Opinion ID: 2320868
Heading Depth: 1
Heading Rank: 3

Heading: The Birth Center v. St. Paul The Bad Faith Action

Text: On June 3, 1994, The Birth Center sued St. Paul, alleging that St. Paul breached its fiduciary duty to The Birth Center, its implied covenant of good faith, and its contract. The Birth Center also claimed that St. Paul's failure to settle Norris within its policy limits constituted negligence, reckless disregard for the rights of Birth Center, willful and wanton behavior and bad faith pursuant to the Bad Faith Statute, 42 Pa.C.S.A. § 8371. On May 3, 1996, the trial began. The Birth Center claimed that St. Paul's refusal to engage in reasonable settlement negotiations damaged its business, reputation and credit. Appellee's Br. at. 11. After the trial, the jury found, by clear and convincing evidence, that St. Paul acted in bad faith and that its actions were a substantial factor in bringing about harm to The Birth Center totaling, $700,000.00 in compensatory damages. The jury did not award punitive damages. St. Paul moved for judgment notwithstanding the verdict. On February 7, 1997, the trial court [6] granted St. Paul's motion. The trial court concluded that St. Paul's payment of the excess verdict nullified Birth Center's bad faith claim, that compensatory damages are not available pursuant to 42 Pa.C.S.A. § 8371, and that, because it believed that it had not charged the jury on the breach of contract claim, that The Birth Center could not recover compensatory damages based on that theory. See The Birth Center v. St. Paul Companies, Inc., No. 94-6492, slip op. at 9 (C.P. Delaware County Aug 11, 1997). The trial court denied The Birth Center's motion for reconsideration. On June 10, 1997, the trial court entered judgment in favor of St. Paul. On appeal, the Superior Court determined that the payment of the excess verdict did not preclude the award of compensatory damages and that the trial court had charged the jury on breach of contract. Therefore, it reversed the decision of the trial court, reinstated the jury award, and remanded the case for a determination of The Birth Center's entitlement to interest, attorney's fees and costs pursuant to 42 Pa.C.S.A. § 8371. [7] St. Paul appealed the Superior Court's decision to this Court.