Court Opinion

ID: 4445846
Source: CourtListenerOpinion
Date Created: 2019-10-10 16:09:52.193483+00
Date Added: 2024-06-11T14:02:35.554889
License: Public Domain

J-A08011-19

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 TIMOTHY A. MOHNEY                         :   IN THE SUPERIOR COURT OF
                                           :        PENNSYLVANIA
                    Appellant              :
                                           :
                                           :
              v.                           :
                                           :
                                           :
 AMERICAN GENERAL LIFE                     :   No. 760 WDA 2018
 INSURANCE COMPANY, AS                     :
 SUCCESSOR BY MERGER TO                    :
 AMERICAN GENERAL ASSURANCE                :
 COMPANY, AS SUCCESSOR IN                  :
 INTEREST TO U.S. LIFE CREDIT              :
 INSURANCE COMPANY                         :

              Appeal from the Judgment Entered May 14, 2018
             In the Court of Common Pleas of Armstrong County
                   Civil Division at No(s): 1995-0764-Civil

BEFORE: PANELLA, P.J., STABILE, J., and McLAUGHLIN, J.

MEMORANDUM BY PANELLA, P.J.:                       FILED OCTOBER 10, 2019

      Timothy A. Mohney, appeals from the judgment entered after the trial

court entered a non-jury verdict against Mohney’s insurance bad faith claims

against Appellee, American General Life Insurance Company (“American”).

Mohney had sued American as a successor company to U.S. Life Credit

Insurance Company (“U.S. Life”), based upon allegations of insurance bad

faith against U.S. Life. The trial court ruled that Mohney had failed to carry his

burden of proving the claims by clear and convincing evidence. Mohney raises

six issues on appeal, which can be loosely grouped into two categories: (1)

challenges to the trial court’s decisions on discovery matters, and (2)
J-A08011-19

challenges to the trial court’s evidentiary rulings. After careful review, we

affirm.

      The torturous course of the proceedings before the trial court were

protracted and problematical. Mohney’s original complaint involved multiple

claims based upon numerous theories and was dismissed after U.S. Life filed

preliminary objections. After the trial court granted, in part, U.S. Life’s

preliminary objections to Mohney’s first amended complaint, Mohney filed a

second amended complaint, which forms the basis for the proceedings

currently under review.

      After this Court twice remanded this case to the trial court for further

proceedings, the only remaining issue is based upon Mohney’s claim that U.S.

Life exercised bad faith in denying his claim for total disability benefits under

his insurance policy with U.S. Life. This claim had been twice dismissed by the

trial court, once pre-trial and another after trial. In both instances, this Court

reversed and remanded for further proceedings

      A second bench trial was held in September 2017, presided over by then

Senior Judge William J. Ober (retired). Senior Judge Ober entered a verdict

following the trial, finding that Mohney did not prove that U.S. Life, American’s

predecessor, had knowingly or recklessly “disregarded the lack of a reasonable

basis for its” denial and termination of the payment of credit disability benefits.

Adjudication and Verdict, 12/20/17 at 2-3.

                                       -2-
J-A08011-19

     After Mohney’s filed post-trial motions, the case was reassigned to the

Honorable Chase G. McClister of the Court of Common Pleas of Armstrong

County, Pennsylvania, because Senior Judge Ober had retired. On May 4,

2018, Judge McClister denied the post-trial motions. Later, Judge McClister

filed a comprehensive Memorandum Opinion, comprised of 16 pages, on July

20, 2018, fully explaining the reasons supporting Senior Judge Ober’s verdict.

     Appellant raises six issues on appeal:

      1. Reversal of discovery sanctions tends to make it more
         advantageous for the offending party to withhold
         information. Instantly, long after expert witness
         disclosures were required, just before trial, Defendant
         disclosed its insurance expert. The first trial judge found
         Defendant's offending conduct was willful, intentional and
         ongoing, striking Defendant's insurance expert. After
         appeal and remand, Defendant sought reversal of the
         discovery sanctions, which the third trial judge granted.
         Was it error for the third trial judge to reverse the sanctions
         entered by the first trial judge?

      2. An insurer must have a reasonable basis to terminate
         disability benefits. This Court previously determined that
         Defendant unreasonably relied upon an equivocal medical
         opinion to terminate Mohney's [d]isability [b]enefits.
         Defendant's expert rejected this finding by opining that
         reliance on the equivocal medical opinion was proper
         according to industry standards. The [t]rial [c]ourt
         accepted this testimony and found that Defendant did not
         act recklessly or with a knowing disregard of its lack of a
         reasonable basis. Did the trial court err in finding that
         Defendant's reliance upon the equivocal medical opinion
         complied with industry standards?

      3. During    claims  handling,   if  an    insurer  makes
         misrepresentations to the insured, the insurer violates
         industry standards. The misrepresentations are evidence

                                      -3-
J-A08011-19

         that the investigation of the claim was neither honest nor
         objective. This Court determined that Defendant made
         misrepresentations to the insured during the investigation.
         The trial court determined that Defendant's claims
         handling complied with industry standards and therefore
         Defendant's conduct could neither be reckless nor
         knowing. Did the trial court err?

      4. Expert Opinions must be supported by credible facts and
         not be based upon speculation. Defendant's expert opined
         that Defendant met industry standards by providing
         adequate training on legal interpretations of policy terms,
         and by providing the adjusters with direction as to when
         they should seek guidance (i.e., legal research) from the
         available staff attorneys. Defendant's expert relied upon
         the adjuster's testimony. The adjuster's testimony about
         training was vague and superficial. Did the trial court err
         by relying upon the unsupported opinion of Defendant's
         expert?

      5. The analysis of an insurer bad faith claim is dependent on
         the conduct of the insurer, not its insured. Instantly, this
         Court held: "on remand, evidence of Mohney's post-denial
         conduct should not be admitted." During the second bad
         faith trial, Defendant was permitted, over Plaintiff's
         objection, to introduce evidence of post-denial conduct of
         the Plaintiff. Did the trial court err by admitting evidence
         which this court previously determined to be inadmissable?

      6. A reasonable investigation to determine whether a claim
         should be paid requires the insurer to review all available
         information whenever it is received. Bad faith conduct can
         occur before, during, and after litigation. Plaintiff sought
         discovery to learn what investigation Defendant conducted
         on the disability claim based upon information the insurer
         received after the breach of contract claim was filed,
         litigated, and appealed. The trial court refused to compel
         Defendant to respond to this requested discovery. Did the
         trial court err?

Appellant’s Brief, at 5-6 (footnote omitted).

                                     -4-
J-A08011-19

      In reviewing the    outcome    of   a nonjury trial,   we   are   limited   to

determining whether the trial court's factual findings are supported by

competent evidence, and whether the court properly applied the pertinent

law. See Prestige Bank v. Investment Properties Group, Inc., 825 A.2d

698, 700 (Pa. Super. 2003). “[A]bsent an abuse of discretion, the reviewing

court is bound by the trial court's credibility determinations.”         De Lage

Landen Financial Services, Inc. v. M.B. Management Co., Inc., 888 A.2d

895, 898 (Pa. Super. 2005). Those findings must be afforded the same weight

and effect as a jury verdict and will not be disturbed on appeal absent an error

of law or an abuse of discretion. See Prestige Bank, 825 A.2d at 700.

      After a thorough and meticulous examination of the record, and a careful

review of the briefs, we find that the Adjudication and Verdict of December

20, 2017, the Order of May 4, 2018, and the Memorandum Opinion of July 20,

2018, adequately address all of the issues raised by the Appellant, and are

more than sufficiently supported in the record. Therefore, we affirm on the

basis of the aforesaid decisions by the trial court.

      Judgment Affirmed. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/10/2019

                                      -5-
J-A08011-19

              -6-
                                                                v:J�·
                                    Received 6/18/2018 2:38:52Circulated
                                                               PM Superior   Court Western
                                                                         09/18/2019        District
                                                                                    11:27 AM

                                        Filed 6/18/2018 2:38:00 PM Superior Court Western District
 IN THE COURT OF COMMON PLEAS OF ARMSTRONG COUNTY, PENNSYLVANIA60WDA2018

TIMOTHY A. MOHNEY,
               Plaintiff,

               vs.
                                     No. 1995-0764-CIVIL
AMERICAN GENERAL LIFE INSURANCE
COMPANY, as successor by merger
to AMERICAN GENERAL ASSURANCE
COMPANY, as successor in
interest to U.S. LIFE CREDIT
INSURANCE COMPANY,                                                                     C)�
                                                                                       ::::_;     .
               Defendant.
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                 ADJUDICATION and VERDICT                                                --    -�--
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     AND NOW, this   �;I�     day of December, 2017,

jury trial of Count VI of Plaintiff's Second Amended Complaint

claiming bad faith under 42 Pa. Cons. Stat. Ann.           §   8371, as

remanded by the Superior Court of Pennsylvania, I find as

follows:

     1)    The legal standard for bad faith has been set forth by

our Supreme Court in Rancosky v. Washington Nat'l Ins. Co., 170

A.3d 364, 365 (Pa. 2017) {citing Terletsky v. Prudential Property

& Cas. Ins. Co., 649 A.2d 680 (Pa. Super. Ct. 1994)).                 In order

to recover in a bad faith action, the plaintiff must present

clear and convincing evidence 1) that the insurer did not have a

reasonable basis for denying benefits under the policy, and 2)

that the insurer knew of or recklessly disregarded its lack of a

reasonable basis for denying benefits under the policy.
      2)    The parties have stipulated that the first element of

that standard has been satisfied as a matter of law.1

      3)    I considered all of the evidence and testimony

presented at trial.      I reviewed this in light of each of the

parties'   suggested findings of fact and conclusions of law.

      4)    At the remanded bad faith trial, unlike at the

previous bad faith trial, each party presented expert testimony

regarding knowing or reckless disregard of a reasonable basis to

terminate benefits.      I find that U.S. Life's expert, Barbara J.

Sciotti, was well-qualified in insurance claims management and

offered more credible testimony than that of the Plaintiff's

expert witness, John A. McCandless, Esq.          She opined, inter

alia, as follows:

      a.    U.S. Life had provided Mr. Carroll with adequate

      training and support with regard to claims adjusting

      practices;

     b.     Mr. Carroll complied with industry practice; and

      c.    U.S. Life did not place its own interests ahead

      of those of Plaintiff.

     NOW THEREFORE, the Court finds that Plaintiff has failed to

prove, by clear and convincing evidence, that U.S. Life knew of

1
  Although the Superior Court of Pennsylvania appears to have concluded, and
the parties have stipulated, that the first prong of the bad faith standard
has been satisfied, it would otherwise be the appropriate responsibility of
this Court to make the factual determination of whether a reasonable basis
existed for U.S. Life's denial of benefits.   See Rancosky, 170 A.3d at 377.
or recklessly disregarded the lack of a reasonable basis for its

determination.   The Court hereby DIRECTS the Prothonotary to

enter judgment in favor of Defendant, and against Plaintiff, on

Count VI of the Second Amended Complaint.      It further is ORDERED

that Plaintiff's requests for punitive damages and attorneys'

fees be and hereby are DISMISSED, as moot.

                               By the Court:

                             ���/:!
                              William J. Ober, S.J.
IN THE COURT OF COMM:ON PLEAS OF ARMSTRONG COUNTY, PENNSYLVANIA

 TIMOTHY A. MOHNEY,               )
               Plaintiff,         )
                                 )
           vs.                   )

 AMERICAN GENERAL LIFE
                                 )
                                 )
                                                  No. 1995-0764-CIVIL
                                                                                    -
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 INSURANCE COMPANY, as successor)                                                   �
 by merger to AMERICAN GENERAL )                                                      I
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 ASSURANCE COMPANY, as successor)
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 in interest to U.S. LIFE CREDIT )                                                    :x
 INSURANCE COMPANY,              )                                                    ca
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                                      ORDER
       AND NOW, this     id:&.     day of May, 2018, upon consideration of Plaintiffs

Motion for Post-trial Relief, Defendant's response in opposition thereto, and the

briefs and argument of the parties, and having reviewed the entire record in this

matter, including the proposed findings of the parties and the trial transcript, the

Court makes the following conclusions:

             1.     There was no error or abuse of discretion in the Court's

permitting Defendant's expert, Barbara J. Sciotti, to testify regarding whether U.S.

Life knowingly or recklessly disregarded the lack of a reasonable basis for

terminating benefits.

             2.     There was no error or abuse of discretion in the Court's finding

Ms. Sciotti's testimony more credible than Plaintiffs expert, John A. McCandless,

Esq., on the issue of whether U.S. Life knowingly or recklessly disregarded the lack

of a reasonable basis for terminating benefits.
              3.    There was no error or abuse of discretion in the Court's finding

that Plaintiff did not present clear and convincing evidence that U.S. Life

knowingly or recklessly disregarded the lack of a reasonable basis for terminating

benefits. The Court considered all of the evidence presented, including the de nova

testimony of the claims handler, Mr. Carroll, and made credibility determinations.

There was evidence in the record indicating, and the Superior Court previously

held, that U.S. Life lacked a reasonable basis for terminating benefits, and its

communications with both Dr. Miller and Plaintiff contained certain omissions and

inaccurate statements of fact. This evidence, if considered alone, would be

suggestive of a knowing or reckless disregard. When considered in light of the

entire record, including the testimony of Ms. Sciotti and Mr. Carroll, it fell short of

clear and convincing evidence, i.e., evidence that is so clear, direct, weighty, and

convincing as to enable the trier of fact to come to a clear conviction, without

hesitancy of the truth of the precise facts in issue. See Berg v. Nationwide Mutual

Ins. Co., __ A.3d __ , 2018 WL 1705274, at *4 (Pa. Super. Ct. April 9,

2018)(citing Grossi v. Travelers Pers. Ins. Co., 79 A.3d 1141, 1165 (Pa. Super. Ct.

2013)). Thus, there was no error or abuse of discretion in the Court's finding that

Plaintiff had failed to carry this high burden of proof.

      NOW THEREFORE, on these bases, it is ORDERED that Plaintiffs Motion

for Post·trial Relief be and hereby is DENIED.

                                         By the Court:

                                              Oit/w(dkUL tL.bi
                                         Chase G. McClister, J.
                                                           Circulated 09/18/2019 11:27 AM

IN THE COURT OF CO:Ml\10N PLEAS OF ARMSTRONG COUNTY, PENNSYLVANIA

 TIMOTHY A. MOHNEY,              )
               Plaintiff,        )
                                 )
        vs.                      )
                                 )
 AMERICAN GENERAL LIFE           )   No. 1995-0764-CIVIL
 INSURANCE COMPANY as successor )
 by merger to AMERICAN GENERAL )
 ASSURANCE COMP ANY, as successor)
 in interest to U.S. LIFE CREDIT )
 INSURANCE COMPANY,              )
                      Defendant. )

                    1925(a) MEMORANDUM

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IN THE COURT OF CO:Ml\10N PLEAS OF ARMSTRONG COUNTY, PENNSYLVANIA

 TIMOTHY A. MOHNEY,              )
               Plaintiff,        )
                                 )
          vs.                   )
                                )
AMERICAN GENERAL LIFE           )               No. 1995-0764-CIVIL
INSURANCE COMP ANY as successor )
by merger to AMERICAN GENERAL )
ASSURANCE COMPANY, as successor)
in interest to U.S. LIFE CREDIT )
INSURANCE COMPANY,              )
                     Defendant. )

                        1925(a) MEMORANDUM
McClister, J.

      Plaintiff Timothy A. Mohney ("Mohney") appeals from the judgment on the

verdict entered on May 14, 2018, in favor of Defendant American General Life

Insurance Company, as successor by merger to American General Assurance

Company, as successor in interest to U.S. Lue Credit Insurance Company ("U.S.

Life"). On December 28, 2017, Senior Judge William J. Ober entered an

Adjudication and Verdict, after non-jury trial, on Mohney's claim for insurance bad

faith, finding that he had failed to carry his burden of proving the claim by clear

and convincing evidence. Mohney thereafter filed a motion for post-trial relief on

January 5, 2018, which this Court denied on May 4, 2018. Mohney then praeciped

for entry of final judgment, which was accomplished on May 14, 2018. Mohney filed

his notice of appeal on May 21, 2018, after which the Court directed him to file a

Rule 1925(b) Concise Statement within 21 days. He timely complied on June 13,

                                           1
2018. Given the protracted history of this case, its procedural posture, and the

several opinions authored in this Court and the Pennsylvania Superior Court, the

Court herein will review only those facts and procedural history that are material to

the issues raised in the instant appeal.

      A.     Procedural History

      This case involves an insurance dispute. I am the fourth trial court judge to

consider the merits of the bad faith claim. The case originally involved multiple

claims sounding in various theories. All counts of Mohney's Second Amended (and

still operative) Complaint, filed October 28, 1998, were dismissed except for the

breach of contract (Count III) and bad faith (Count VI) claims. Then-President

Judge Kenneth G. Valasek found in Mohney's favor on the breach of contract claim

by adjudication filed December 27, 2006, and judgment in the amount of $20,772.58

was entered on April 2, 2007. Judge Valasek previously had entered summary

judgment on the bad faith claim, which determination was reversed by the Superior

Court. See Nonprecedential Decision, filed July 1, 2008. U.S. Life's subsequent

petition for allowance of appeal to the Pennsylvania Supreme Court was denied on

December 10, 2008.

      After remand, the parties engaged in discovery on the bad faith claim. The

first bad faith trial, before Senior Judge Joseph A Nickleach, occurred in April

2013. Judge Nickleach found in favor of U.S. Life on the bad faith claim, which

decision was reversed, and a new bad faith trial ordered, by the Superior Court on

May 8, 2015. U.S. Life's subsequent petition for allowance· of appeal to the

                                           2
Pennsylvania Supreme Court was denied on December 8, 2015. Approximately five

months later, no action on the case having been taken by the parties, specially-

assigned Senior Judge William J. Ober scheduled a status conference. After the

conference and with the consent of the parties, Judge Ober ordered the case to

mediation. The case did not resolve at mediation. Thereafter, the parties engaged

in discovery. A case management order was entered on December 21, 2016, setting

the dates for trial, the completion of discovery, and additional pre-trial conferences.

The case proceeded to trial in September 2017, after which Judge Ober entered his

adjudication finding that Mohney had not carried its burden to prove, by clear and

convincing evidence, that U.S. Life had knowingly or recklessly disregarded a lack

of a reasonable basis for terminating the payment of credit disability benefits.

Judge Ober's judicial commission expired on December 31, 2017, after which this

Court was assigned to the case. After my disposition of Mohney's post-trial

motions, this appeal followed.

       B.      Errors Complained of on Appeal

       Mohney asserts seven assignments of error on appeal, each of which the

Court will address separately."

       1.      Compliance with Industry Standards

       Mohney argues in his first issue that Judge Ober "erred by finding Defendant

met industry standards, when [the Superior Court] previously determined

1 Several ofMohney's issues challenge specific evidentiary and discovery rulings by Judge Ober
without identifying the particular testimony or ruling being challenged. The Court has reviewed the
entire record and has identified what it believes to be the issues raised on appeal.

                                                 3
Defendant unreasonably relied upon an equivocal medical opinion to terminate

benefits." First, Judge Ober did not anywhere in his findings determine that the

medical opinion provided by Dr. Miller and relied upon by U.S. Life's claims

adjuster, Lawrence Carroll, was not unequivocal. Nor did Judge Ober determine

anywhere in his findings that U.S. Life's basis for terminating benefits was

reasonable. Rather, Judge Ober had before him a narrow and discrete issue,

namely, whether Mohney had proven, by clear and convincing evidence, that U.S.

Life knowingly or recklessly disregarded a lack of a reasonable basis for its

termination decision. Judge Ober expressly acknowledged that the first prong of

the bad faith standard already had been met. See Adjudication and Verdict, at        ,r 2
n. 1. Thus, at the outset, Mohney's construction of Judge Ober's findings is not

accurate.

      Judge Ober's express finding was that U.S. Life's expert, Barbara Sciotti, was

both well-qualified in insurance claims management and offered credible testimony.

Judge Ober did not rely on the opinion of Mohney's proffered expert, John A.

McCandless, Esq., which he found to be less credible. Mohney has not challenged

that credibility determination on appeal. Even were he to challenge that credibility

finding, it was sound in any event. Mr. McCandless has no firsthand experience in

first party claims handling, of credit disability claims or otherwise. He has never

himself made, in the first instance, a first-party claim determination. All of his

experience working directly in the insurance industry amounts to three years with

Nationwide Insurance Company, which experience pre-dated the enactment of the

                                           4
bad faith statute and only involved claims that had escalated to litigation. Mr.

McCandless has been actively engaged in plaintiffs·side bad faith litigation,

although he does, at times, serve as "coverage counsel." Since this case has been

filed, and particularly since the prior bad faith trial, Mr. McCandless has instituted

new bad faith lawsuits on behalf of plaintiffs. He advertises his practice to include

a "special interest in representing people who are the victims of insurance bad

faith." He has testified in court as an expert on bad faith in only one other case, in

which he was engaged by Mohney's counsel in this case, Thus, Judge Ober's

finding that Mr. McCandless's testimony was less credible is both amply supported

by the record and not at issue on appeal.

      Judge Ober's finding that Ms. Sciotti was qualified and credible also is amply

supported by the record. Ms. Sciotti worked directly in the insurance industry as a

claims adjuster for many years. She then began a consulting business in which she

performs reviews of claims to determine the propriety of insurer conduct. She has

maintained this business for approximately 23 years and has reviewed at least 450

cases. She maintains a consistently objective approach to her reviews, having

rejected approximately one· half of the cases presented to her, from both insureds

and insurers, because she did not believe their position had any merit. She has

been qualified as an expert in insurance practices 18 times, and her testimony has

never been excluded. She also has been invited by the Pennsylvania Bar Institute

to be a presenter and faculty member in presentations and trainings on insurance

practices. Ms. Sciotti's business overall has involved more plaintiffs'·side work

                                            5
than defendants'