1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

10-24-1995

Caplan v Fellheimer

Precedential or Non-Precedential:

Docket 95-1445

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Recommended Citation

"Caplan v Fellheimer" (1995). 1995 Decisions. Paper 280.

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

 

Nos. 95-1445 & 95-1478 

 

MAIA CAPLAN, 

 Appellant in 95-1445 

v. 

FELLHEIMER EICHEN BRAVERMAN & KASKEY; 

DAVID L. BRAVERMAN 

and 

MAIA CAPLAN, 

v. 

FELLHEIMER EICHEN BRAVERMAN & KASKEY; 

DAVID L. BRAVERMAN 

 Vigilant Insurance Company, 

 Appellant in 95-1478 

 

 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. Civil Action No. 94-cv-07506) 

 

Argued August 3, 1995 

 Before: MANSMANN, HUTCHINSON* and ROTH, Circuit Judges

(Opinion Filed October 24, 1995) 

 

 
2 

* The Honorable William D. Hutchinson participated in the oral 

argument and decision in this case, but died before he could join 

or concur in this Opinion. 
3 

William H. Ewing, Esq. (Argued) 

Carl Oxholm, III, Esq. 

Albert G. Bixler, Esq. 

Stephanie A. Philips, Esq. 

Connolly, Epstein, Chicco 

 Foxman, Engelmyer & Ewing 

1515 Market Street 

Suite 900 

Philadelphia, PA 19102 

 Attorneys for Appellant/Appellee Caplan 

Carolyn P. Short, Esq. (Argued) 

Kenneth M. Kolaski, Esq. 

Reed, Smith, Shaw & McClay 

1650 Market Street 

2500 One Liberty Place 

Philadelphia, PA 19103-7301 

 Attorneys for Appellees Fellheimer, Eichen, 

 Braverman and Kaskey, P.C. and David L. 

 Braverman 

Helen M. Braverman, Esq. 

Fellheimer, Eichen, Braverman & Kaskey 

One Liberty Place 

1650 Market Street 

21st Floor 

Philadelphia, PA 19103-7334 

 Attorney for Appellees Fellheimer, Eichen, 

 Braverman & Kaskey, P.C Appellees 

Thomas A. Riley, Jr., Esq. 

Riley, Riper, Hollin & Colagreco 

240 Daylesford Plaza 

P.O. Box 568 

Paoli, PA 19301 

 Attorney for Appellee Braverman 

Robert B. White, Jr., Esq. (Argued) 

Rapp, White, Janssen & German 

1800 JFK Boulevard 

Suite 500 

Philadelphia, PA 19103 

 Attorney for Appellant Vigilant Insurance 

 Company 

 

 

OPINION OF THE COURT 
4 

 

 

ROTH, Circuit Judge: 

 Maia Caplan and Vigilant Insurance Company (Vigilant) 

have brought this expedited appeal from the District Court's 

Order of May 25, 1995. The order declared null and void an 

agreement between Vigilant and Caplan, settling a civil action, 

entitled Caplan v. Fellheimer Eichen Braverman & Kaskey et al., 

which Caplan had brought in the Eastern District of Pennsylvania. 

The May 25 Order also enjoined Caplan from entering into any 

settlement of the action unless defendants, Fellheimer Eichen 

Braverman & Kaskey (FEB&K) and David Braverman, were parties to 

the settlement. 

 The appellees, FEB&K and Braverman, have moved to 

dismiss the appeal on the grounds both that the May 25 Order is 

not an injunction appealable pursuant to 28 U.S.C. § 1292(a)(1) 

and that the order is interlocutory and does not fall within the 

"collateral order" exception to the final judgment rule. 

 Because we find that the May 25 Order is a preliminary 

injunction, we conclude that we do have appellate jurisdiction of 

the appeal. We also conclude that Vigilant is a proper party to 

the appeal. Finally, because we find that the district court 

erred in its assessment of the factors required to grant 

injunctive relief, we will reverse the Order of May 25 and remand 

this action to the district court for further proceedings 

consistent with this opinion. 
3 

I. FACTS

 In January 1995, Caplan filed a five count amended 

complaint against FEB&K, the law firm where she had formerly been 

employed, and against its managing partner Braverman, alleging: 

(1) violations of Title VII of the 1964 Civil Rights Act, by 

creating a hostile environment for women at the firm and by 

sexually harassing Caplan's secretary; (2) negligent infliction 

of emotional distress; (3) tortious interference with existing 

and prospective contracts; (4) intentional infliction of 

emotional distress; and (5) defamation. Defendants tendered the 

amended complaint to Vigilant, their liability insurance carrier. 

In February, Vigilant notified the defendants that it would 

provide a defense for them on all counts of the amended complaint 

but with a full reservation of rights. Vigilant reserved its 

rights because it had determined that the first four counts of 

the amended complaint were not covered under the insurance 

contract.1 

 Defendants filed counterclaims against Caplan, 

asserting malicious abuse of process and civil conspiracy to 

maliciously abuse process. The district court dismissed these 

 

1Under Pennsylvania law, when an insured tenders multiple claims 

to an insurer for defense, the insurer is obligated to undertake 

defense of the entire suit as long as at least one claim is 

potentially covered by the policy. See, e.g., American Contract 

Bridge League v. Nationwide Mut. Fire Ins. Co., 752 F.2d 71, 75 

(3d Cir. 1985). As to indemnification, however, the insurer is 

obligated to its insured only for those damages which are 

actually within the policy coverage. See, e.g., C.J. Heist 

Caribe Corp. v. American Home Assur. Co., 640 F.2d 479, 483 (3d 

Cir. 1981). 
4 

counterclaims as premature because the underlying action had not 

been terminated in defendants' favor. 

 Vigilant's policy with FEB&K allows Vigilant to settle 

suits without FEB&K's consent. The relevant provision of the 

insurance policy reads as follows: 

1. We will defend claims or suits against 

the insured seeking damages to which this 

insurance applies. We may make: 

a. Such investigation of any 

occurrence, claim or suit, and 

b. Such settlement within the 

applicable Amount of Insurance 

available; 

as we think appropriate. 

Appendix (App.) at 248. 

 In April 1995, Caplan and the defendants entered into 

settlement negotiations. Although the parties came close to an 

agreement on monetary damages, they could not agree on other 

issues, including defendants' demand that Caplan issue a public 

retraction as part of any settlement. When they could not agree 

on the wording of the public retraction, negotiations broke down. 

On May 17, attorneys for both parties informed the district judge 

that they could not reach a settlement. 

 At the same time as defendants were negotiating with 

Caplan, they were also negotiating with Vigilant to take over 

full defense and liability for the case in return for a payment 

to them by Vigilant of $190,000, the settlement amount that 

Caplan and defendants appeared to have agreed upon if Caplan 
5 

could be persuaded to issue a retraction. These negotiations 

also broke down on May 17. 

 After the breakdown of negotiations, Vigilant's 

attorney wrote to the district judge on May 17, requesting a 

settlement conference. All counsel agreed that such a conference 

would be helpful. At the request of the district judge, the 

magistrate judge scheduled a conference for May 22. On the 

morning of the conference, the defendants notified counsel for 

Caplan that they would not be attending because one of their 

attorneys was out of the country on vacation. Caplan's counsel 

telephoned the magistrate judge's chambers to report defendants' 

absence. Defendants did not notify Vigilant, and counsel for 

Vigilant appeared at the magistrate judge's chambers to 

negotiate. In addition, Caplan herself did not receive notice 

that defendants and their counsel would be absent. She came up 

from Washington, D.C., for the conference. 

 Although the conference was rescheduled, the magistrate 

judge encouraged those present to discuss the possibility of 

settlement. That same day, Vigilant and Caplan came to an 

agreement under which Caplan would execute a general release of 

all claims in favor of defendants in return for Vigilant's 

payment to Caplan of $200,000. Caplan signed the release and her 

attorneys executed a stipulation of dismissal with prejudice of 

the suit. Both the release and the stipulation were to be held 

by Vigilant pending delivery of the settlement funds. 

 The following day, May 23, defendants filed an 

emergency motion with the district court, seeking an order 
6 

"temporarily restraining and, after hearing, preliminary [sic] 

enjoining Plaintiff and her counsel from taking any action 

whatsoever to consummate the purported 'settlement' arranged by 

Plaintiff and Defendants' insurance carrier without the knowledge 

and authorization of Defendants." App. at 128. In support of 

the motion, defendants asserted that if the injunction were not 

granted, defendants would "suffer irreparable harm" and that the 

"harm to Defendants outweighs the harm the injunctive relief 

sought may cause Plaintiff". The potential harm to defendants, 

cited by them in their memorandum accompanying the motion, 

included the loss of the right to vindication at trial and a 

wrongful and irreparable deprivation of "the agreed to public 

retraction from Plaintiff". Defendants claimed that their 

"legitimate interests will be severely prejudiced if the Court 

does not turn to its inherent equitable powers to grant 

Defendants' motion in order to prevent this injustice." It is 

apparent from defendants' memorandum that their prime interest in 

voiding the settlement between Caplan and Vigilant was to be able 

to bring an action against Caplan for wrongful use of civil 

proceedings or for malicious prosecution. Under Pennsylvania's 

malicious prosecution statute, 42 Pa. Cons. Stat. Ann. § 8351, an 

essential element of such an action is that the underlying 

litigation have terminated favorably to the defendant. See Junod 

v. Bader, 458 A.2d 251 (Pa. Super. 1983) (holding that a 

compromise is not an outcome sufficiently favorable to a 

defendant to entitle him subsequently to bring a malicious 

prosecution action against his accuser). 
7 

 The district court held a hearing on the emergency 

motion at 4:15 p.m. on May 23. Present at the hearing were the 

attorneys for Caplan, for Braverman, for FEB&K, and for Vigilant. 

Defendant Braverman was the only witness. He testified that 

Caplan's suit had caused him and FEB&K embarrassment and loss of 

business in the amount of "tens of thousands of dollars a month" 

and that settlement of the suit without a public retraction from 

Caplan would prevent defendants from clearing their names. 

 Although Vigilant was not a party to the proceeding and 

had not made a motion to intervene, its counsel, Robert B. White, 

was present and wished to make a statement. Counsel for FEB&K 

opposed any appearance by Vigilant on the basis that Vigilant had 

no standing to appear before the court. 

 The court, however, permitted White to speak. White 

explained that the policy language gave Vigilant the unqualified 

right to settle actions in which it provided a defense. He also 

represented that in return for the agreed settlement payment of 

$200,000, Vigilant had obtained a general release from Caplan 

covering all five counts, along with a stipulation of dismissal 

signed by Caplan's counsel. White stated that the case was over 

and no injunction was necessary. 

 In its Order of May 25, the district court granted 

defendants' motion for injunctive relief. In its Memorandum 

Opinion, the court recited the four factors a court must consider 

before granting injunctive relief: 1) reasonable probability of 

success on the merits, 2) irreparable injury, 3) harm to the 

other party, and 4) public interest. 
8 

 In discussing likelihood of success on the merits, the 

court defined the issue as "whether Defendants can have the 

litigation settled for them by their insurance carrier." App. at 

19. The insurance policy at issue was not before the court but 

the court assumed for the sake of argument that the settlement 

clause, as we have quoted it supra, was in the policy. The court 

concluded that under Pennsylvania law an insurance company would 

settle a case in bad faith if it settled "without regard to the 

fact that it may be barring a counterclaim of the insured." App. 

at 20, quoting Bleday v. OUM Group, 645 A.2d 1358, 1363 (Pa. 

Super. 1994), allocatur denied 655 A.2d 981 (1955). The court 

stated that it had to determine "whether Defendants have a 

reasonable likelihood of showing that their rights will be 

prejudiced by a settlement and that Vigilant was aware of this 

when it negotiated a settlement with Plaintiff." App. at 21. 

Because Vigilant was aware that defendants wanted to sue Caplan 

for malicious prosecution and because a settlement would bar such 

an action, the court concluded that defendants had adequately 

demonstrated a reasonable probability of success on the merits of 

their assertion that Vigilant had no authority to settle with 

Caplan on defendants' behalf. 

 Turning to irreparable injury, the court found that 

defendants would be damaged if a settlement eliminated their 

ability to sue Caplan for malicious prosecution. As to harm to 

the other party, the court determined that Caplan would suffer 

from the delay in receiving her $200,000 check but this harm was 
9 

not greater than defendants' harm in losing their opportunity to 

clear their names. 

 Finally, the court found that Caplan and Vigilant went 

behind defendants' back to work out a settlement and that the 

public interest was not served "by taking away Defendants' right 

not to be buried without a fight, either at the settlement table 

or before a jury of their peers." The court concluded that the 

defendants had satisfied the requirements for a preliminary 

injunction and "[d]ue to this showing, a preliminary injunction 

shall be entered." 

 In the accompanying Order, the court decreed that: 

 "the settlement entered into between 

Plaintiff and Defendants' Insurance Carrier 

on May 22, 1995 is hereby declared null and 

void. It is hereby FURTHER ORDERED that 

Plaintiff is enjoined from entering into any 

settlement of this action unless Defendants 

are a party to such settlement." 

Caplan and Vigilant both appealed this order. 

 The district court had jurisdiction of this case under 

28 U.S.C. §§ 1331, 1343, and 1367. Our jurisdiction to hear this 

appeal will be the first issue discussed. 

 II. DISCUSSION

A.

 Defendants-appellees, FEB&K and Braverman, contend 

first that the May 25 Order of the district court is not an 

appealable order, either as an injunction or under the collateral 

order exception to the final judgment requirement. See Cohen v. 

Beneficial Indus. Loan Corp., 337 U.S. 541 (1949). Because we 
10 

find that the order is appealable as an injunction under 28 

U.S.C. § 1292(a)(1),2 we will not go on to consider either the 

collateral order exception or appellants' alternative petition 

for a writ of mandamus. 

 Our review of our jurisdiction to hear this appeal is 

plenary. Anthuis v. Colt Indus. Operating Corp., 971 F.2d 999, 

1002 (3d Cir. 1992). 

 Despite the language of their emergency motion and of 

their argument before the district court and despite the wording 

of the May 25 Order, defendants contend that the order is not an 

injunction nor is it the type of injunctive order which is 

appealable under § 1292(a)(1). They assert instead that "this 

action by the Court was an exercise of its inherent and Rule 16 

supervisory powers to manage its docket and not an injunction." 

This supervisory power, they contend, is the power of the court 

to enforce or to undo a purported settlement. The case cited by 

defendants to support this proposition is Fox v. Consolidated 

Rail Corp., 739 F.2d 929 (3d Cir. 1984), cert. denied 469 U.S. 

1190 (1985), in which we affirmed the district court's refusal to 

reopen Federal Employers' Liability Act (FELA) cases which had 

been brought and then settled in the Pennsylvania state courts. 

 

2Section 1292(a)(1) provides in pertinent part: 

(a) [T]he courts of appeals shall have 

jurisdiction of appeals from: 

(1) Interlocutory orders of the 

district courts of the United States . . 

. granting, continuing, modifying, 

refusing or dissolving injunctions, or 

refusing to dissolve or modify 

injunctions . . .. 
11 

In Fox, we agreed with the district court that settlement 

agreements should be enforced in the same court in which the 

original litigation had taken place. Id. at 932-33. 

 In support of their position that the May 25 Order was 

not an injunction, defendants also cite the case of Saber v. 

FinanceAmerica Credit Corp., 843 F.2d 697 (3d Cir. 1988) in which 

the district court had granted plaintiffs' motion to enforce a 

settlement agreement against defendants. We dismissed the 

appeal, holding that an order to pay money under the settlement, 

a legal remedy, was "not transformed into an injunctive remedy 

merely by a district court's imposition of a time limit on the 

defendants' obligation to pay." Id. at 702-03.3 

 In their efforts to demonstrate that the May 25 Order 

is not an injunction, defendants have also distinguished 

appealable injunctions from injunctions which were incidental to 

a pending action and which were unrelated to the substantive 

issues of the case. See Hershey Foods Corp. v. Hershey Creamery 

Co., 945 F.2d 1272, 1279 (3d Cir. 1991) (holding that orders that 

focus on procedural issues and do not grant or deny part of the 

substantive relief sought by claimant are not immediately 

appealable under § 1292(a)(1)). 

 Caplan and Vigilant, on the other hand, support their 

position that the May 25 Order is an appealable injunction by 

citing the case of Cohen v. Trustees of the Univ of Medicine & 

 

3We did note in Saber that we were leaving undecided the question 

whether an order to pay money, enforceable by a contempt 

citation, was an injunction. Id. at 703. 
12 

Dentistry of N.J., 867 F.2d 1455, 1464 (3d Cir. 1989) in which we 

held that an order by the district court, directing reinstatement 

of a medical school professor, was appealable because it granted 

part of the ultimate relief sought by the claimant. 

 We noted: 

For purposes of 28 U.S.C. § 1292(a)(1), 

injunctions may be affirmatively defined as 

follows: 

Orders that are directed to a party, 

enforceable by contempt, and designed to 

accord or protect "some or all of the 

substantive relief sought by a 

complaint" in more than a [temporary] 

fashion. 

Id. at 1465 n.9 (brackets in original) (quoting Charles A. et 

al., Federal Practice and Procedure, § 3922, at 29 (1977)). We 

distinguished non-appealable injunctive orders as having in 

common the characteristic that "while significant, [they do] not 

either grant or deny the ultimate relief sought by the claimant." 

867 F.2d at 1464. 

 Reviewing the relevant case law, in light of the facts 

of the present case, we conclude that the May 25 Order is an 

appealable order because it does qualify as an injunction under 

28 U.S.C. § 1292(a)(1). The order does not deal with pre-trial 

procedural issues. See Hershey Foods, 945 F.2d at 1279. It does 

not order the legal remedy of specific performance of the payment 

of a sum of money. See Saber, 845 F.2d at 702-03. 

 The May 25 Order does attempt to undo a settlement. 

Even so, Fox, the case cited by appellees to support their 

position that approval of settlement orders is part of a district 
13 

court's supervisory powers, supports only a narrower proposition: 

that a federal court should not try to reopen a settlement 

arrived at in a case which was litigated and settled in state 

court. Fox does not stand for the proposition that federal court 

judges may interject themselves into any particular case before 

them to pass on the propriety of the settlement in that case. 

 Our federal courts have neither the authority nor the 

resources to review and approve the settlement of every case 

brought in the federal court system. There are only certain 

designated types of suits, for instance consent decrees, class 

actions, shareholder derivative suits, and compromises of 

bankruptcy claims where settlement of the suit requires court 

approval. Cf. United States v. City of Miami, 614 F.2d 1322 (5th 

Cir. 1980), reh'g granted 625 F.2d 1310, aff'd in part, vacated 

in part, 664 F.2d 435 (5th Cir. 1981) (en banc): 

 In what can be termed "ordinary 

litigation," that is, lawsuits brought by one 

private party against another private party 

that will not affect the rights of any other 

persons, settlement of the dispute is solely 

in the hands of the parties. If the parties 

can agree to terms, they are free to settle 

the litigation at any time, and the court 

need not and should not get involved. 

* * * 

 Moreover, procedurally it would seem to 

be impossible for the judge to become 

involved in overseeing a settlement, because 

the parties are free at any time to agree to 

a resolution of the dispute by private 

contractual agreement, and to dismiss the 

lawsuit by stipulation. In this situation, 

then, the trial court plays no role in 

overseeing or approving any settlement 

proposals. 
14 

614 F.2d at 1330. See also Gardiner v. A.H. Robins Co., 747 F.2d 

1180, 1189 (8th Cir. 1984) ("[in] lawsuits between private 

parties, courts recognize that settlement of the dispute is 

solely in the hands of the parties."). 

 Defendants argue in opposition to this result that they 

did not consent to this settlement of the lawsuit because it is 

contrary to their interests. It was only when Caplan and 

Vigilant started negotiating "behind defendants' backs" that a 

settlement was reached. They contend that that settlement should 

not be effective since they were not a party to it. What 

defendants overlook, however, is that in their contract with 

Vigilant for insurance coverage, they have authorized Vigilant to 

act as their agent to settle claims or suits as Vigilant thinks 

"appropriate." Vigilant is not required by the policy to obtain 

the defendants' approval of any settlement.4 

 From our examination of facts of the present case, we 

conclude that the May 25 Order is an appealable injunction 

because it did deny the substantive relief sought by Maia Caplan. 

See Cohen, 867 F.2d at 1464. Caplan's suit included a claim for 

damages. She reached an advantageous settlement of that claim 

with defendants' insurance company, which was acting in its 

 

4There are insurance policies which require the insured's consent 

to settlement. Cf. Brion v. Vigilant Ins. co., 651 S.W.2d 183, 

184 (Mo. App. 1983) (holding that provision of insurance contract 

requiring insured's consent prior to settlement is essentially a 

"pride" provision which gives insured control over litigation 

affecting his reputation). Had defendants elected to negotiate 

for a policy under which they had the right to approve settlement 

of litigation for which the insurer provided the defense, their 

position here would be justified. Defendants, however, did not 

choose to purchase such a policy. 
15 

capacity as the agent defendants had authorized to settle claims 

for them. Under the terms of the settlement, Caplan was to 

receive a payment of $200,000 in return for releasing all her 

claims against defendants. By her agreement to the settlement, 

Caplan expressed her satisfaction with the relief she had 

obtained from the entire litigation. The May 25 Order voided the 

settlement and denied Caplan the realization of that relief. 

 In addition, the May 25 Order would appear to be 

enforceable by contempt. It does not say so in so many words but 

it implies as much in its commanding tone: "Plaintiff is 

enjoined from entering into any settlement of this action unless 

Defendants are a party to such settlement." Caplan would defy 

such an order at her peril. 

B.

 Having determined that the May 25 Order is an 

appealable injunction under § 1292(a)(1), we turn to defendants' 

next argument -- that Vigilant does not have standing to appeal 

that order because it was not a party of record before the 

district court. Generally, it is true that those who were not 

parties before the district court may not appeal an order of the 

district court. We have, however, recognized that a non-party 

may bring an appeal in a situation where three conditions are 

met: 1) the equities favor the appeal; 2) the non-party has 

participated in some way in the proceedings before the district 

court; and 3) the non-party has a stake in the outcome of the 

district court proceedings, which is discernable from the record. 

Binker v. Pennsylvania, 977 F.2d 738, 745 (3d Cir. 1992) (citing 
16 

EEOC v. Pan American World Airways, Inc., 897 F.2d 1499 (9th Cir. 

1990), cert. denied, 498 U.S. 815 (1990)). 

 Defendants assert that Vigilant does not qualify under 

the Binker test because it had a chance to intervene in the 

district court but chose not to do so, because its interests are 

adequately represented by Caplan, because it can still negotiate 

a settlement with Caplan as long as the defendants are also 

present, and because it can still negotiate a policy release with 

the defendants. 

 The defendants do acknowledge that Vigilant did 

participate in the hearing on defendants' emergency motion, over 

their objections, and that Vigilant has a stake in the appeal 

"because without a settlement it must continue to fulfill its 

duty to defend." Appellees' Brief at 33 n.8. With these 

concessions, the only Binker factor left for us to determine is 

whether the equities favor permitting Vigilant to join in this 

appeal. We conclude that Vigilant's interest, both specifically 

in this case and generally in upholding its contractual terms 

with its policy holders, is adequate to satisfy the Binker

factors. The fact that Vigilant may still negotiate a settlement 

which meets with defendants' approval should not preclude it from 

asserting its interest in completing the settlement with Caplan 

which it negotiated, pursuant to its contractual agreement with 

defendants. Any other result would require Vigilant to expend 

further defense costs in a suit which it had terminated in a 

manner expressly permitted by the terms of the policy. 
17 

 Our evaluation of the equitiesnding of bad faith in 

settlement has been made against an insurer. Sh and that this 

misconduct on Vigilant's part should trump the provisions of the 

insurance contract. Defendants are correct in their contentions 

that they cannot pursue an action for malicious prosecution 

against Caplan unless Caplan's suit against them is terminated 

favorably to them and that under Pennsylvania law a settlement is 

not considered to be a favorable termination. See, e.g., Junod 

v. Bader, 458 A.2d 251 (Pa. Super. 1983). However, the language 

in FEB&K's policy with Vigilant expressly authorizes Vigilant to 

settle suits as Vigilant deems appropriate. This grant of 

discretion to Vigilant permits it, in its evaluation of a 

settlement, to consider factors such as the likelihood of 

defendants being found liable, the cost to Vigilant of defense of 

the suit, the impression which various parties and witnesses may 

make at the trial, the strength of the evidence, and the nuisance 

value of the claim. Cf. Shuster v. South Broward Hosp. Dist. 

Physicians' Professional Liab. Ins. Trust, 591 So. 2d 174 (Fla. 

1992) (interpreting "deems expedient" provision to grant insurer 

exclusive authority to control settlement, guided by its own 

self-interest, including settlement for nuisance value of the 

claim).5 This type of provision also permits the insurer to 

settle a suit that presents no valid claim against the 

defendants. See, e.g., Marginian v. Allstate Ins. Co., 481 

 

5A policy provision that the insurer may settle a suit it "deems 

expedient" is similar to the "settle when appropriate" provision 

found here. 
18 

N.E.2d 600, 602 (Ohio 1985) (interpreting "deems appropriate" 

provision to give insurer right to settle on behalf of insured 

even if claims are fraudulent or groundless). In view then of 

the construction which has been given to this type of policy 

language, we cannot see that Vigilant acted in bad faith in 

arriving at a settlement with Caplan without first obtaining 

defendants' approval of the terms of settlement. 

 Moreover, the claim by defendants of bad faith on 

Vigilant's part is not directed to that category of actions by an 

insurer where the courts most often have found bad faith by an 

insurer in settlement. It is primarily in cases of an insurer's 

failure or refusal to settle within policy limits that a finding 

of bad faith in settlement has been made against an insurer. See, 

e.g., Gedeon v. State Farm Mut. Auto. Ins. Co., 188 A.2d at 322 

(holding that insurer assumes a duty to act in good faith and is 

derelict where it unreasonably refuses an offer of settlement); 

Marginian, 481 N.E.2d at 603 (finding that a common thread 

running through most bad faith settlement claims is that insurer 

failed to settle within policy limits); 7C John Alan Appleman, 

Insurance Law & Practice (Walter F. Berdal ed., 1979) §§ 4711, 

4712. 

 Cases are much rarer in which an insured claims bad 

faith because the insurer has settled within the policy limits. 

See Jon Epstein, Annotation, Liability of Insurer to Insured for 

Settling Third-Party Claim Within Policy Limits Resulting in 

Detriment to Insured, 18 ALR5th 474 (1994). It is that type of 

claim, arising from a settlement within policy limits, which is 
19 

defendants' basis for arguing that the settlement here should be 

voided because Vigilant's bad faith will prevent defendants from 

recovering from Caplan for their alleged loss of business and 

harm to their reputations. Defendants' position is based on 

Bleday, 645 A.2d 1358. In Bleday, however, the Pennsylvania 

Superior Court held that the insured's complaints of increased 

insurance premiums, loss of business, and harm to reputation 

would not support a cause of action under Pennsylvania law 

against an insurer for bad faith in settling a suit within policy 

limits: 

We cannot find, in a situation where the 

insured freely enters into an insurance 

contract with "deems expedient" language, 

that an insurer has settled a claim in bad 

faith when these types of damages may occur 

prospectively. 

Id. at 1363. Bleday does not then support defendants' position 

that Vigilant's actions in settling with Caplan amount to bad 

faith by Vigilant toward defendants. 

 Vigilant argues that it should not be required to seek 

the consent of the insured to settle in the absence of a 

provision in the policy that such consent was required. 

Vigilant's position in making this contention is supported by 

Pennsylvania law. Indeed, Vigilant might be exposed to a finding 

of unfair or deceptive acts or practices in the business of 

insurance under Pennsylvania's Unfair Insurance Practices Act 

(UIPA), 40 P.S. §§ 1171.1 et seq., if it made a practice of: 

(xv) Refusing payment of a claim solely on 

the basis of an insured's request to do so 

unless: 
20 

(a) The insured claims sovereign, 

eleemosynary, diplomatic, military service, 

or other immunity from suit or liability with 

respect to such claim; 

(b) The insured is granted the right under 

the policy of insurance to consent to 

settlement of claims; or 

(c) the refusal of payment is based upon the 

insurer's independent evaluation of the 

insured's liability based upon all available 

information. 

40 P.S. § 1171.55(a)(xv)(a)-(c) (emphasis added). 

 Section 1171.5(a)(xv)(b) of the UIPA demonstrates that 

the Pennsylvania legislature recognizes the significance of an 

insured's consent to settle provision in an insurance policy. 

Such a consent-to-settle provision protects the professional, 

such as a doctor or a lawyer, who is concerned about his or her 

reputation. See, e.g., Feliberty v. Damon, 527 N.E.2d 261, 262 

(N.Y. 1988); Brion v. Vigilant Ins. Co., 651 S.W.2d 183, 184 (Mo. 

App. 1983). An insured's subjective opposition to settlement for 

reasons such as reputation may impede an insurer from settling 

with a third party. The Pennsylvania legislature has, however, 

established the policy that, unless the insurance contract so 

provides, insurers may not delay settling with third parties on 

the ground that the insured objects to settlement. If Vigilant 

is prevented from settling the present case, it may find itself 

unable to settle other cases involving Pennsylvania insureds who 

are unwilling to consent. Such a practice by Vigilant would 

violate the UIPA. 

 We find, therefore, that the equities favor permitting 

Vigilant to appeal an injunction that would void this settlement. 
21 

Vigilant has a strong interest in upholding the provisions of its 

insurance policy. Moreover, under Bleday, the damages defendants 

are claiming, as a result of bad faith in settlement, are not 

recognized under Pennsylvania law as supporting a claim of bad 

faith by the insured against the insurer. In addition, under the 

UIPA, Vigilant could be found to be engaging in unfair insurance 

practices if it made a practice of refusing to settle claims 

under a "settle when appropriate" policy simply because the 

insured opposed settlement. 

 The district court came to a different conclusion, 

citing Bleday, 645 A.2d 1358, for the proposition that "settle 

when appropriate" language in an insurance policy does not give 

an insurer the power to settle a case when that settlement is in 

bad faith and is contrary to the intent and expectation of the 

parties. Defendants also rely on Bleday to support their 

position that an insurance company cannot settle a suit over the 

objection of the insured if that action would have the effect of 

extinguishing a claim of the insured. 

 The district court's and the defendants' reliance on 

those aspects of Bleday is, however, unpersuasive. In Bleday the 

Pennsylvania Superior Court was considering the insurer's 

authority to settle a suit when such a settlement would 

extinguish an existing counterclaim in that same suit.6 The 

 

6This concept, that settlement and consequent dismissal of an 

action should not result in the dismissal of an existing 

counterclaim, is also recognized in the Federal Rules of Civil 

Procedure. Dismissal of an action in which a counterclaim has 

been filed is barred under Rule 41(a)(2) when the defendant 

objects "[i]f a counterclaim has been pleaded by a defendant 
22 

counterclaim which defendants had filed in the present suit had, 

however, already been dismissed by the district court as 

premature. Vigilant's settlement with Caplan has no effect on 

that no-longer-existent counterclaim. The fact that the 

settlement may have an effect on a future action which defendants 

would like to bring against Caplan is an entirely different issue 

from the one discussed in Bleday. 

 Finally, although Caplan may, as defendants claim, have 

a common interest with Vigilant in enforcing the settlement she 

negotiated, Vigilant's interest is broader than Caplan's because 

of the effect the May 25 Order may have on Vigilant's policies 

with other insureds. 

 We conclude, therefore, that the equities support 

permitting Vigilant to participate in this appeal.7

C.

 Having determined that the May 25 Order is appealable 

and that Vigilant is a proper party to the appeal, we next turn 

to the question of whether the district court properly issued the 

preliminary injunction. We conclude that the district court 

erred in granting the injunction because the court misinterpreted 

the clear language of the insurance policy and because it 

 

prior to the service upon the defendant of the plaintiff's motion 

to dismiss . . . unless the counterclaim can remain pending for 

independent adjudication by the court." 

7Because we have determined that Vigilant may join in this 

appeal, we will not go on to analyze appellants' claim that 

Vigilant was a necessary party to the district court proceedings 

pursuant to Fed. R. Civ. P. 19. 
23 

incorrectly analyzed the factors of irreparable injury and of 

likelihood of success on the merits. 

 We review the district court's granting of the 

injunction to determine whether the court abused its discretion, 

committed an obvious error in applying the law, or made a serious 

mistake in considering the proof. In re Assets of Myles Martin, 

1 F.3d 1351, 1357 (3d Cir. 1993). 

 The first factor we will review is irreparable injury. 

The consideration of the factor of irreparable injury is relevant 

to the granting of a preliminary injunction because the purpose 

of such an injunction is to protect the moving party from 

irreparable injury until the court can render a meaningful 

decision on the merits. See 11A Charles A. Wright et al., 

Federal Practice & Procedure 2D § 2947 (1995). 

 In order to demonstrate irreparable harm 

the [moving party] must demonstrate potential 

harm which cannot be redressed by a legal or 

an equitable remedy following a trial. The 

preliminary injunction must be the only way 

of protecting the [moving party] from harm. 

Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 

801 (3d Cir. 1989). 

 The district court defined the irreparable harm to 

defendants here as the damage to their ability to seek legal 

redress against Caplan in a malicious prosecution action. App. 

at 23. The outcome of the present action will of course 

determine defendants' ability to sue Caplan because they cannot 

do so unless this action terminates favorably to them. The 

termination which defendants fear is a settlement like the one 
24 

negotiated by Caplan and Vigilant. But defendants contracted 

with Vigilant to authorize Vigilant to settle this litigation. 

Because defendants have acted to permit the outcome which they 

find unacceptable, we must conclude that such an outcome is not 

an irreparable injury. If the harm complained of is selfinflicted, it does not qualify as irreparable. See 11A Charles 

A. Wright, Federal Practice & Procedure § 2948.1 pp. 152-53 

(1995). 

 We conclude, therefore, that the harm of which 

defendants complain is not irreparable. Moreover, with this 

finding, the balancing of harms shifts to weigh in favor of Maia 

Caplan. If the present settlement is voided and defendants 

required to agree to any future settlement, Caplan at the least 

faces a delay in receiving the negotiated settlement amount. In 

addition she may be forced to undergo further stress and 

harassment by having to continue in this litigation which she had 

settled favorably to her interests. 

 We next consider the factor of likelihood of success on 

the merits. The district court defined likelihood of success as 

being "not the merits of the litigation between Plaintiff and 

Defendants, but the question whether Defendants can have the 

litigation settled for them by their insurance carrier." App. at 

19. The district court concluded that "Defendants have a 

reasonable probability of success on the merits of their 

assertion that Vigilant has no authority to make this settlement 

with Plaintiff on Defendants' behalf." App. at 22. 
25 

 The language of the policy, however, clearly provides 

for Vigilant to settle suits in which it is defending claims. 

Vigilant is required under Pennsylvania law to defend all claims 

in a suit if at least one claim is covered by the policy. See

American Contract Bridge League, 752 F.2d at 75. Because the 

policy language permits Vigilant to settle a suit it is 

defending, it may do so whether or not all claims in the suit are 

covered by the policy. There is no provision which limits 

settlement of suits to those in which only covered claims are 

being defended by the insurer. It is not unusual for an 

insurance company to make a reservation of rights in defending a 

suit, as to certain of the claims made in the complaint or as to 

coverage periods or as to certain named defendants or as to the 

whole claim because of untimely notification by the insured. 

Under the policy language, the sole determination required of 

Vigilant in settling a suit is that it thinks the settlement is 

appropriate. 

 As we have discussed in Part II. B above, this 

settlement provision should be enforced as expressed in the 

policy. If for reasons of professional reputation an insured 

wishes to control the settlement of cases, policies are available 

which provide that protection. FEB&K did not, however, purchase 

this type of coverage. It is not appropriate for us to amend the 

policy here in order to give FEB&K a type of coverage for which 

it didn't contract. Cf. Brokers Title Co. v. St. Paul Fire & 

Marine Ins. Co., 610 F.2d 1174, 1181 (3d Cir. 1979) ("it is not 

the function of the court to redraft a contract to be more 
26 

favorable to a given party than the agreement he chose to 

enter."). 

 Because we conclude that the policy should be enforced 

as written, we consequently conclude that the defendants did not 

have a likelihood of prevailing in their claim that Vigilant had 

no authority to make the settlement with Caplan on defendants' 

behalf. Defendants cannot succeed in their efforts to void a 

settlement which we have determined was appropriately arrived at 

and which will terminate this case. For this reason, we find 

that the district court erred in its analysis of likelihood of 

success on the merits. 

III. CONCLUSION

 Because we find that the district court improperly 

determined both that defendants would suffer irreparable harm if 

the settlement of the case was permitted to remain in effect and 

that defendants were likely to succeed in their assertion that 

Vigilant was not authorized to settle with Maia Caplan on behalf 

of defendants, we conclude that the court erred in granting the 

relief which it did in its May 25 Order. We will reverse the 

Order of May 25, voiding the settlement and enjoining Caplan from 

entering into any settlement unless defendants were a party to 

that settlement. We will remand the case to the district court 

with directions to dismiss it with prejudice when the stipulation 

of dismissal, signed by Caplan's counsel, has been filed with the 

court.