argued by Appellant. The Court affirmed the superior court, which partially vacated the trial court’s judgment and remanded for further proceedings on Appellee’s bad faith claim. View "Rancosky v. Washington National Ins. Co." on Justia Law

No fiduciary duty arises in a consumer transaction for the purchase of a whole life insurance policy based upon the advice of a financial advisor where the consumer purchasing the policy does not cede decision -making control over the purchase to the financial advisor. In 1995, Bryan Holland, a financial advisor for IDS Life Insurance Corporation, made an unsolicited telephone contact, a "cold call," to Eugene and Ruth Yenchi. At a subsequent meeting and for a fee of $350, Holland presented the Yenchis with a financial management proposal containing a notice that it had been prepared by "your American Express financial advisor" (Holland) and that "[alt your request, your American Express financial advisor can recommend products distributed by American Express Financial Advisors and its affiliates as investment alternatives for existing securities." The Proposal offered the Yenchis a number of general recommendations, including that they monitor monthly expenses, consolidate their debt, consider various savings plans, consolidate current life insurance policies into one policy, review long-term care coverage, keep accurate records for tax purposes (medical expenses and charitable contributions), transfer 401(k) funds into mutual funds, and continue estate planning with an attorney and their financial advisor. The Yenchis implemented some of these recommendations. In 2000, the Yenchis had their portfolio independently reviewed. Through this process, they were advised that Holland’s recommendations would be financially devastating to the Yenchis. In April 2001, the Yenchis sued Holland and his company, American Express Financial Services Corporation, American Express Financial Advisors Corporation, and IDS Life Insurance Company. The Yenchis' asserted claims of negligence/willful disregard, fraudulent misrepresentation, violation of the Uniform Trade Practices and Consumer Protection Law ("UTPCPL"), bad faith, negligent supervision, and breach of fiduciary duty. Of relevance here, with respect to the breach of fiduciary duty claim, the trial court held that no fiduciary relationship was established between the Yenchis and Holland because the Yenchis continued to make their own investment decisions. The Pennsylvania Supreme Court concluded that, consistent with its jurisprudence, no fiduciary duty arose in such a situation. Consequently, the Court reversed the Superior Court's decision to the contrary. View "Yenchi v. Ameriprise Financial" on Justia Law