Davis, R. v. Fidelity Natl. Title

• Court: Superior Court of Pennsylvania
• Decided: March 18, 2015
• Docket: 672 MDA 2014
• Status: Unpublished

Opinion

J-A31019-14

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

RICHARD AND MARIA DAVIS IN THE SUPERIOR COURT OF PENNSYLVANIA Appellee

v.

FIDELITY NATIONAL TITLE INSURANCE COMPANY D/B/A FIDELITY NATIONAL TITLE INSURANCE COMPANY OF NEW YORK

Appellant No. 672 MDA 2014

Appeal from the Judgment Entered May 28, 2014 In the Court of Common Pleas of Lackawanna County Civil Division at No(s): 10-00-8868

BEFORE: BOWES, J., OTT, J., and STABILE, J.

MEMORANDUM BY OTT, J.: FILED MARCH 18, 2015

Fidelity National Title Insurance Company d/b/a Fidelity National Title

Insurance Company of New York (Fidelity) appeals from the judgment

entered on May 28, 2014, in the Court of Common Pleas of Lackawanna

County. Plaintiffs, Richard and Maria Davis (collectively Davis), filed a

complaint against Fidelity alleging breach of contract and bad faith regarding

a dispute over ownership of a 1.86 acre parcel of land. The parties

proceeded to a bench trial before the Honorable Carmen D. Minora who

found in favor of Davis on both counts and awarded an aggregate verdict of

$2,062,746.89. Fidelity raises five issues in this timely appeal. After a

thorough review of the submissions by the parties, relevant law, and the

certified record, we affirm. J-A31019-14

The factual history of this matter is complex and we rely upon the

Final Memorandum and Order on [Fidelity’s] Motion for Past-Trial Relief,

3/28/2014, Memorandum and Order, 8/15/2013 (including findings of fact),

and Stipulated Undisputed Facts, Joint Pre-Trial Order, 12/17/2012.

For brevity’s sake, we simply recount that this matter concerned Davis’

claim against his Fidelity Title Insurance policy regarding disputed title to

1.86 acres of land Davis sought to develop as part of a housing project.

Davis purchased the property as part of a 15-acre acquisition in 2004. In

2007, as Davis attempted to obtain a zoning exception at a public hearing,

Louis Norella objected, claiming to be the rightful owner. Davis filed his

claim against the policy in October 2007. In June 2009, Fidelity

acknowledged a problem with the title and promised resolution of the

matter. Although Norella demanded $40,000.00 for the disputed property in

2010, Fidelity did not resolve the issue until it purchased the property from

Norella for $50,000.00 in August 2012. Davis claimed the delay in

resolution of the matter caused him to delay his development project,

costing him lost profits. Additionally, Davis argued the delay represented

unconscionable behavior and bad faith.

Fidelity’s first three claims address the trial court’s determination of

lost profits. Fidelity argues the award was based upon speculation, lacked

evidentiary support, and lacked proof of causal connection to any Fidelity

action. The trial court awarded compensatory damages of $224,760.00,

consisting of $89,760.00 for increased building costs and $135,000.00 in lost

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profits. Davis’ claim of lost profits was based on the expert testimony of

Jean Black, a licensed real estate appraiser. She based her calculations on

the relative value of the proposed townhomes in December 2008 as

compared to January 2012. Based upon these dates, Black calculated lost

profits of $272,000.00.1

Fidelity argues that (1) the housing development was nothing more

than “hypothetical”, (2) the trial judge called Black’s testimony futuristic,

lacking credibility and unpersuasive,2 (3) there was no historic basis of sales

upon which to determine profitability, and (4) the award was lacking in

evidentiary support and speculative. We disagree.

First, the trial judge clearly rejected Fidelity’s position that the

development project was nothing more than hypothetical.3 The evidentiary

record demonstrated Davis had taken several steps to realize the project.

He had purchased plans, engaged engineers, conducted surveys and was

only stopped when he sought a zoning exception and the problem with the

____________________________________________

1 Davis did not claim damages from the total inability to proceed with the development project. Rather, Davis claimed the diminution in value (DIV) between the ability to proceed with the project in a timely fashion and the delayed project. 2 See Memorandum and Order, 8/15/2013, at 20, ¶ 22. 3 See Appellant’s Brief, Statement of Questions Involved, at 4, Questions 1- 2.

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title was discovered. Accordingly, the underlying basis for the award of lost

profits is supported by the record.

As noted, the actual calculation of lost profits was based upon the

testimony of Jean Black. Black testified that she chose December 2008 as a

starting point for calculating lost profits because it was a little over one year

after Davis filed the claim against Fidelity (October 2007). This estimate

gave Davis one year to build the townhomes. She further testified, “If we

needed a more specific time, the reason we don’t have it is because they

[Fidelity] didn’t resolve this claim.” See N.T. trial, 1/29/2013, at 230.

Despite accepting Davis’ underlying premise of the existence of damages

and Black’s method of calculation thereof, the trial court rejected Black’s

presumptive starting date. Fidelity argues this rejection essentially

recognizes the claim for damages was speculative.

While we agree that selection of a starting date to calculate damages

necessarily includes an estimation, that necessity is largely the result of

Fidelity’s actions. Our Supreme Court has stated:

[T]here should be no doubt that recovery will not be precluded simply because there is some uncertainty as to the precise amount of damages incurred. It is well established that mere uncertainty as to the amount of damages will not bar recovery where it is clear that damages were the certain result of the defendant's conduct. ... The basis for this rule is that the breaching party should not be allowed to shift the loss to the injured party when damages, even if uncertain in amount, were certainly the responsibility of the party in breach.

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Spang v. United States Steel Corporation, 545 A.2d 861, 866 (Pa.

1988), quoting Pugh v. Holmes, 405 A.2d 897 (Pa. 1979).

Additionally,

While damages cannot be based on a mere guess or speculation, yet where the amount may be fairly estimated from the evidence, a recovery will be sustained even though such amount cannot be determined with entire accuracy.[4]

“Williston on Contracts, Revised Edition, Vol. 5, lays down these principles in respect to measuring damages: Section 1345, p. 3776. ... ‘though there must be evidence of substantial damage in order to justify recovery of more than a nominal sum, the exact amount need not be shown. Where substantial damage has been suffered, the impossibility of proving its precise limits is no reason for denying substantial damages altogether.’

*** The essence of the legal principles above cited is that compensation for breach of contract cannot be justly refused because proof of the exact amount of loss is not produced, for there is judicial recognition of the difficulty or even impossibility of the production of such proof. What the law does require in cases of this character is that the evidence shall with a fair degree of probability establish a basis for the assessment of damages.”

477 Pa. at 41-42, 383 A.2d at 812 (Opinion in support of affirmance and modification; further citations omitted). See also comment (a) to Restatement (Second) of Contracts, § 352 (“Doubts are generally resolved against the party in breach. A party who has, by his breach, forced the injured party to seek compensation in damages should not be allowed to profit from his breach where it is established that a significant loss has occurred.”) and Delahanty v. First Pennsylvania Bank, 318 Pa. Super. 90, 464 A.2d 1243 (1983) (“justice and public policy ____________________________________________

4 Quoting Osterling v. Frick, 131 A. 205 (Pa. 1925).

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require that the wrongdoer bear the risk of uncertainty which his own wrong has created and which prevents the precise computation of damages”).

Spang, 545 A.2d at 866-867.

Accordingly, Pennsylvania law has long recognized that where the

existence of damages is certain and due to defendant’s actions, the

defendant will not be able to benefit from the lack of complete certainty in

assessing those damages. Here, Black provided adequate methodology to

calculate lost profits and the trial court, acknowledging the uncertainty in

assigning a starting point, used its discretion to move the starting date

forward two years to provide extra time to accomplish the development. 5

The evidence of record, therefore, provides reasonable certainty for the

calculation of damages.

Fidelity’s final argument regarding compensatory damages is an

allegation that there is no evidentiary causal connection between its actions

and the damages claimed. It is undisputed that Fidelity took approximately

five years to resolve this title claim. It is also undisputed that Davis

intended to put the townhome portion of the development on the disputed

property. It cannot be credibly maintained that Davis could have built on

the disputed portion of land prior to the resolution of the title dispute. Davis ____________________________________________

5 We note that the trial court could have simply accepted Black’s starting point as reasonable, and such would have been supported by the record. By exercising his discretion, the trial judge relieved Fidelity of substantial additional liability to Davis.

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faced the choice of going forward with his project without the townhomes,

which would have required new plans to accommodate shifting of roads and

the like, or waiting to resolve the dispute and moving forward as planned.

As will be more fully discussed in the bad faith discussion, Fidelity had two

options in resolving the problem: Fidelity could purchase the disputed

property for Davis or pay Davis the value of the land. Yet, Fidelity dithered

for years, unwilling to make a decision regarding how it was going to

proceed. Fidelity’s delay directly led to Davis’ inability to go forward with the

project.6 Accordingly, the trial court did not err in finding a causal

connection between Fidelity’s actions and Davis’ harm.

Because the proposed development project was not illusory, Fidelity’s

delays caused Davis to delay the project, and expert testimony provided the

sound basis for the determination of damages, we find no error in the award

of lost profits. Even though precise calculation of damages was not possible

due to the forced estimation of the starting point for those damages, the

uncertainty was caused by Fidelity’s actions. Accordingly, Fidelity cannot

claim refuge from damages based on the uncertainty it created. The trial

court’s award of lost profits are based upon reasonable certainty and will not

be disturbed. ____________________________________________

6 Fidelity’s position on lack of causality would essentially require Davis to ignore Fidelity’s delays in the resolution of the claim and to proceed with only a fraction of the original project, to Davis’ detriment, while exonerating Fidelity from the financial consequences of its actions.

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Next, Fidelity raises two issues regarding the award of punitive

damages. First, it claims the award is excessive under the due process

clause, and second, attorney’s fees were incorrectly included in the

multiplied compensatory damages award. Neither issue has merit.

We begin by noting that Fidelity is not challenging the determination it

acted in bad faith toward Davis. Rather, both issues challenge the amount

of punitive damages awarded pursuant to that finding of bad faith.

In reviewing a challenge to the amount of an award of punitive

damages, we are cognizant that:

Under Pennsylvania law the size of a punitive damages award must be reasonably related to the State's interest in punishing and deterring the particular behavior of the defendant and not the product of arbitrariness or unfettered discretion. In accordance with this limitation, [t]he standard under which punitive damages are measured in Pennsylvania requires analysis of the following factors: (1) the character of the act; (2) the nature and extent of the harm; and (3) the wealth of the defendant.

Hollock, supra at 419 (internal quotation marks and citations omitted). We review such an award for an abuse of discretion. Id. at 420. In addition, in the face of a constitutional challenge, we conduct a de novo review “to determine whether it comports with the Due Process Clause of the Fourteenth Amendment to the United States Constitution.” Id.

“Because punitive damages pose an acute danger of arbitrary deprivation of property, due process requires judicial review of the size of punitive damage awards.” [Pioneer Commercial Funding Corp. v. American Financial Mortg. Corp., 794 A.2d [269] at 292 [(Pa. Super. 2002), reversed on other grounds, 855 A.2d 818 (Pa. 2004)].]

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In State Farm v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 [2003], the United States Supreme Court reviewed a $145 million punitive damages award. Finding that the award was excessive and disproportionate to the wrong committed, the Court ruled it constituted an unconstitutional deprivation of the insurer's property. The Court noted that, although states possess discretion over the imposition of punitive damages, there are procedural and substantive constitutional limitations on these awards. Id. at 1519. The Court cautioned that the due process clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments. Id. at 1520. While finding that punitive damages are aimed at deterrence and retribution, id. at 1519, the United States Supreme Court advised reviewing courts to consider three guideposts: “(1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.” Id. at 1520, (citing BMW of North America, Inc. v. Gore, 517 U.S. 559, 560-61, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996)).

The Court in Campbell reiterated that the “most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct.” Campbell, 123 S.Ct. at 1521.

Grossi v. Travelers Personal Insurance Company, 79 A.3d 1141, 1157

(Pa. Super. 2013) quoting Hollock v. Erie Ins. Exch., 842 A.2d 409 (Pa.

Super. 2004) (en banc).

Here, Fidelity does not challenge the application of the Hollock

factors, but rather claims the award is excessive under the Campbell

factors.

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Initially, we note the trial court awarded Davis $393,227.31 in

compensatory damages and $1,572,909.24 in punitive damages. This

represents a 4:1 ratio of punitive to compensatory damages. The United

States Supreme Court stated:

We decline again to impose a bright-line ratio which a punitive damages award cannot exceed. Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. In [Pacific Mut. Life Ins. Co. v.] Haslip, [499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991)] in upholding a punitive damages award, we concluded that an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety. 499 U.S., at 23- 24. 111 S.Ct. 1032. We cited that 4–to–1 ratio again in Gore, 517 U.S., at 581, 116 S.Ct. 1589. The Court further referenced a long legislative history, dating back over 700 years and going forward to today, providing for sanctions of double, treble, or quadruple damages to deter and punish. Id., at 581, and n. 33, 116 S.Ct. 1589. While these ratios are not binding, they are instructive. They demonstrate what should be obvious: Single- digit multipliers are more likely to comport with due process, while still achieving the State's goals of deterrence and retribution, than awards with ratios in range of 500 to 1, id., at 582, 116 S.Ct. 1589, or, in this case, of 145 to 1.

State Farm Mutual Automobile Insurance Company v. Campbell, 538

U.S. 408, 425-26, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003). Accordingly, at

4:1, there is nothing facially improper with the ratio between punitive and

compensatory damages.

The degree of reprehensibility is the most important of the factors in

assessing the appropriateness of punitive damages. Here, it can fairly be

said, the trial court was appalled by Fidelity’s conduct. The trial court found

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Fidelity was aware of both the delay it caused Davis and likely consequences

thereof. Final Memorandum and Order, 3/28/2014, at 11. In December

2007, shortly after Davis filed the claim, Fidelity notified Davis it was

evaluating the claim and hoped to get back to him shortly. Memorandum

and Order, 8/15/2013, Finding of Fact 14, at 4. 7 Approximately one year

later, Fidelity notified Davis that Norella may have a valid claim to the 1.86

acres. FF. 15, at 4. Six months later, 20 months after the claim had been

filed, Fidelity accepted Davis’ claim and again stated it would contact Davis

shortly regarding resolution of the claim. FF. 17, at 4. Fidelity waited

another three months to hire counsel. FF. 18, at 4. Fidelity investigated the

possibility of filing a quiet title action against Norella, but admitted there was

scant chance of success. FF. 23, at 5. Nonetheless, Fidelity threatened

Norella with filing the suit. CL. 22, at 14.

By August 2010, counsel for Fidelity was warning Fidelity of the

possibility of bad faith. FF. 24, at 5. Davis repeatedly made inquiry about

the status of his claim. CL. 24, at 14. Fidelity breached its own contract by

failing to act diligently, failing to pay the loss within 30 days of fixing the

7 All citations to findings of facts (FF) or conclusions of law (CL) are taken from the August 15, 2013 Memorandum and Order. Additionally, the trial court did not issue omnibus findings of fact and conclusions of law, rather, they were broken down into sub-categories, not always specifically labeled as findings or conclusions. For ease we refer to all citations as either FF or CL. Rather than clutter this memo with sub-category titles, we will cite to the FF or CL number and the page on which it is found.

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amount and failing to act in good faith and fair dealing. FF. 8, at 17. It failed

to follow its own internal claims handling procedures. FF. 13, at 18. Fidelity

violated 31 Pa. Code 146.6 and 146.5(c) regarding prompt investigations of

claims and communications with clients, as well as Pennsylvania Statutes 40

P.S. 1171.5(a)(10)(ii),(v) regarding communications with clients and failure

to affirm or deny claims promptly. FF. 15, 16, 17, at 18-19. Fidelity made

no offer to either Norella or Davis until after Davis filed the instant bad faith

claim. FF. 36, at 7. Indeed, it is difficult to find an area in which Fidelity

acted in conformance with accepted statutory, regulatory or internal

standards.

As stated, reprehensibility of actions is the “most important indicium”,

Campbell, supra, in determining reasonableness of the punitive damage

award. Degree of reprehensibility is determined by examination of several

factors. See Campbell, supra; Gore, supra.8 Fidelity is correct that some

of the factors to consider in determining reprehensibility are inapplicable

here. The harm was economically rather than physically injurious and there

is no indication that such behavior is part of a greater pattern of indifference

to its policyholders. Although the parties agreed Fidelity did not intentionally

8 Factors include: physical or economic harm; indifference or reckless disregard to health or safety; affirmative acts; financially vulnerable victim; repeated actions. Case law provides no instructions regarding the application of these factors. Therefore, we conclude the weight given to each factor is case specific and based upon the discretion of the fact-finder.

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harm Davis, the record clearly demonstrates a reckless indifference to the

rights of Davis, and a five-year pattern of inaction, characterized by

repeatedly ignoring the warnings of counsel and requests by its insured. In

light of the overwhelming evidence against Fidelity, we find the trial court’s

determination of a high degree of reprehensible behavior to be supported by

the record and therefore represents no abuse of discretion.

We believe the factual scenario of the instant matter is similar to that

found in Grossi v. Travelers, supra, wherein the insurer’s bad faith was

limited to the claim at issue, as opposed to being part of a larger scale

pattern of bad faith behavior toward multiple insureds. However, the bad

faith consisted of repeated failings in addressing the insured’s underinsured

motorist claim. The reprehensibility of Travelers’ actions outweighed other

considerations and supported a $1,252,325.00 punitive damage award. This

award represented a punitive damage to compensatory damage ratio of

between 4:1 and 5:1.

Finally, Fidelity argues the trial court improperly included attorney’s

fees in the compensatory damage award that was quadrupled to arrive at

the punitive damages amount. Fidelity has provided no authority for this

position.9 Additionally, we note that attorney’s fees are specifically included

9 Fidelity cited Hollock v. Erie Insurance Exchange, 842 A.2d 409, 421 (Pa. Super. 2004)(en banc). However, all judges in the en banc panel, (Footnote Continued Next Page)

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as compensatory damages in the bad faith statute. See 42 Pa.C.S. §

8371(3). Multiple cases have included attorney’s fees in compensatory

damages. See Hollock, supra; Birth Center v. St. Paul Companies,

Inc., 787 A.2d 376 (Pa. 2001); Willow Inn, Inc. v. Public Service Mut.

Ins. Co., 399 F.3d 224 (CA3 2005). Accordingly, we reject Fidelity’s

statement that attorney’s fees must be removed from the punitive damages

calculation. Fidelity has provided no other indication of how the trial court

abused its discretion in including attorney’s fees as compensatory damages,

and our independent review finds no abuse of discretion.

Because the trial court’s decision is supported by the certified record

and free from abuse of discretion or error of law, we affirm.

Judgment affirmed.10

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 3/18/2015

_______________________ (Footnote Continued)

including the two dissenting judges, agreed that attorney’s fees were appropriately included in the compensatory award. 10 In the event of future proceedings, the parties are directed to attach copies of Final Memorandum and Order on [Fidelity’s] Motion for Post-Trial Relief, 3/28/2014, Memorandum and Order, 8/15/2013 (including findings of fact), and Stipulated Undisputed Facts, Joint Pre-Trial Order, 12/17/2012.

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.,-. • •

1 RICHARD DAVIS and ;INTHE COURT OF COMMON PLEAS \ MARIA DAVIS, O' LACKAWANNA COUNTY

Platntiff! avn. ACTION - LAW , 1 FIDELITY NATIONAL TITLE JURY TRIAL DEMANDED I INSURANCE COMPANY, t

Defendant

,, .! ~

lOIHT Pu:t1UAL ORDER

-, 1. Lacka,Co, R,C.p' 21200 Conference ofCounse\: - '.V a. Date of Conference: November 30. 2012 Mediation before Thomas Helbig. Esq. Mediation discussions contintTh' b. Names of counsel participating:

Attorney for Plaintiff Carl J. Guagliardo. PlainLiffs. Richard and Maria Davis also attended

Anomey for DefendantlAdditiona1 Defendant Scott M. Rothman. Defendant teprtSetltative Cyntia Baines a lso attended

2. LackA. Co, RC,P. 238 Conti_pn of Settlement Offer and Response a. Date and amount ofsett1tmt:m offer(s): N/A ~ Breach ofContTact and Bad Faith Action. Rule 238 does Dotappl)'

b. Date and substance ofresponse to settlement offer(s)

, , Circulated 02/27/2015 02:49 PM 587a

, , • • . .--- 3. Comprchcnsi'Vc Written StioulationofAll UncOntested Facts: (To be read to th.e jury at the outset of trial). SEE ATTACHED

4. Wib!esse3 to be C!illed gIrjpl (NOTE: Only those wilDesses identified in the pre-trial order will be Permitted to testify at trial):

For th~ Plajnttff(.d: I ! Richard Dayis; 2. Maria Davis' 3 Ben Badek; 4. Ray Abrams: 5. Michael Coughlin' 6 David Iom.jnc' 7 Thmie1 p/:ot:lar, 8. Keith Weller; 9. William Rebar; 10, Jean Black: II. Owen Girard; 12. Defendant Corporate Designee' 13 E P Mancinelli

(Attach additional sheets ifnecess81)'.)

For We Defendant(s);

(Attach additionaJ sheets if necessary.)

S. Sched\lle QU...xbibits: (NOTE: Only those exhibits which are identified in the pre-tritl order may be QSed or admitted into evidence at trial):

For the PlaintiJJ(s) (Indicate wherh~r the parties' stipulate to its admLufblllty, and fjnot, ltare the grouruhfOT objection):

#2: iI3: #4: #5: #6: #1: #8: #9: #10:

6 Circulated 02/27/2015 02:49 PM 58Ba

• • • •

#12: _ #11: -================== For the Defendtmt(J) (Indic.att whether the parties ' stipulate to iU admissibility, and ifnot slate/he grounds for objecJion): #1 : #2: #3: #4: #5: #0: #7: #8: #9: #11 : #12:

6. Statement of Facts aod Legal~: a. Plaintiff's version of the facts and statement onega! issues On October 15, 2007 Plaintiffs filed a title insurance claim with

disbonest. Plaintiffs tiled the subject bad faithlbreach ofoontracr .mil M Dec.emher J 4 20) 0 Defoendant , ,'tjrnttei¥ ~olvcd abc lj~e iilsuraoce claim by securing title to the property Ul the name of the P1aintiffs on A\lKUSt 14.2012, nearly S yean aftertbe clajm was opened. LegaJ issues have been briefed via Motion in Limine and Plaintiff will file trial b 'ef b. Defendant's version offacts IIJld statement ortega] issues (continu, see atta hed

7 Circulated 02/27/2015 02:49 PM 589a

.~. • •

7. Trial Deposition Name of Witness Date of Length of Parry offering DeposiJion Deposition DePosition Testimony

8. EstimatedNumber QfTrlal Days (NOTE: The Court will strictly enforce the partics' estimated 1riallimcr. nu.e Day(s). 9, Any Additional Issues Which Sbould be Considered to Facilitate the Settlement or Trial otthis Malter:

~.t;;bV'.~ fU>T1~M"'r"rJ Attorney for 1'1 . !:iife1 /)t,

Attom.ey for Waldant(s}' pu.NTlI!U

• Circulated 02/27/2015 02:49 PM 590a

• • •

AND NOW. tbis _ day of _ _ _~' ----J &he ,Parties' jointly

submitted Pre-Trial Order is hereby approved and shall govern the Trial of this case.

BY THE COURT:

======-==;:-,-J. JUDGE CARMEN D. MINORA

, Circulated 02/27/2015 02:49 PM 591a

'. ' , , • •

Carl J. Guagliardo, Esq. SELINGO GUAGLIARDO, LLC. 345 Market Street Kingston, PA 18704 (570) 287-2400 At!Omey I.D. No. 68876 Counsel for Plaintiff IN THE COURT OF COMMON RICHARD DAVIS and PLEAS OF LACKAWANNA COUNTY MARIA DAVIS, Plaintiffs. CIVIL ACTION - LAW VS. JURY TRIAL DEMANDED

FIDELITY NATIONAL TITLE INSURANCE COMPANY, d/b/a FIDELITY NATIONAL TITLE INSURANCE COMPANY OF NEW YORK Defendant. No. 10 - CV - 8868

STIPULATED UNDISPUTED FACTS

1. Defendant, through its authorized agent, Daniel Penetar, Esq., issued a title

insurance policy to Plaintiffs on October 29, 2004. (ComplainlfAnswer ~4. 5, andpolicy).

2. The policy insured an approximate 15 acre parcel of land in Carbondale Twp.,

Lackawanna County, Pennsylvania (Poiicy).

3. Plaintiffs plarm~ to develop the 15 acre parcel of land for residential housing, in

the nature of both one-half acre parcels for individual homes and a "garden section" containing

three, four-unit townhouses which would be offered for sale to the public. (R. Davis dep. p. J /-

32).

4. Daniel L. Penetar. Jr., Esquire, counter-signed the policy as the authorized agent

of Defendant and also served as counsel for Plaintiffs with respect to the subject purchase of

land. Circulated 02/27/2015 02:49 PM 592a

,-,. . • •

5. The "garden section" containing the townhouses was to be developed on a 1.86

acre portion of the property. (R. Davis dep. p. 13).

6. Prior to 2007. Mr. Davis purchased construction plans for the townhouses and

hired an engineering fum to draft plans and drawings for the development (R. Davis dep. p. 38·

40).

7. In 2007, Plaintiff, Rick Davis, attended a Carbondale Twp. Zoning board meeting

to request a zoning special exception that would accommodate the townhouse development. (R.

Davis dep. p. 13).

8. At the zoning bearing, a neighboring property owner, Louis Norella. objected on

the basis that he was the owner of record of the 1.86 acre parcel. (Jd).

9. On October 15. 2007 Mr. Davis filed a title insurance claim with Defendant as

related to a possible defect in his title to the 1.86 acre parcel of land. (Davis letter dated Ocl. 15,

2007).

10. The handbook for adjustment of claims provided by Defendant to Plaintiffduring

.discovery in this matter applied to adjustment of the Davis claim..

11. On June 18, 2009) Defendant completed its coverage investigation of the Davis

claim. (De! leners dmed Oct. 24, 2007 and June 18, 2009).

12. On September 15, 2009, Defendant hired Michael Cougblin, Esquire to evaluate

the merits of filing a Quiet Title Action. (Discovery docs. 297-298; 220-22 I; 300; and 28IJ.281).

13. On January 20, 2010, Defendant obtained a legal research memo related to its

options to resolve the claim as well as the merits ora quiet title action. (Dj.~covery delc. 163·164).

14. Defendant obtained DIY appraisals an March 20, 2010. (D

appraisals).

2 Circulated 02/27/2015 02:49 PM 593a

IS. In July. 2010, the Defendant attempted to "negotiate a settlement" with the

Neighbor for the pw:chase of the 1.86 acres. (Discovery documenJ 00055).

16. Regarding the option to file a quiet title action to resolve the claim, Defendant

knew (and documented. on April 28, 2010) that such an action would likely be defeated if

defended because there existed a notice/service defect in an earlier 1963 quiet title action for the

subject property. (Discovery doc. 0005).

17. Necessary subdivision approval was obtained about nine months later on June 7,

2012 and the subject property was thereafter conveyed to Plaintiffs on or about August 6, 2012.

(Deed).

18. On August 27.2010 Defendant's retained counsel, Michael Coughlin, Esquire,

wrote the following to Defendant Claims Attorney Benjamin Bartek:

"Ben. any word on this? The insured calied me once again to find out how we in/end to proceed. This claim has been hanging around for an extremely long period oftime and I am concerlred that the insured may opt to sue us for badfaith ifwe don 'f taJre some action relatively soon. "

(Discovery doc.. Nos. 0054 and 0053).

19. On December 13, 2010, the Defendant plared the first payment authority for

settlement or resolution of this claim. De! discovery document number 0094). 20. This suit was commenced on December 14, 2010. (Complolnl).

21. Defendant's first written settlement offer to Mr. Norel1a (the property owner of

record) was made on December 14~ 2010. (Dec. 14.2010 letter from M Coughlin to L. NoreJla).

22. On November 22. 2010 Mr. Tomaine called Defendant's retained counsel, Mr.

Coughlin, to discuss status of the Davis claim. (Coughlin billing records, Nov. 22, 2010).

23. Mr. Coughlin had contact with Defendant's ''Operations'' attorney, Keith Weller.

on December 9. 2010 (a Thursday). (Coughlin billing record Dec. 9. 2010).

) Circulated 02/27/2015 02:49 PM 594a

• • • • • •

24. Mr. Weller contacted Raymond Abrams of Defendant's Omaha, Nebraska claims

center on or about December 13,2010. (Discovery doc. 00096).

25. Mr. Abrams testified that the litigation that was attempting to be avoided was the Quiet Title Action against Mr. Norella. (Abrams dep. p. 43, lines 19-24).

26. On December 13. 2010 Mr. Abrams granted $25,000 settlement authority on this

claim without a case assessment report (CAR) having been done. (Discovery doc. 00094).

27. Generally. thou¢1 not always. a CAR is required to be done before settlement

authority may be placed on a file. (Abrams dep. p. 39, line 14-15).

28. Prior to December 13, 2010, no amount of settlement authority had been placed

on the Davis claim. (Ab,.ams dep. p. 50, lines 10-14).

29. Defendant's claims manual provides the following:

"Insurer's Response to Tender ole/aim; Investigation . .....

"Response by the insurer to the claimant should be timely. The claims administrator should/ollow the requirements ofthe applicable statutes and reguialions regarding acknowledgment ofreceipt ofan insured's claim; completion ofinvestigation; and notification ofthe Iille company '$ decision regarding coverage. Some state regulatory schemes provide specific timelines, while others simply require that the insurer's response occur in a reasonable time. "

(Relevant portions of Fidelity Claims Handbook. document 0499, 0500, 0501).

30. Qaims attorney Benjamin Bartek was hired by the defendant in February, 2010.

(Bartek dep. P. 6, line 10).

31. Prior to being employed by the Defendant, claims attorney Benjamin Bartek had

no prior title claims experience. (Bartek dep. p. 6, lines 9~23).

32. After two weeks on tbejob he was handed the Davis claim along with

approximately 39 others. (Bartek dep. P. 7. line 17 ihrough p. 8 line 25).

4 Circulated 02/27/2015 02:49 PM 595a

, ,

33. Bartek was solely responsible for the approximately 40 files he was initia1ly

given. (Bartek dep. P. 9, lines 1-5).

34. Mr. Bartek's case load was eventually increased to approximately 160 files.

(Barlek deposition, p. 8Unes 6 through 25).

35. On November 7,2012, the Carbondale Twp, Zoning Board granted Plaintiffs'

request for special exception, in accordance with Carbondale Twp. zoning law~ to construct

three, four-unit townhouses on the parcel of property that is the basis of this lawsuit

36. No appeal of the November 7, 2012 special exception., described in paragraph

131, bas been filed.

37. Defendant selected and paid Michael Coughlin, Esq. as retained CQtmSel for the

Davis title claim.

SELINGO GUAGLIARDO

BY: cr:1ii:~£Q Selingo Guagliardo 345 Market Street Kingston, PA 18704 Pa. Supreme Court No. 68876 Attorney for Plaintiff

5 Circulated 02/27/2015 02:49 PM 1776a

ruCHAIU) DAVIS and MARIA DAVIS, Plaintiffs,

CIVIL ACTION - LAW

FIDELITY NATrONAL INSURANCE COMPANY, d/b/n FIDELITY NA TTOHAL TITLE INSURANCE COMPANY OF NEW YORK. Defendants. NO. 2009-CV-6 I54

MEMORANDUM AND ORDER

MINORA,J.

I. INTROI)UCTION AND PROCEDURAL POSTURE

Before the Court is an insurance bad faith and breach of contract action arising out

of a title insurance policy thai WdS issued by DerClldam, Fidelity Nationallnsurance

Compa.'lY. to Plaintiffs, Richard and Maria Davis, on Ociober 29, 2004. The insurance

policy insured a parce l o fpropeny upon which Pluintiffs proposed to build a residential

development consisting of twelve townhouses comprised ofthrce, four-unil lownhouse

buildings and 32 single family homes. The townhouses were to be built on a 1.86 acre

triangular portion of the property. 11 was the ownership of this 1.86 acre piece of

property thaI came into dispute and for which the title insurance claim was made.

T he parties proceeded to a bench trial before Ihis Court 011 January 29, 30 and 31,

2013. Both parties waived their right to ajury trial on the contract aetion and agreed

(hat t}>js Court would serve as the fact·finder for both the bad fai th and·contrtlct counts. Circulated 02/27/2015 02:49 PM 1777a

The factual findings SCI f0l1h below ha ....e been established by clear and convincing

evidence and are based upon the testimony and evidence, which thi s court has found to

be competent, credible, relevant and admissible in this case.

II, GENERAL FINDrNGS OF FACr

( 1) 'flle Defendant , through its authorized agent, Daniel Penclnr, Esq .• issued 8 title

insurance policy 10 Plaintiffs on October 29, 200'1. Slip. Faell.

(2) 'n)C policy insnred aT) Ilpproximate 15 acre parcel ofland in Carbondale Twp.,

Lackawanna County, PetUlsylvania. Slip. Faer 2.

(3) Daniel L. Peoelar, Jr., Esquire, counter-signed the policy as tne authorized agent

of Defendant Il.nd also served as counsel for Plaintiffs with respect to the subject

purchase of loneL Slip. Facl4.

(4) Plaintiffs planned to develop the 15 acre parccl of lalld for residential housing,

in the nature of both aile-half acre parcels for individual homes and 0 "garden

section" containing lhree, four-unit townhouses all of which would be offered

for sale to thc public. Slip. Fact 3.

(,5) l11C "garden section" containing the townhouses \va" to be developed on the

disputed 1.86 acre ponion of the property. Stip. Fact 5.

(6) Prior to 2007, Mr. Davis pu rchased non-sea1cd construction plans for Ihe

townhouses and hired fin engineering linn to draft plans and drawings for the

subdivision of the dcvelopmcnt. Slip. Facl 6; Plif. Exh. 25 - "HICKORY

PLANS."

2 Circulated 02/27/2015 02:49 PM 1778a

(7) The size of each of the twelve townhOllses v."

feet, nol including an indoor, singlcMcar garage. N. T. Vol. /, p. 37-38.

(8) In 2007, Plaintiff, Rick Davis, attended a Carbondale Twp. Zoning board

meeting to request a zoning special exception that would accommodate the

townhouse development. Slip. Fact 7.

(9) At that same zoning hearing, a neighboring property ovmc r, Lo uis Norell!!.,

objected on the basis that he was the proper owner of record of the 1.86 nen::

parcel. Stip. Fact. 8

(10) At that time, the 7.oning board could not approve Plaintifrs TC

determined who actua!1y owned the disputed portion of the land. N. r. Vol. r. pA2.

( 11) On October 15.2007, Mr. Davis timely filed a title insurllnce claim with

Defendant as related to a possible defect in the title to the 1.86 acre pflrccl of

land. Slip. Facl9.

(12) Receipt ofMr. Dflvis' claim WflS acknowledged by Defendant by letter dated

October 24, 2007. Pltj Exh. 2, doc. No. 336.

(13) 011 November 8, 2007 Defendant's <;

Defendant that allhough he did perform n title search prior 10 issuing the Davis

title policy, he did not include a search. of the Norella chain ortitlc. Once the

dispute was brought to his attention he searched the Norclla deed and it did

appc.'ir to include the disputed piece of property. Pit! Exh. 2, doc. No. 25 J.

3 Circulated 02/27/2015 02:49 PM 1779a

(14) By Ictter dated December J 3, 2007, Defendanlllotified Mr. Davis that it was in

the process of evaluating his claim and hoped to gel back to him "shotti}'." Plif.

F.xh. 2, eWe. No. 334.

(IS) On December 10, 2008 , Atoorney Penelar again wrote to Defendant !lnd

explained that he and the surveyor the Defendant hired concluded thatlhc

disputed area is, and always has been, included in the Norella tille. The same

leucr explained that the Uavis' source of title traced back to a 1963 Quiet TWe

Action, which was defective due to lack of proper service upon the rightful hmd

owner. PIJf Exh 2, doc. No. 253-254.

(16) On January 10,2009, Defendant claims representative, Joseph Rejcnt, noted that

the surveyor concluded that the insured did not own all the land he thought he

owned and that one of the parcels purchased by the insurc=d "came out of a Quiet

Title Action \\:hich now appears to be faulty ." PIt! Exh. 2. doc. No OJ 1.

(17) On June 18.2009, Defendant completed its coverage investigation of the Davis

claim. Defendant notified Plaintiffthat there were no relevant policy exceptions

or exclusions; that it was accepting the Davis claim; and that they would contact

Mr. Davis shOltly about resolution of the claim. N. T. Vol. J, p. 45 and Pltj £Xh.

2. doc. No. 265. Temporally. this is tlpprox imalcly one yen and eight months

aftcr Plaintiff originally filed his claim on October 15.2007.

(18) On Scpt'cmbcr 15,2009, Defendant hired Michael Coughlin, Esquire to evaluate

the merits of filing a Quiet Title Action. Discovery docs. 297-298; 220-22 i:

300: and 280-2Si . This was three months after accepling the. claim.

4 Circulated 02/27/2015 02:49 PM 1780a

(19) On Janultry 20, 2010, Defendant obtained a legal research memo related to its

options to resolve the claim fl5 well as the merits ora quiet title action. Slip. Faci

13.

(20) From March 20 10 through October 2010, Mr. Davis repeatedly inquired into the

status of his claim, however he did not receive a response from Defe ndant. N.T

Vol. T, p. 51-56. This time period ending 011 October 7, 2010 is approximately

three years after Plaintiff's October 15, 2007 cluim was filed.

(21 ) Defendant obtained dimunition in vahle (mv) appntisals on March 20, 2010.

Defendant DlV appraisals.

(22) In July 2010, the Defendant attempted to "negotiate a sculement" with the

Neighbor for the purchase of the 1.86 acres. Slip. Facl 15.

(23) Regarding the option to file a quicllitle action to resolve the claim. Defendant

knew (and documented 011 April 28, 2010) that such an action would likely be

defeated if defended because there existed a notieelscrviC'.e defect in an earlier

1963 quiet title action for the subject property. Slip. Faci 16.

(24) On August 27, 2010 Defendant's retained counsel, Michael Coughlin, Esquire,

wrote the following to Defendant Claims Attorney Benjamin Bartek:

"Ben, any word on this? 11\0 insured called me onceagaill to find out how we intend to proceed. This claim has been hanging IlTOund for an extremelv long time and T pm concerned that the insured may opt to sue us for bad faith j[we don ' t ta.ke some action relatively soon." (emphasis added)

Stip. 17'oci 18.

(25) Mr. Davis hired David J. Tomaine, Esquire. and instructed Mr. Tomaine to give

Defendant a deadline for resolution of the claim. NT Vol. 1., p. 57.

s Circulated 02/27/2015 02:49 PM 1781a

(26) On November 22, 2010, Mr. Tomaine culled Defendant's retained counsel. Mr.

Coughlin, to discuss statUS of me Davis claim. Slip. Fac122.

(27) Mr. Coughlin had contact with Defendanl's "Operations" attorney. Keitb

Weller, on December 9, 2010. Sfip. Fact 23.

(28) The presenllawsuil \\f8.S commenced on December 14, 20 10. Srip. Fact 20.

(29) On December 13,2010, the Defendant placed the ftrst payment authorit y for

settlement or resolution of this claim. Slip. Fact 19. Three years and two months

after the claim was filed, while tbre..'lt of suit wns pending.

(30) Mr. Weller contacted Raymond Abra ms of Defendant's Omaha, Nebraska

claims center on or about December 13, 20 I O. Slip. raet 24. (3 1) Mr. Abrams testified that the litigation that was attempting to be avoided was

the Quiet Title Action against Mr. Norella. SOp. Fact 25.

(32) On December 13, 2010 Mr. Abrams g raoted $25,000 settlement authority on this

claim wHhout a case assessment repor t (CAR) having been done. Slip. Fact 26.

(33) Generally. though not always, a CAR is required to be done before settlement

authority may be placed 011 a file. Slip. Fact 27.

(34) Prior to Decembe r 13, 201 0, no amount of settlement authority had ever been

placed on the Davis claim. Stip Fact 28.

(35) Defendant's c laims manual provides the following:

"Insurer's Response to Tender of Claim; Investigation ... "

" Response by the insurer to the claimant should be!.i!:nill. 'n le claims ndmillislralor should fQllow the requirements ofthe applicable statutes a od re gulations regarding acknowledgment of receipt oian insured's claim: completion of investigation: and nOlification of the title company's decision regarding coverage. Some state re~ulatory schemes

6 Circulated 02/27/2015 02:49 PM 1782a

provide sped fie limclines. while others simply require that the insurer's response occur in a reasonable time." (emphasis added)

Slip. Fact 29.

(36) Defendant's first written settlement o1Ter to Mr. Norel1a (the property owner of

record) WBS made on December 14, 2010. Dec. 11,2010 leller/rom M Coughlin

to L. Norella. lbis was the same day the lawsuit was filed.

(37) On December 14. 2010, PlaintiIT'commenced the subject breach of contract and

bad fai th lawsUit. N.1: Vol. It p. 59 and Complaint

(38) On January 6, 201 1, Defendant tendered payment 10 Plaintiffs in an amouJlt

equal to the $20,000 DIV; however, Plaintiffs did not accept the payment as this

suit had alre.'ldy been filed. Pltf Exh 5; D.T. 59: J2 to 59:21.

(39) Plaintiffs' claim was resolved willl Defendant agreeing to pay the owner of the

disputed property S50,OOO.OO (Fifty Thousand Dollars) and transfer title ill

Plaintiffs' names in August 2012. N.T. Vol.}, p. 64-65. Defendant also hired

counsel to effectuate a subdivision approval of the Property and 1\ surveyor 10

prepare the necessary plans. R. T. 153:21 10 154:1,' D.T. 64:181065:3;

Tej'timony QfGeorge Broseman ("G. T. 'J 102:7 10 102:18: 106:610 106:14. This resolution occurred fifty eight (5 8) months afler the original claim was filed

by Plaintiff; nearly five years!

(40) On November 7, 2012, the Carbondale Twp. Zoni ng DOflrd granted Plaintiffs'

I'equest for special exception, in accordance with Carbondale 'fwp. zoning law,

to construct three, rour-unit townhouses on the parcel of property thai is the

basis oflh,is lawsuit. Sfip. Fact 35.

7 Circulated 02/27/2015 02:49 PM 1783a

(41) N{) appeal of the November 7, 20 12 special cl(ccption has been filed . Slip. Fact

]6.

(42) Defendant's title insurance policy provides that claims are resolved either by

payi(l&, or otherwise settling with, other parties for or in the name of an insured

clHimam, o r by paying the loss la, or othe!Wise seHling with, the insured

claimant. Policy, Plrj Exh. }, 16. (43) Pursuant 10 the Policy. Defendant therefore had the option {O (a) attempt to cure

the ti tle defect by filing a quiet title action, or negotiate with lhe Norellas to

convey the 1.86 acre disputed parcel 10 the Plaintiffs, or (b) pay the loss as

defined by the po licy, which is the lesser oflhc policy limits or the diminution in

value (DIV) oflhe property as a result oCthe. title derect. Policy, Plif. Exh / , ~

6.

(44) Under the Policy, "The liability of the Company shall not exceed the least of: (i)

The Amount ofln:mrllllCe stated in Schedule A; or, (ii) the difference between

the value of the insured estate or interest as insured (tnd the value of the insured

estate or interest subject to the defect, lien or encumbrance insured against by

[tho Policy];" Policy, PIt[ Exh I, ~ 7(a)

HI. GENERAL CONCLUSIONS OF LAW

CA) LIABILITY

(1) In the pre sent case, there were several known legal duties and fiduciary

obligations recklessly disregarded by Fidelity, namely extraordinary delay in

adjusting and resolving the clai m. repeated violations or the Unfair fnsurance

8 Circulated 02/27/2015 02:49 PM 1784a

Practices Act !lnd Unfair Claims Practices Act, failure to adequately train (lnd

supervise its employees, failure to follow its own claims handling guidelines,

failure to make a ti mely offer of settlement, and elevating its own interest above

the interest of ils' insured, among other dUlies .

(2) As defined by Black's Law Diclionary, bad failh occurs through an insurance

C

coverage in violation of lhe dUlies of good faith and fa ir denling owed to un

insured . Terlefsky v. Prudential Property and Cas. 111S. Co., 437 Pa.Super 108,

124,649 A.2d 680. 688 (1994); Black's Law Dicli01w,ry (r;U= ed 2009).

(3) In a typical §8371 bad failh action against an insurer, Plaintiffs must be able to

demonstrate bOlo clements of a two-part test by "clear and convincing"

evidence. The test is: (I) the insurer lacked a reasonable basis [or denying

coverage; find (2) the insurer knew or recklessly disregarded its lack of a

reasonable basis. Adamski, 738 A.2d at 1036.

(4) It is this Court's conclusion of law that the Defendant, insurer, acted in bad faith

and its chronic dilatory conduct embodied feckless disregard toward its insured

from lhe time the claim was fil ed on Ocmber 15,2007 until the time Ihat the

claim was finally resolved in August of2012.

(5) It is the further conclusion ofl1lw of this Court that punitive damaf;c." arc

appropriate given the reckless disregard of the rights or the Plaintiffs, its own

fi rst party insured, by Defendant FidelilY.

(6) Section 8371 of the Jud icia l Code governs bad faith actions against an insurer by

its insured, and provides:

9 Circulated 02/27/2015 02:49 PM 1785a

"In an action arising under an insurance policy, if the 'court tin~s that the insurer has acted in bad faith toward the insured, the COUI1 may (!Ike all of the followi nQ, aclions;

"( I) Award interest on the amount of the claim from the dale the claim was made by the insured ill an amount equel to the prime rate of interest plus 3 percent."

"(2) Award punitive damages a~ait\S\ the insurer."

"(3) Assess court costs and attorneys' fees against tlle insurer."

42 PII.C.S. §83 7 1. (flmphaSIS added)

en The bad faith statute "authorizes courts, which find tha~ an insurer has acted in

bad faith toward its insured, to award punitive damages, attorneys' fees, interest

~ costs." Birth Center v. St. Palll Companies inc.• 567 Pa. 386, 403 ,787 A.2d

376,386 (200 1). (emphasis added)

(8) Section 8371 does nol defme what conduct constitutes bad faith and the

appellate courts havc cautioned that "the breach of the obl igation to act in good

faith CRIUlOI be pn:cisely defi ned in all circumstances." Zimmerman v.

Harleysville MUfua! /n.fllrance Co., 860 A.2d 167 (Pa. Super. 2004).

(9) Rather, bad faith claims "are fa ct-~l}ecific and depend on the conduct of the

insurer vis-a-vis its insured." Williams v. Nationwide Mulua/lnsurance Co. , 750

A.2d 881, 887 (pa. Super. 2000).

(10) Decisional prccedent has described bad faith conduct by an insurer liS including

"any frivolous or unfounded refusal to pay proceeds of a policy." Bonenberger

v. Nationwide Mutua/Insurance Co., 79 1 A.2d 378, 380 (pa. Super. 2002);

AdanlSki v. Allstate Insurance Co., 738 A.2d 1033, 1036 (Pa. Super. J 999),

appeaJ denied, 563 Pa. 655, 759 A..2d 381 (2000); Wiiliam.t, supra.

10 Circulated 02/27/2015 02:49 PM 1786a

(11) Since the insurer's conduct in failing to pay a c laim must import a di shonest

purpose in order to be deemed bad faith, the insured is required to prove thai the

insurer breached its duty of good fai th and fait' dealing through some motive of

self-interest or ill will. Brown v. Progressive [/lSuranee Co., 2004 WL 2002477,

·7. 34 (Pa. Super. 2004); O'Donnell v. Allstate insurance Co., 734 A.2d 901,

905 (P,. Super. 1999).

(12) Although lllere negligence or bad jud gment is insufficient to establish bad ftlith,

it is nol necessary fo r the insurer's refu~al to be fraudu lcm. Bonenberger, .'>Iq)ra;

Adamski, supra. For that reason, "bad faith encompasses a wide variety of

objcctionableconducl." Browll, supra at ·6,13 1.

(13) By way of illustratioll, actions by the insurer which are violatioDs of lhe Unfair

Tnsurance Practices Act are considered to be bad fai t.h conduct under Sect ion

837 1. O'Donnell, 734 A.2d at 906. Therefore, an insurer may be liable for bad

faith if it iails to conduct a good fai th investigation and neglects to communicate

promptly with the insured. Drown, supra at "'6, ~3 l (quoting Romano v,

Nationwide Mutual Fire Insurance Co., 435 PH, Supcr. 545. 553·54, 646 A2d

1228. 1232 (1994».

(14) As the Superior Court of PelUlsylvania has remarked:

"lndividuals expect that their insurers will treat them fairly and properly evaluate any claim they may make. A claim must be cvaluated on ils merits alonc, b)' examining the particular situat ion and the injury for which recovery is sought. An insurance company may not look to its own economic considerations, seek to limit its potent ial liabil ity. and operate in a fashion designed to 'send a message.' Rather, it bas a duty to compensate its insureds for the fa ir value of their injuries. rIldividuals make payments 10 insurance carriers 10 be insured in Ihe event coverage is needed, It is the responsibility of insurers to treat their insureds fairly Elnd provide just compensation for covered claims based on (he actual

11 Circulated 02/27/2015 02:49 PM 1787a

domages suffered. InS\lrers do a terrible disservice 10 their insureds when they fail to evaluate each individual case in tenns of the situation presented and the individuall"lffected."

Honenberger, 791 A.2d at 382.

(\ 5) When considering the merits ofa bad faith claim, "one must look at the behavior

of the insurer toward the insured and measure its reasonableness ... to sec

whether it is perhaps more than lUere negligence or bad j udgment. ... " Ash 1.1,

Conrinentallnsurance Co. , 593 Pa. 523,932 A.2d 877 (2007).

(16) With respect to Lhe present case, the evidence clearly shows Ihat Fidelity did nol

have a reasonable basis fOT laking almost five (5) years to resolve Plaintiffs'

claim. At virtually every stage of Defendant's claims review and adjustment

there is a dj~1urbing pattern of extraordinary chron ic delay: Sec, Findings vf

Fact, , 11·38.

(17) Derelldant recognizes and readily acknowledges thal it shou ld have resolved

Plaintiffs' title insurance claim more quickly. However, Defendant argues that

its delay does not give rise 10 a cl aim for bad faith liability under 42 Po. C.S.

§8371 because Plaintiffs presented no evidence of any ill will, improper motive,

or dishonest purpose as tbe cause of fh e delay. Defendant instead assen s that its

actions merely amount to si mple neglect of the claim and bad judgment, which

they claim is not. enough to trigger liability under §8371.

(18) An insurer can, in good faith, delay payment based upon infonnation that ir does

not yet have. It is only if the delay was due to an evil motive or a reckless

ind ifference to the rights oftbe insured that had fa ith can be present. Younis

12 Circulated 02/27/2015 02:49 PM 1788a

Bros. & Co., Inc. v. eigna Worldwide Ins. Co., 882 F Supp. 1468, 1470 (E.n.

Pu. 1994), While not bound by this case we fi nd its reasoning most persuasive.

(19) However, the presenllitle insurance case is factua lly unique because Fidelity did

not deny coverage, Instead, Fidelity took 20 months to complete its investigation

and notify Plaintiffs that the claim . . . 'Us covered under their policy. See, Findings

of Pacl, 111 . 13. Defendant then dele>'ed payment for almost three years, only

fi nally tendering an inadequate offer once suil was filed Sec, Findings of FaCi, 1

18,30.

(20) This Court concludes that such all extreme delay can ccn ainl)' consti tute had

faith under 421)a.C.S. §S371, and it characteri7.es the inaction oflhe Defendant

as being outrageous and recklessly indifferent 10 the rights of its insured. our

Plaintiff. Younis Brothers & Company, supra.

(21) Fidelity knew of und was recklessly indiffercul due to jls lack ofa reasonable

basis for failing to resolve the Davis' claim during the nearly fi ve (5) year period

in question. Such reckless indifference can clearly be seen though Fidelity's

repeated failure 10 respond to Davis' constant inquiries regarding the Status of

his claim. This reckless indiff'Crencc is also i1hlstraled in the correspondence

between (he Defendanl claims attorney, Shawn Grimsley, Esq. , and the Claims

manager, Malachay Sulli\'an, Oil September 2, 2009, in which Mr. Grimsley

conveyed his concerns regarding the extreme and UIUlecessary delay involved

with the handli ng of the Davis' clai m liS well as the possibil ity that the insured

"may opt tosue us for bad fa ith if we don' t take some action relatively soon." PIt! Exh 2, doc. No. 297~298; Plif. Exh. 2, doc. No. 053. n~is communication

1) Circulated 02/27/2015 02:49 PM 1789a

marks the earliest definitive date, almost two (2) years post claim filing, when

Defendant knew that it had no reasonable basis 10 continue to deny, by delay,

the resolution of Plaintiffs' claim. Given this knowledge and their delay and lack

of action one can only conclude Defendant' s conduct is outrageous.

(22) Fidelity also displayed improper purpose in its delay such as ill will, improper

motive, dishonesty or self~intc resl through its dealings with adjoining property

owner Mr. Norella by knowingly threatening a mcritless quiet title suit. and

investigating his finances to determine whether he could afford to defend the

quiet title action instead of settling the claim and making the insured whole. Plif.

Exh. 14, Bartekdep. P. 43.1n JOwJ8.

(23) A lengthy delay in payment owed by an insurer does not automatically

constitute bad faith, since the delay CQuld be due to negligence. £1 80r COIp. v.

Fireman 's Fund Ins. Co., 787 F. Supp. 2d 34 1, J49 (£.0. Pa. 201 J). In Ef }Jor

Corp. v. Fireman's Fund Ins. Co., delay in the processing oflhe daim, because

the elaim had "fallen through the cracks;' did not constitute bad faith beeause

the delay was not knowing or reckless. ollly negligent. Therefore, a seven-month

dclay in the processing oflhe insured's claim after receipt of the expert report

did not constitute bad fai th. Jd.

(24) The length of Fidelity'S deJay in the present case greatly exceeds the seven-

month deJay ill El Bor Corp. v. Fir/!.man 's Fund Ins. Co. Further, fidelity was

repeatedly reminded by Davi s' numerous inquiries thltt his claim continued to

remain outslanding and unreSQlved.

14 Circulated 02/27/2015 02:49 PM 1790a

(25) There is sufficient credible evidence showing that the insurer's outrngeous

scheme and reckless indifference in turning a blind eye to Davis' claim hoping

that it would somehow resolve itsclf backflred. Fidelity's self-serving, self-

created position in reraining policy proceeds rightfully belonging to their

insured, OUT Plaintiff. presents a gross and reckless indifference to the rights of

the insured with whom they had a contractual relationship und arguably, a

fi duciary relationship as well. HoUoek v. Erie Ins. Exchange, 54 Pa. n. & C. 4lh 449, S18 (Pa.Com.PI. 2002). Fidelity's delay wttS not only due to negligence, but

also because of reckless di sregard ofthc PlaintifT.<;' rights, tlU'ough it s repeated

attempts over nearly five years to fmd a cheaper way of cscll.ping their liability

to settle the claim, while the Davis' waited and watched their proposed

subdivision languish.

(B) COMPENSATORY DAMAGES TO INSURED

(1) "Consequential damages are general ly understood to be other damages which

naturally and proximately flow from the breach and include three types oflost

profit damages: ( I) los( primary profits ; (2) lost secondary profits; and (3) loss

of prospective profits, also commonly referred to as good will damages."

AM/PM F}'[(m:hisc Association v. A tlantic RiChfield Co., 536 Pa. 110, 119,584

A.2d 915 (Pa. 1990).

(2) Howevt:r, statutorily, Plain(iffs cannot recover under 42 Pa. C,S, §&371 for Wly

compensatory or consequential damages. Birth Center, 787 A.2d at 403. Courts

applying §8371 have uniformly held thaI a successful plaintiITmay oilly recover

15 Circulated 02/27/2015 02:49 PM 1791 a

the damages that arc expressly provided by the statute: interest, court costs,

punitive damages. and attorney's fees. Id. at 402-403.

(3) Compensatory damages may be awarded,_howcver, under PClUlsyivania

common law, which has historically recognized the implied covenant of good

faith and fair dealing in the context of insurance law. Zologa II, Provident Life

and Ace Inc. Co. OfAmerica, 671 F.supp.2d 623, 630 (M.D. Pa. 2009).

(4) The general mle is that consequential damages are reco\'erable l!l contract nod

1011 actions where ( 1) there is evidence to est.'lblish them with reasonable

certainty; (2) there is evidence to show that they were the proximate

consequence of the wrong; and (3) in contract actions, they were reasonably

foreseeable. Delahanty v. Firs, I'ennsylvania Bank., ,vA. , 318 Pa. Super. 90, 464

A.2d 1243, 1257(\983).

(5) Plaintiffs' claims for compensatory damages are not limited solely to statutory

bad faith claims under Section 8371. They also include a bad faith claim arising

from Defendant's breach of the implied covenant or good fai th and fair dealing,

aud therefore their claim for compensatory damages is proper. Zaloga v.

Provident Life and Ace. Inc. Co. OfAmerica, at 63 1.

(6) To prevail on a breach of contract cauSe of action under Pennsylvania law, a

Plaintiff has the burden of showing the following: the existence of a contract,

including its essential terms; a breach of a dul)' imposed by the contract; and

damages (0 the Plaintiff as a result of tile breach. Care-Srales Bank'll. Cutillo,

723 A.2d 1053 , 1058 (po. SUPCL 1999).

16 Circulated 02/27/2015 02:49 PM 1792a

(7) PCIUlsylvania law implies a duly of good faith into an insurance contract and the

breach of such a dtJt)' constitules 2 breach of the insurance contract. Berg v_

Nationwide, 2012 Pa.Super. 8R, 44 A .3d 1164, 1170 (2012), citing Gray v.

Nationwide, 422 Pa, 500, 508, 223 A.2d 8, I I (1966).

(8) Here, the Plaintiffs assert that the Defendant breached the title insurance

contract entered into bet\veen the parties in at least three respects: (1) In failing

to fulfill its contractual obligations in a reasonably diligent mllnner dllC to taking

almost five years 10 resolve the claim; (2) By failing to pay the loss within 30

days of fixing the amount thereof. as required by the terms of the contract (PILe

Exh. J. '~ 12(a)); and, (3) By breaching their implied duty of good faith and faith

dealing with its insureds, by, among other things: delaying resolution of the

claim for nearly five years; repeatedly failing to communicate with its insureds

about the claim, despite repealed requests for information; and by committing

multiple violations of the Pennsylvania Unfair Insurance Practices Act and

Unfair Claims Settlement Practices Regulations.

(9) In addition to violation of Pennsylvania's Uad Faith statute, 42 Pa.C.S. §8371 .

this Court finds clear and convincing evidencc of bad faith conduct by

Defendant in the following:

(10) Through Defendant's failure to make a timely offer of settlement. Hollock v.

Erie Ins. Exchange, 54 Pa. D&C 4tll (Luzerne 2002), affd' 842 A.2d 409 (pa.

Super. 2004) (the court held thal bad faiUl conduct by an insurer may include the

failure to make a reasonable offer of settlement). Sec also, Klinger v. Slate

Farm, 115 F.3d 230 (3d. Cir. 1997).

J7 Circulated 02/27/2015 02:49 PM 1793a

(1 1) Through Derendant's failure to manage and supervise the handling of the Davis

claim . An insurer's failure to "efficiently, effectively, and professionally

manage" its insured's claim may serve as a basis for bad fai th. Sec, Liberty

Mutual Ins. Co. v. Paper Manufacturing Co., 753 F .Supp. 156, 159- 160 (E.n.

Pa. 1990) and Adamski, supra.

(12) l 'hrough Derendant'S elevating its own interest above that of its insured. An

insurer must give the interest s ()fits ifisured the snme faithfu l consideration that

it gives its own i!llcresls. Hollock, supra.

(13) Through the Defendant's failure to follow its own internal claims handling

guidelines (the failure of an insurance company to follow its own internal claims

handling guidelines may be evidence of not having a reasonable basis for

denying insurance benefits). Galka v. Harleysville Pennfand Insurance Co. ,

2005 Pa. D&C 4111 236 (Lacka. 2005.).

(14) It has also been held that an insurer can be held liable for bad faith where the

insurer's assessment of a claim is "less than honest, intelligent and objective."

Puritan Ins. Co. v. Canadian Ins. Ca., 775 F.2d 76 (3d Cir. 1985).

(15) We must also look to the Hollock trial court 's rendition of what constitutes bad

fai th \¥here it adopts the guidelines set forth in the Unfair Insurance Practices

Act, 40 P.S. § J 171 et seq. and the Pennsylvania Code regulations for insurance

practices, 31 Pa. Code § 146.1 et seq. Those segments that we find most

applicable are set forth below:

(16) Defendant violated 31 Pa. Code 146.6 - Standards for prompt invcstigation of

claims, which requires an lnS\ll'Cr to complete its ilwcstigatioll of a claim within

18 Circulated 02/27/2015 02:49 PM 1794a

30 days after notification of claim, unless the investigation cannot reasonably be

completed within the lime. If the investigation cannOl be completed within 30

days, and every 45 days thereafter, the insurer shall provide the claimant with a

reasonable written explanation for the delay and slale when Ii decisiOIl on the

claim may be expected. HeTC Defendant took 20 months to complete its

investigation, without the legally required communication and justification for

such a delay. Despite Plnintiffs' conslun! effOits. Defendant did not

communicate allY explanation for the delay to its insured.

( 17) Defendant repeatedly violated 40 P.S. I 171.5(IlXlO)(ii) (faili ng to acknowledge

and act promplly upon written or oral communication with respect to claims

arising under insumnce policies), and 31 Pa. Code § 146.5(c) (Failure to

acknowledge pertinent communications, requiring that Ihal an appropriate rely

shall be made within 10 working days 011 other pertinent communications from a

claimaIU which reasonably suggest thaI a response is expected). Here Defendant

routinely ignored Plaintiffs, who initiated repented communications. wilh his

insurcr over a period of years.

(18) Defendant v iohued 40 1>.8. 11 7 1.5(a)( 10)(v) - Failing to affirm or deny

coverage of claims within a reasonable time after proof ofloss statements have

been completod and communicated to the company or its representative. In

support of this conclusion the Court adopts, by reference thereto, those

conclusions of law related to Defendant's wlrcasonable basis to delay/deny

Plaintiffs' claim, supra, as it fully set [01111 herein at length . See, Findings of

Fact, 20, 24, 27, 37, eLc.

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(19) Defendant violated 40 P.S. 1 ! 71.5(a)(1 O)(vi) - "Not attempting in good faith to

effectuate prompt, fair and equitable settlements of claims in which the

company's liability under the policy has become reasonably clear." III the

prescnt case, the testimony established thal Defendant's liability under the

policy was clear within months of tile claim being filed . However, at no lime

prior to this lawsuit being filed on December 14, 201 0. was a settlement offer

made to Mr. Nocella, the true owner of the land, 0 1' to the insureds. Mr. and Mrs.

Davis.

(20) The unreasonable delay of nearly five years, along with multiple, and often

repeated, violations ofPcnnsylvania lllw by Defendant leads the Court (0

conclude that the Defendant's conduct extended well beyoOO mere negligence or

misjudgment and instead demonstrated bad faith, reckless indifference and

outrageous conduct towards its insureds. This is especially so when it is noted

above, that it took the fil ing of this lawsuit to finally motivate Defendant to

authorize monetary authority on thi s claim and to resolve the dispute.

(21) The Plaintiffs have provided estimates for the increased costs of construction

between 2007 and 2013, and the depreciation in market value of the townhouses.

These numbers amount to $89,760.00 and S272 ,400.00 respectively. N. T. Vol. I.

p . 163; N. T. Vol. I. p. 232. 239-240 and Plif. Exil. 39.

(22) However, the Court finds that the futuristic appraisal numbers lack credibility

aud nrc therefore unpersuasive. The timeline for construction and the rollout and

readincss of the units for market are not based upon any fixed construction

schedule, nor is their completion and entry into the marketplace clearly

20 Circulated 02/27/2015 02:49 PM 1796a

determined. We therefore exercise our discretion as fact fi nder and allow

$ 135,000.00 for depreciation as well as $89,760.00 for Plaintiffs' increased

construction costs.

(C) PUNITIVE DAMAGES

(\) VCIUlsylvania courts have established Ihat a finding of bad faith against an

insurer toward its insured was the only statutory prerequisite to punitive

damages award in all aclion arising under an insurance policy pursuant to 42

Pa.C.S.A . §8371. Hollock, supra at 41 8.

(2) It is wen recognized Ihat a dctennination of bad fai th does not necessitate an

award of punilivc damages, but it does allow for lUl awnrd of punitive damages

without additional proof, subject 10 the trial court's exercise of discretion. Jd.. at

419.

(3) For the reasons sct forth above, we lind Ihal Fidelity's bad faith conduct was

clearly proven to be outrageous and egregious and displayed a reckless disregard

toward the rights and interests of the Davis'. Therefore, the Davis' are entitled to

an award of punitive damages under 42 Pa C.S. §8371 (8). Adamski, supra.

(4) TIle Pennsylvania Superior Court ooncluded "the size of n punitive damages

award must be reasonably related to the State's int.erest in punishing and

deterring the particular bcbavior of the defendant and not the product of

arbitrariness or unfettered discretion." Shiner v. Moriarty. 706 A.2d 1128, 1241

(Pa. Super. 1998).

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(5) Punitive damages are directed towards deterrence and retribution. Slate Farm v.

Campb,lI, 538 U.S. 408, 419 (2003).

(6) In assessing punitive damages, the trier affect should consider the character of

the defclldant's eel, the nature and extent of the hAnn 10 the plaintiff~hat the

defendant caused or intended to cause, and the wealth of the defendant. SHV

Coa/Inc. v. Colltjnentai Grain Co., 526 Ila.. 489, 493-94, 587 A.2d 702, 704

(1991).

(7) A defendant's nct worth has been recognized "as u vulid measure of its wealth"

for purposes of punitive damages. See Sprague v. Walfer, 441 Pa . Super. 1,61·

63,656 A.2d 890, 920 (1995).

(8) Davis nnd Fidelity have stipulated through the admission of Plainli ffExhib its

20, 2 J and 22, Ihat the Defendant' s nct worth between 2009 und 201 I ranged

between $363, 555,922.00 and $528, 567, 433.00.

(9) However, the Fourteenth Amendment prohibits the imposition of grossly

excessive 01" arbitrary punishments, and mandates that the proportionality

between the actual or potential haml suffered Ilnd the si7.e of the punitive

damages award is relevant. Stale Farm v. Campbell, at 424 ·426.

(10) Although there is no "bright-line" 1est that a court can apply to ensure that the

size o rall award ofpunj(jve damages complies with due process, several factors

afe called into question, the Supreme Court has noted thilt "in practice, few

awards exceeding a single-digit mIlo win satisfy due process." Id. at 425;

Hollock, supru at 421.

22 Circulated 02/27/2015 02:49 PM 1798a

(1 1) In analyzing the proportionality between the compensatory damages and the

punitive damages, the amount of counsel fees aIld costs awarded is to be

included in the compensatory damages fi gure. Jd. at 421·422. 111crelore. the

lotal compensatory damages figure for the purpose of calculating pllnitive

damages is:

$89,760.00 - Increased Construction Costs

$1 35,000.00 - Depreciation $158,450.00 - Attorney' s Fees SIO,OI 7.31 Litigation Costs and Expenses Total Co mpenslltory Damages: $:\93,22 7.31

(12) Given Fidelity's net worth (averaging $454.557,975.67 from 2009 through

2011, based on stipulation of tlle parties), u significant punitive damflge award is

necessary in order to deter Fidelity from engaging in similar misconduct towards

other policy holders.

(13) The significant hann caused to Plaintiffs in essentially stopping their business

investment find development for years while Fidelity refu sed to act must also be

considered in calctilating punitive damages.

(14) Taking all oCthe above factors into consideration we find that an appropriate

multiplier is an award of four times the compensatory damages as rendered by

this Court as $393,227.3 1. The total punitive damages award equals

$1,572,909,24.

( J5) 1l1jS approach is significant in terms oCthe insurer's wealth while it accounts fo r

Defendant ' s C(lutinuing fmaneial stability and wi ll not destroy its operations.

23 Circulated 02/27/2015 02:49 PM 1799a

Such an amount also operates as a deterrent to the Defendant, as well ~s other

insurers in the future. Shiner, supra.

(D) I NTERRS'I'

(l ) A separate issue the Court is clIlled to confront is the subject matter of interest as

applied to compensatory damages as applicable under 42 PII. C.SA. § 8371.

(2) 42 Pa. e.S.A. §8371 prescribes that upon a finding of bad faith, by an insurer, a

COUl'1 may award interest on the amOtml of lhe claim from the date the claim was

made by the insured in an amount equal (0 the prime rate of interest plus 3%.

(3) The statute plainly states that interest should be applied to the amOUl\l ofthc

claim from the rla,e the claim was made. See 42 Pa.C.S.A. §8371(1).

(4) The date we shal l assess as (he dare the claim was made is October 15, 2007

(See, Findings of Fact "i 11). 1bis date mllrks the day that Richard and Mwia

Davis had filed a legitimate claim arising from their insurance policy. Therefore, .

we sha11 apply 3% above the prime mtc of intel'cst to the verdict i1l1ile

underlying action of $224,760.00 payable by Fidelity National Insurance

Comp!lIlY pursuant to 42 Pa. C.S.A. §837 1( J).

(5) Pa. R.C.P. 238 lists the prime roles of interest for each year as set forth in the

first ed ition oCtile Wall Street Journal for the purpose of assessing damages.

Under !la. R.C.P. 238, the prime rate of interest for the applicable years was

8.25% for 2007, 7.25% for 2008. and 3.25% for 2009 ihrough 2013.

24 Circulated 02/27/2015 02:49 PM 1800a

(6) Therefore, calculating this interest rAte plus 3%, the amount of interest due is to

equa l $96,610.04, which represents lhe period ofOclober 15,2007 through

August 15,2013.

2007 77 Days at 1I .25% $5,397.16

2008 366 Days al 10.25% $24,326.33

- 2009 365 Days 31 6.25% $14,494.49

2010 365 Days at 6.25% $1 4,494.49

20 11 365 Days at 6.25% $14.494.49

2012 366 Days aI6.25% $14,535.46

2013 226 Days at 6.25% $8,867.62

(E) ATTORNEY' S FEES

(I) Pa.C.S. §8371 provides ror the recovery of counsel fees and expenses "to

compensate the pJaintifffor having to pay an attorney to get that to which they

were contractually entitled" and punitive damages "to punish the defendant for

its bad fRith in fu iling to do lhat which it was contractually obligated to do."

Klinger, supra at 236.

25 Circulated 02/27/2015 02:49 PM 1801a

(2) In the present case, attllrncy's fees and costs were admitted through stipulatioIl

of the patties in Plaintiffs ' Exhibit 17 and Plaintiffs' Exhibit 18 respectively.

N. T. January 31, 2013, p. 97.

(3) Pla intiffs' Exhibit 17 indicates that the reasonable value of said legal services is

SI S8,4S0.00.PIt( Exh. 17.

(4) Thi s amount includes 633 8 service hours at $250. 00 an hour. Id. The Court

finds the amount of these legal fees 10 be rcaSOlUl.ble Wld customary for our urea.

(S) Plaintiffs ' Exhibit 18 indiCf!les that Plaintiffs' litigation costs and expenses from

trial through die beginning of triai totaled $7, 392.3 I and thaI PlaintitTs'

Iitigntjon cost and expenses from Irial through the current date totaled an

add itional·$2,625. Thert:fore Plaintiffs' IOUlllitigation costs and expenses are

$10, 0 17.31. As they are well documented the court accepts these costs and

expenses as offered.

(6) , This Couri therefore finds the amount assessed for both attorney' s fees to be a

reasonable and acceptable fee, and the amount measured for litigation costs and

expenses to be reasonable and acceptable.

(7) Therefore, OU( assessment of attorney's fees and cost will include an award to

Richard Davis and Marin Davis in the amount of$168,467.31.

An appropriate Order follow

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R1CHARD DAVIS and MARlA THE COURT OF COMMON PLEAS DAV IS, OF LACKAWANNA COUNTY Plaintiffs,

VS. CIVIL ACTION· LA W

FIDELITY NATlONAL INSURANCE . COMPANY, d/b/a FIDELITY NATIONAl TITLE1NSURANCE COMPANY OFNEW YORK, Defendants. NO. 2009-cv-6IS4

onDER AND NOW, this 1SIb day of August 2013, upon consideration of the parties'

verbal and written arguments of counsel and all testimony and evidence presented to the

COUIt on January 29, 30 and 31. 2013 and in accordanco with the preceding

Memorandum it is hereby ORDERED AND DECREED as follows:

(1) A verdict is entered in favor of the plaintiffs, Richard Davis and Maria Davis,

and against Ihe defendant, Fidelity National Insurance Co., pursuant to 42

Pa.e.S. §8371 based upon clear and convincing evidence that the defendant,

Fidelity National Insurance Co., acted in bad faith toward its insureds, Richard

Davis and Maria Davis, and pursuant to Plaintiffs' bad fai th claim based upon

clear and convincing evidence that Defendant breached its implied covenant of

good faWl and fairdea li ng towards the insured.

(2) The Court fmds that the Defendant, Fidelity National Insurance Company is

liable for the verdict rendered, totaling 5224,760.00 compensatory damages

27 Circulated 02/27/2015 02:49 PM 1803a

(increased construction costs plus depreciation). in the underlying action, pillS

interest at the rate of3% above the prime ratc of interest from the date of

October 15,2007, the claim was made through August 15, 2013 equal to

S96,610.04.

(3) 1bc Court awards attorney's fees and costs to Richard Davis and Maria Davis

in Iheamount 0(S168,467.3l.

(4) The Court awards punitive dnmagcs against the Defendant , Fidelity National

Insurance Company, in an amoum or four time.:; the total compensatory damages

(increased construction costs, depreciation, Iluomey's fccs.litigatioll costs and

expeuses) awarded by this Court equali ng $1,572,909 .24.

$%,610.04 simple interest 10/15/07 - 8/1 SIl3

$1,572,909.24 punitive award (4 x total compensatory damages verdict)

1224,760.00 compensatory damages

S168,467.3] Davis' atlorney' s fees and costs

$2,062,746.59 Total verdict

(6) Judgment is entered in the alllount of $2,062.746.59 for the Plaiutiffs.

BY TIlE COURT

CC: Written notice ()fentry ofthejoregoing Memorandum and Order has been

28 Circulated 02/27/2015 02:49 PM 1804a

,.

provided fa each party pursuant to Pa. R. Civ,Pro. 236(a){2) by mailing time stamped copies (0 ;

Attorney for Plaintiffs: SeJingo Guagliardo, LLC Carl 1. Guagliardo , Esq . 345 Market Street Kingston, PA 18704

6!1Q..mey fOI" Defendant: Durkin and MacDonald, LLC Lawrence A. Durkin, Esq. 108 N. Washington Avenue, Sle. 1000 Scranton, PA 18503

29 Circulated 02/27/2015 02:49 PM 1988a

RlCHARD DAVIS and THE COURT OF COMMON PLEAS MARlA DAVIS OF LAC~W~~:<;OUNTY Plaintiffs -- . v. , ::f~~Iif.l[).W FIDELITY NATIONAL 2~I(),CW8868 INSURANCE COMPANY, ,~.: .J ', • • •• "- .,'::C:i', dib/. FIDELITY NATIONAL TiTLE INSURANCE COMPANY OF NEW YORK Defendants

M1NORA,J.

INTRODUCTION

Before the Court is Defendant Fidelity National Inswance Company (hereinafter

"Defendant")'s Motion for Post-TrjaJ Reliefseeking reconsideration oflhis Honorable

CoUJ1's August 15.2013 Memorandwn and Order. For the reasons that follow ,

Defendant's Motion is denied and dismissed. and the COW1 'SNon·Jury Decision filed

August 15, 2013 is affirmed in all respects.

PROCEDURAL mSTORY

This Honorable Court's August 15,2013 Memorandwn and Order entered

judgment in favor ofPlainliifs and against Defendant in the amount of $2,062.746.59

pursuant to our finding of Defendant's breach of contract and statutory insurance bad

faith. Both parties filed Motions for Post-TriaJ Relicfto the August 15.2013 Order.

Plaintiff's motion, filed Seplember 12, 2013, was denied and dismissed by this Court on

September 16, 2013.

1 Circulated 02/27/2015 02:49 PM 1989a

Defendant's MOiion for Post-Trial Relief was filed September 2, 2013 , While

Defendant's Motion was pending in the trial court, Defendant filed a Nolice of Appeal

of the Order on September 12, 2013, the same day that Plaintiffs filed their Motion fot

Post-Trial Relief, On January 17.2014, the Appeal was quashed by the Pennsylvania

Superior Court since Defendant's post-trial motion remained pending before oW' Court.

Defendant's Brief in Support of its Motion for Post-Trial Reliefand Plaintiffs'

Briefjn Opposition to Defendants' Motion were both filed December 23, 2013.

Argument on Defendant's Motion was held January 14.2014.

DEFENDANTS' LEGAL ARGUMENT

Defendant moves for an Order granting a new trial with respect to all issues

pursuant to Pa.R,C.P. 2227 ,1(a){J), (2), (4), and (5), or in the alternative. for an Order

entering judgment in Defendant's favor, or an Order modifying or changing the August

1S, 2013 Order. Defendant alleges that the court's damages award of$2.062,746.59 is

not supponed by Pennsylvania law. Specifically. Defendantargue~ that the trial court

applied the wrong standard in assessing Plaintiffs' claim of Oefendants' bad faith and

erred In awarding lost profits and punitive damages. Defendant's arguments ~ further

described in the LegaJ Analysis section ohhls Opinion betow.

LEGAL STANDARD Post-Trial MQ\ions Regarding Request for a New Trial

The filing and disposition of Defendant's Post-Trial Motion is governed by

Pa.R,C ,P. 227, I entitled "Post-Trial Relief." The rule indicates at PaRC.P. 227.1 (a):

2 Circulated 02/27/2015 02:49 PM 1990a

..After trial and upon the written motions fOr Post-Trial Rel ieffiled by any party. th~ court may: ( I) Order I Dew trial as to all or any of the issues; or (2) Direct the entry of judgment in favor of any party; or (3) Remove a non-suit; or (4) Afi"um, modify, or change the decision, or (5) Enler any other appropriate order. Pa.R.C.P, 227.1 (e) states thai posf.tnal motions shall be filed within ten days

after . . . (2) nOlice of nonsuit or the filing oflhe detision in the case ofa trial without a

jury. See CQvalesky v, Covalesky, 2003-EQ-60069 at 2·3. (Lacka. Co. Jan. 14. 2014).

Regarding post-trial motions. trial court, possess broad discretion to grant or

deny a new trial. Covaleskv. 2003-EQ-60069 a1 7; Hannan v. Board, 562 Pa. 455, 465,

755 A.2d 1116 (2000). The granting or denial of a new trial can be an effective

instrumentality for seeking and achieving justice in those instances where the original

trial is proven [0 have failed to produceajusl and fai r result. Covalesky. 2003-EQ-

60069 at 7 (citing Doman v. McCanhy. 412 Pa, 595. 195 A.2d 520, 522 (1963);

Hannan, 562 Pa, at 466). Review of a denial of a new trial request requires the same

analysis as a review of a grant of new trial. Covalesky, supra at 13 (citing Luzerne

County Flood Protection Authority, 825 A.2d at 783-84). If support for a tria) coun's

decision is found in the record. its' order must be affinned. Rand! V. Abex Corn .. 611

A.2d 228. 448 Pa. 224 (pa Sup", 1996).

In n:viewing post-trial motions seeking a new trill), a court must begin with an

analysis oflhe alleged underlying conduct or omission by the trial court that fonns the

basis for the request or motion. Th is analysis involves a two-step process. First, the

court must decide whether one or more mistakes that implicate facruaJ, legal, or

discretionary maners may have occurred during trial. Second, if the court detennines

3 Circulated 02/27/2015 02:49 PM 1991a

than an errOT or mistake did occur, it must determine if the alleged mistake Or elTor was

so grievous as to provide a sufficient basis for granting a new trial. ~ CQvalesky,

supra at 8 (citing Harman, 562 Pa, 8t 467; Bey v. Sacks. 789 A.2d 232, 236 (pa. Super.

2001); Luzerne Co, Flood PrQtection Authority v, Reilly. 825 A.2d 779 (pa Cmwtth.

2003).

A new trial is not warranted simply because an error may have occurred al tria)

or because another judge may have ruled differently. CQvalesky. 2003·EQ..60069 supra,

at 8. The moving party must prove they suffered some prejUdice as a result oflhe error.

M:. (citing.lkt. 789 A,2d at 236). This analysis implicates the harmless error doctrine, which underlies every docision to grant or deny a new trial. Id. This is so because the

court, being a human institution, cannot ever guarantee a perfect trial. 'd. What It seeks

to do is provide a trial free of reversible error concluding with a fair result. ill

In our review of Defendant's Motion for Post-Trial Relief, we are guided by the

law we followed in Covalesky, 2003-EQ-60069 (Jan. 14,2014) 819, which states:

In performing the first stage of analysis, the court is guided by two scopes of review. Where II mistake or series ofmistakee are alleged to have occurred, which is our case, the coun is to apply a narrow scope of review using the applicable standards for factual , legal, or discretionary matter! alleged to be in enor. Conversely, if allegations are made that a new trial is appropriate "in the interests of justice" or in the name ofjustice then a broad scope of review implicating the entire trial record is in ordO'_ Hannan. 562 Pa.. at 467-68; DjviJIy v. Pan Authority ofAlleghenv County. 810 A.2d 755 (pa.. Cmwlth. 2000), appeal denied, 829 A.2d 1158, 574 Pa, 749. Using the narrow scope of review, we look to the type of error alleged . If the error alleged is factual, then factual errOr analysis of a narrow scope must be conducted. ~ In our case, the Court acted as the finder of fact. Ajury, like any other fact finder, ....... may accept

4 Circulated 02/27/2015 02:49 PM 1992a

all, none, or part cfany expert's testimony .. ," (emphasis added) (citing Donollghc v, Lincoln Electric Co., 936 A.2d 52 (pa. Super. 2007» . Even un-contradicted testimony need not be accepted as true or accurate, especially opinion evidence. Taliaferro v. Darky Twp. Zoning Hearing Bd., 873 A.2d 807 (Pa. Cmwltb. 2005). Therefore, the court's findings of fact must be tested under an abuse of discretion layer of analysis. If the mistake alleged involves a discretionary act, it should be tested for abuse oftbc exercise: of that discretion in order to determine: if clTOr bas occurred. The standard of review of a triaJ cow1's decisioo post-trial is whether the trial coun paJpably am clearly abused its discretion or committed an error of law which controlled the outcome ofthec8sc. Coker v. Flickinger Co., 55] Pa. 441, 445, 625 A.2d 1181 (pa. \993).. , . "Abuse of discretion is not a meTe error of judgment; one must show that the law was misapplied or overridden, or that thl! judgment exercised was manifestly unreasollable or the result of bias, prejudice or partiality." Cova1esky, supra at 13 (citing Cacurak v. St. Francis Medical Center. 823 A.2d 159 (pa. SUp

Covaleskv v. Coyalesky, 2003-EQ-60069. supra at 9, 13.

In Coyaleskv. we also noted ha nlUTOW scope of review is appropriate to apply

't\'hen specific reasons are raised as the only basis for a new trial." !5L. at 10. Since specific reasons were the only reasons raised as the basis for a new trial in Coyalesky, a

narrow scope of review was perl'onned. Td. Likewise, in the mattc:r before us, Defendant

Davis bas raised specinc issues on their respective motion for a new trial. Therefore the

narrow scope of review is required in the present case.

LEGAL ANALYSIS To assess Defendants' claims, we must first exwnine whether we believe a

mistake was made at the trial court Covalesky, supra at 8·9; this Opinion at 34. If the

5 Circulated 02/27/2015 02:49 PM 1993a

court concludes a mistake was made, we must analyze whether that error so prejudiced

the moving party that it rose beyond harmless error to the point of being reversible

error. Coyalesky, supra at 13 (internal citations omitted).

J. The T rial COil" Properly Found Th at Defendant! Breached the Ba d Faith Stalute. 42 Pa.C.S. § 8311 Defendant first argues that the Court's finding that Defendants breached the Bad

faith Statute, 42 Pa.e.S . § 8371 , is erroneous because Plaintiffs did not meet their

burden of proving bad fai tb by the standard of clear and convincing evidence.

We fmd no error was made in our detemlination of Defendatlts' bad faith

pursuant to 42 Pa.C.S. § 8371 . Support for Defendants' bad fruth by cle8f and

convincing evidence exists in the rtoord in the form of correspondence between

Plaintiff· insureds and Defendant-insurer; correspondence between Defendants' claims

attorney and claim manager; testimony of witnesses of Plaintiff and Defendant; and in

the form of admissions by Defendant-insurer. as noted in our August IS, 2013 Opinion

at pp.g-9. See!.W2 Defendant's Proposed Conclusions of Law Nos. 3-4.

Accordingly, since the record supports our factual conclusion, the relief requested

by Defendants with respect to the erial court's finding of Defendant's bad faith is denied

and dismissed.

II. The T rial Court'" Lost Pro fit s Award Was Proper

Defendant next argues the trial COurt'1 award of lost profIts was erroneous because

the lost profits award d id not follow from an application of the standard of clear and

6 Circulated 02/27/2015 02:49 PM 1994a

convincing evidence. Specifically, DefendiUlt argues that although the trial court

acknowledged this standard, there was no showing that I. PJajntiffs' dama.ges were

proximately caused by Defendants' wrong. 2. mere was no reasonably certain proof of

the damages, and 3. the damages were nOl foreseeable. See Defendant', Briefin

Support of its Motion for Post-Trial Relief al pp. 4, 20, and 24. Built into Defendant 's

argwnent is their claim that Plaintiffs did nOI establish lost profits with reasonable

certainty since the projected profit was speculative with respect 10 increased

construction costS and depreciation of the townhomes. IQ. at pp. 6, 9, and 11.

As wedid in OUI review of our finding of Defendant's § 8371 bad faith above, if

the coun must review whether a mistake was made in its determination of lost profits,

and if we conclude there was such mistake, we must analyze whether that error so

prejudiced the moving party that it rose beyond hannless enor. See this Opinion It 34,

citing CQvaJesky, supra, at 8-9, 13; Harman, 562 Pa. at 467;~, 789 A.2d at 236; and

Luzerne Co. Flood Protection Auth., 825 A.2d 779. With respect to the court's analysis

of lost profits., we find no mista.'< e was made. Our conclusion is supported by discussion

of the 3 elements on this page above with respect to Plaintiffs' increased construction

costs and depreciation damages due to Defendant's conduct.

1. There was a Showing that Plaintiffs ' Damages Were Proximately Caused by Defendants' Wrong Defendants allege that the court did not prove by clear and convincing evidence that

Plaintiffs' dllfflsges were proximately caused by Defendant' s wrong. ~ Defendant's

Brief in Support ofits Malian for Post-Trial Reliefal 20. As discussed in our August

1S, 2013 Opinion, this Court, as finder of faCt and assessor of credibility, properl y

7 Circulated 02/27/2015 02:49 PM 1995a

found Defendant's bad faith. breach of contract, and breach of the covenants of good

faith and fair dealing were the cause of the delay in construction of Plaintiffs' twelve

towMomes . ~ Dayy v. fidelity National Ins. CQ .• Memorandum and Order. 2010-

CV ·8868, (Aug. 15, 20 IJ) at pp. 12·18 (hereinafter "Davis, 201 O-CY -8868"). The trial

coun properly assessed its award of primary lost profits, based on its review of the

record. The court found credible the evidence presented by Plaintiff and Defendant

appraisers and Plaintiffs' contractor regarding depreciation of home value! and

increased construction costs of the homes as a result afme delay in their construction.

Accordingly, since the record supports our factual conclusion, we find no error that

Plaintiffs' damages were proximately caused by Defendant's wrong.

2. Plaintiffs L9s;t. Profit Damages (As Laid Out By !he Coun With R~ct So The Demeeiation and Increased Construction Cost Damages. Included in the CQurt's De1eanination QfLQSl Profits) Were Established with Reasonable Certainty Defendants also argue the trial court's lost profits award flows from a

misapplication of the correct legal siandard requiring "reasonably certain proof."

Defendants allege that the losl profits award was precluded by the trial coun's own

findings concerning the lack of evidence for any timeframe for development and

construction and the unreHability of hypothetical valuations, and specifically in the

court's assessment of depl1!ciation damages and increased construction costs. ~

Defendant's Brief in Support of its MOlion for Post-Trial Reliefst pp.17·18.

As we did above in our review oftbe August 1S, 2013 fmdings of Defendant's bad

faith and Defendant's wrong causing Plainliffharm, we again note that to Whether there

was 8 mistake, a court must begin with an analysis or the alleged underlying conduct or

8 Circulated 02/27/2015 02:49 PM 1996a

omission by the trial court that forms the basis for the request or motion for new trial.

Next.. the court must also decide whether there are one or more mistakes that implicate

factual. legal, or discretionary maners, that may have occurred during trial . See this

Opinion at 3-4 (citing Covaleslcy. 200J-EQ-60069 at 8-9. 13; Hllmlan. 562 Pa, at 467;

lky. 789 A.2d at 236; Luzerne Co, Flood Protection Aulh .• 825 A.2d 779). As sel forth

below in sections a. and h. ~Iow, we hold that based on !.he record there was no

mistake in our finding of lost profits. We also hold lost profits ~re established with a

reasonable certainty.

a. The Trial Court Properly Detennined Depreciation Damages

This Court made no mistake in its analysis of depreciation damages. The trial

court, as sale wesSOl' of credibility, may believe all, part, or none orlhe evidence

presented Lou Balti Construction v, Harbulak, 2000 Pa. Super. 287, 760 A.2d 896, 898

(2000). This Court found the evidence offered by Plaintiff and Defendants' licensed real

estate appraisers '"to be competent, credible, rele'\l8Dt, and admissible." ~ Dayis. 20 I ()..

CV-8868, lntroduclion al p.2, and Conclusiorlll of Law at p.21 '20. The Court. in

properly exertising its discretion as fact finder, determined a depreciation value of the

townhomes was somewhere in between the timelines asserted by Plaintiff and

Defendants' expert real estate appraisers, and allowed for SI35,OOO for depreciation,

half of what Plaintiff's expert appf'.llsed for depreciation. SM: ~ 20 IO-CV -8868 a1

p.2l. Where the amount of damages can be fairly estimaU!d from the evidence, the

recovery will be sustained even though such amount cannot be determined with

complete accuracy. Kaczkowski v. Bolubasz.49 1 Po. 561 , 567,421 A.2d 1027 (1980).

9 Circulated 02/27/2015 02:49 PM 1997a

Accordingly, since the trial CQW1'S determination of depreciation dameges are

lIUpported in me record in the form oflhe testimony of Plaintiff and Defendant's

appraisers, depreciation damages were established with a reasonable certainty. As such,

we find no misWcc made by the trial oourt in its calculation of depreciation damages.

b. The Trial CQurt Properly Detennined Increased Construction Costs Likewise, in pe:rfonning the same review of whether the court made a mistake in its

finding ofPlaiotifrs increased comtruction costs of the lownhomes, the trilll court

made no such mistake. m Covalesky. 2003·EQ·60069 at 8·9,13; Hannan, 562 Pa. at

467; Bey. 789 A.2d 111236; Luzerne Co. Flood Protection Auth. 82S A.2d 779. The trial

coun found Plaintiffs' building contractor', testimony and evidence with regard to

increased construction costs to be "competent, credible, relevant, and admissible," See

~ 2010-CV-8868, Introduction at p.2 and Conclusions of Law at p.21 . The court's

detennination as to increased con3truction costs is therefore supported by testimony in

the t"erord. We find no error in the calculation of increased construction costs.

Accordingly, since the trial coul1 's findings of de precialion and increased

construction cOSts are both supported 10 the record. the trial coun made no mistake in its

findings as to lost profits. Lost profi ts were established with reasooable certainty.

3. The Trial Court Properly Found Thllt Plantlffs' Lost Profits Wele Foreseeable Finally, in our review of the trial court's detmnination of lost profits. we must

assess whether the court made a mistake in its delermination that Plaimiffs' lost profit!

were foreseeable. See this Opinion Ilt)'4; Covalesky, 2003·EQ-60069 at 8·9. The trial

10 Circulated 02/27/2015 02:49 PM 1998a

coun properly found that Plaintiffs' losl profits were foreseeable. This de1ermination is

supported by the recoro. See Davis. 2010-CV-8868. Findings of FIK:[ at pp.2-8.

This court, wing its discretion as fact finder, fOWld credible Plaintiffs' evidence

at trial thaI Defendant had knowledge that Plaintiffs' title insurance policy was for

residential development. including the construction oftownhomes. The court found

Defendant had this knowledge both before and at the time the policy was issued.

We also found credible evidence in the record showing that Defendant! were

aware of the delay they had caused in the construction. See N.T. Vo!.l. p33-34

(hereinafter "N.T."); Davis. 2010-CV-8868. Non-Jury Trial (Lacka Co.) (Jan. 29-.3 I,

2013). Tn addition, the record supports that it was reasonable for Drlendant to have

known or should have known market conditions change from year to year and delay

would affect the value of Plaintiffs' development. Defendants' appraiser Mr. YUler,

acknowledged at trial how market condhions can change drastically from year to year.

~ N,T. Vol. JJl p.69 line 24~25 .

Therefore, we made no mistake in finding Plaintiffs' damages for lost profits in

the form of increased cost of wnstr\1ction and depreciation were reasonably foreseeab le,

As this court properly exm:ised its discretion as fact finder to determine thai 1.

Plaintiffs' lost profits were caused by Defendant's wrong; 2. the lost profits were

established with reasonable certainty; and 3. the lost profilS were reasonably

foreseeable, as !Upported by the retord, there was no mistake in the court's

determination of lost profits. Accordingly, the relief requested by Defendants witb

respect to the trial court's finding or lost profits is denied and dismissed,

11 Circulated 02/27/2015 02:49 PM 1999a

Ill. Whether Tbe Trial Court', Award 0(1.011 Profits Was "In Derogation oftbe Contractua l Liability In the Title Insuraoce Policy" h to No Avail

Defendant next argues that the trial court's award of compensatory damagt3 in

the fonn oflost profits was trial coUrt error because a lost profits award is precluded by

the tide insurance policy. S« Defendant's Brief in Support of Motion for Post-Trial

Relief at p.2 L Defendant's argument is without merit. No mislake was made at the trial

court. ~ Covalesky. 2003·CV -60069 at &-9. As noted in our August 15, 2013 Opinion

!It p. t 6, in Pennsylvania, consequential damages may be awarded for bad faith. ~

~ Opinion, Conclusions of Law at p.IS 1 I. As addressed both in the August 15,

2013 Opinion at pp.13-17 and p,21 and in this Opinion on p.6, the trial court properly

found that Defendal'lt engaged in bad faith conduct under 42 Pa.C.S . § 8371(a) and that

Plaintiffs endUIcd lost profits. FinaJly, primary lost profits are a proper measure of

consequential damages in this case. Davis. 2010·CV·8868 at p.I S ,2 and p.16 ~ 3.

In properly detennining Defendant's bad faith and Plaintiffs' lost profits being

caused by this bad faith, the triaJ court's award ofJOSt profits, supported by the record,

was appropriate. Defendant's requested relief with respect La a lost profits award "in

derogation of the contractual liability in the ... policy" is denied and dismissed.

IV. The Trial Court',PuDitive Damages Award ofSl.S72.909.24 Wu Proper Defendant abo alleges that the trial court erred in awarding ex.cessive punitive

damages because there was no finding ofi ll~will , fraud, or dishonest purpose by

Defendant. We hold there was no mistake in the trial court's conclusion of Defendant's

ill-will and resulting calculation of punitive damages. See ~ 2010-CV-8868 at p. Circulated 02/27/2015 02:49 PM 2000a

14 , 22, The punitive damages award is based on the various factors set forth in detail in

OUT August 15.2013 Opinion. all of which are supported in the record through

stipulations, submissions of the parties, exhibits, and testimony. See Davis. 20tO-CV·

8868, at pp.21 ·23. In addition the facts of oW' case follow case law on punitive damage

multipliers . .l!!..; see also Plaintiff's Brief in Opposition to Defendant's Motion ror Post

Trial Reliefal pp.18-19 (and case law within). As the record suppol1S the pWlitive

damages award. no mistake has been made. See CQvalesky, supra at 8-9. Therefore, the

relief requested by Defendants with regard to punitive damages is denied and dismissed.

Since the record supports the trial court's decisions as to all components mised

by Defendant in Defendant's Motion for Post-Trial Relief, the trial court' s order must

be af'finned. Rand! v, Abex Corn.. 671 A.2d 228, 448 Pa 224 (Pa, Super. 1996)

(emphasis addocl).

An appropriate final order and entry of judgment follows.

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RlCHARD DAVIS and THE COURT OF COMMON PLEAS MARlADAVlS Of LACKAWANNA COUNTY Plaintiffs • -:- ,. to, , L~'I .' ;.~. I~ " .',,: .: y, CIVIL ACTION· LAW Z6\\ liAR 28 P 2' ~ 1 FIDELITY NATIONAL 2010·CV·8868 INSURANCE COMPANY, " d/b/. FIDELITY NATIONAL ,." . •,i ... " .... ~'C"" vh". . TITLE INSURANCE COMPANY OF NEW YORK Defendants

FINAL ORDER

AND NOW, this Zgtt.dBy of March 2014, upon this Court's thorough review of

the pleadings, the answers thereto, the briefs in support and in opposition, the trial

record transcript and arguments of able counsel, it is hereby held:

(I) Defendants' Motion for Post-Trial Relief is DENIED and DlSMJSSED;

(2) The Non-Jury Decision by the Court filro August 15,2013 is hereby

AFFIRMED in all respetts per Pa.R.C,P. 227.1;

(3) The Clerk of Judicial Records is directed to enter judgment in accordance

with the Non·Jury Decision and Order filed August 15,20 13;

(4) This Order, in conjunction with our non-jury decision of August 15,2013

and with our September 16, 2013 Order Denying and Dismissing Plaintiffs'

Motion for Post· Trial Relief representS 8 final order for appellate purposes

and for P•.R.C.P. 1921(b) pwposes.

J.

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Cc: Writ/en notice o/the entry oftneforegoing Memorandum and Order has been provided to each party pursuonr 10 Pa.R.CP. 326(0)(1) by mailing time·stamped copies 10'

Attorney for Plajntiffs Anorney for Defendants Carll Guagliardo, Esq. Scon M. Rothman, Esq, Selingo GuagJiaxdo, L.L.C. Halberstadt Curley LLC 345 Market Street 1\00 E. Hector Street. Suite 425 Kingston. PA 18704 Conshohocken, PA 19428