Court Opinion

ID: 6262517
Source: CourtListenerOpinion
Date Created: 2022-02-17 22:13:12.07415+00
Date Added: 2024-06-11T08:59:44.627422
License: Public Domain

LARSEN, Justice,
dissenting.
I dissent.
*512Acting in bad faith, insinuating fraud, the insurance company denied the policyholder’s claim after the policyholder’s boat was damaged in a storm. Policyholder, a police officer, suffered mental distress as a result.1
These facts give rise to a tort — bad faith refusal to make payments due under an insurance policy — wholly independent of any cause of action in contract, and damages for mental distress are recoverable. See Gruenberg v. Aetna Insurance Co., 9 Cal.3d 566, 510 P.2d 1032, 108 Cal.Rptr. 480 (1973). Traditional contract remedies are inadequate in this area. See Mann & Keintz, Judicial Approaches to the Awarding of Extra-Contract Damages for Breach of Insurance Contracts, 661 Ins.L.J. 95 (1978). See also Keintz & Mann, Extra-Contract Damages for Breach of Insurance Contacts: The Statutory Approach, 660 Ins.L.J. 7 (1978). A tort action assures a policyholder more complete recovery, protects a policyholder with limited resources who would otherwise be precluded from suit because of small contract claims, and deters the insurance company from acting in bad faith. See Comment, Extracontractual Insurance Damages: Pennsylvania Insureds Demand a “Piece of the Rock”, 85 Dick.L.R. 321, 330-31 (1981).
The policyholder should recover for mental distress caused by the insurance company’s bad faith conduct because insurance is purchased to provide peace of mind. See Crisci v. Security Insurance Co., 66 Cal.2d 425, 433-34, 426 P.2d 173, 179, 58 Cal.Rptr. 13, 19 (1967). Insurance companies exploit this concern in their advertising:
The insurer’s promise to the insured to “simplify his life,” to put him “in good hands,” to back him with “a piece of *513the rock” or to be “on his side” hardly suggests that the insurer will abandon the insured in his time of need.
D’Ambrosio v. Pennsylvania National Mutual Casualty Insurance Co., 262 Pa.Super. 331, 342-43, 396 A.2d 780, 786 (1978) (Spaeth, J., opinion in support of reversal). Moreover, there is authority in Pennsylvania law for recovering mental distress damages in the similar area of landlord-tenant relations. See Fair v. Negley, 257 Pa.Super. 50, 390 A.2d 240 (1979) ; Beasley v. Freedman, 256 Pa.Super. 208, 389 A.2d 1087 (1978). Finally, Pennsylvania should join the numerous jurisdictions which have recently recognized tort actions based on an insurance company’s bad faith conduct.2
The majority opinion suggests that this case is covered by the Unfair Insurance Practices Act [hereinafter U.I.P.A.], Act of July 22, 1974, P.L. 589, No. 205, § 1 et seq., 40 P.S. § 1171.1 et seq. (Supp. 1981-82), and that the sanctions authorized by the U.I.P.A. — administrative penalty, injunction, and fines (40 P.S. §§ 1171.9, 1171.10, 1171.11) — are adequate to deter bad faith conduct. The majority concludes that it is unnecessary to recognize an independent tort action. In doing so, the majority (1) overlooks statutory construction principles, and (2) without any factual basis whatsoever, assumes that the U.I.P.A. is effective.
*514First, the words of the U.I.P.A. clearly demonstrate that the legislature never intended to limit any other remedies available against the insurance company:
§ 1171.13. Provisions of act additional to existing law
The powers vested in the Commissioner by this act are additional to any other powers to enforce any penalties, fines or forfeitures authorized by law with respect to the methods, acts and practices declared to be unfair and deceptive.
Act of July 22,1974, P.L. 589, No. 205, § 13, 40 P.S. § 1171.13 (Supp. 1981-82). We can reasonably infer that the legislature did not intend to preclude individual recovery in tort. See Dozer Agency, Inc. v. Rosenberg, 403 Pa. 237, 169 A.2d 771 (1961) (Unfair Insurance Practices Act of 1947, predecessor of the U.I.P.A., did not preclude individual causes of action). Furthermore, the Statutory Construction Act of 1972 provides:
§ 1929. Penalties no bar to civil remedies
The provision in any statute for a penalty or forfeiture for its violation shall not be construed to deprive an injured person of the right to recover from the offender damages sustained by reason of the violation of such statute.
1 Pa.C.S.A. § 1929 (Purdon). The U.I.P.A. sanctions cannot preclude the policyholder’s recovery in tort. See Pearl Assurance Co. v. National Insurance Agency, 150 Pa.Super. 265, 28 A.2d 334 (1942), aff’d on rehearing, 151 Pa.Super. 146, 30 A.2d 333 (1943).
Second, the majority’s conclusion “that the Unfair Insurance Practices Act serves adequately to deter bad faith conduct. . . ” [p. 970], is unsupported. There is no evidence that the U.I.P.A. has been applied in this case. Moreover, any sanctions imposed by the U.I.P.A. would do absolutely nothing to compensate the policyholder. Finally, the fines are inadequate to deter bad faith conduct: while the policyholder in this case alleges damages in excess of $10,000, the U.I.P.A. only imposes a $5,000 penalty for each violation (40 *515P.S. § 1171.11(1)) — a bargain from the company’s point of view.
Consequently, I would reverse the order of the Superior Court and reinstate the policyholder’s tort claim.
KAUFFMAN, J., joins in this dissenting opinion.

. In deciding the insurance company’s preliminary objections in this case, the allegations in the policyholder’s complaint and all reasonable inferences therefrom must be taken to be true. See Danson v. Casey, 484 Pa. 415, 399 A.2d 360 (1979). The complaint must be liberally construed. See Interstate Traveller Services, Inc. v. Commonwealth, Department of Environmental Resources, 486 Pa. 536, 406 A.2d 1020 (1979). The majority’s conclusion that the complaint fails to make a claim of bad faith conduct reflects an illiberal reading of the complaint.

. These jurisdictions include: United Services Automobile Association v. Werley, 526 P.2d 28 (Alaska 1974); John Hancock Mutual Life Insurance Co. v. McNeill, 27 Ariz.App. 502, 556 P.2d 803 (1976); Gruenberg v. Aetna Insurance Co., 9 Cal.3d 566, 510 P.2d 1032, 108 Cal.Rptr. 480 (1973); Grand Sheet Metal Products v. Protection Mutual Insurance Co., 34 Conn.Supp. 46, 375 A.2d 428 (Super.Ct. 1977); Escambia Treating Co. v. Aetna Casualty & Surety Co., 421 F.Supp. 1367 (N.D. Fla. 1976); Ledingham v. Blue Cross Plan, 29 Ill.App.3d 339, 330 N.E.2d 540 (1975), rev’d on other grounds, 64 Ill.2d 338, 1 Ill.Dec. 75, 356 N.E.2d 75 (1976); Amsden v. Grinell Mutual Reinsurance Co., 203 N.W.2d 252 (Iowa 1972); Standard Life Insurance Co. of Indiana v. Veal, 354 So.2d 239 (Miss. 1978); United States Fidelity & Guarantee Co. v. Peterson, 91 Nev. 617, 540 P.2d 1070 (1975); State Farm General Insurance Co. v. Clifton, 86 N.M. 757, 527 P.2d 798 (1974); Corwin Chrysler-Plymouth, Inc. v. Westchester Fire Insurance Co., 279 N.W.2d 638 (N.D. 1979); Kirk v. Safero Insurance Co., 28 Ohio Misc. 44, 273 N.E.2d 919 (1970); Christian v. American Home Assurance Co., 577 P.2d 899 (Okl. 1977); Anderson v. Continental Insurance Co., 85 Wis.2d 675 271 N.W.2d 368 (1978).