L.S.S. Realty Corp. v. Liberty Mutual Insurance

58 Pa. D. & C.4th 44, 2002 Pa. Dist. & Cnty. Dec. LEXIS 213
CourtPennsylvania Court of Common Pleas, Lehigh County
DecidedJanuary 3, 2002
Docketno. 2001-E-0064
StatusPublished

This text of 58 Pa. D. & C.4th 44 (L.S.S. Realty Corp. v. Liberty Mutual Insurance) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Lehigh County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
L.S.S. Realty Corp. v. Liberty Mutual Insurance, 58 Pa. D. & C.4th 44, 2002 Pa. Dist. & Cnty. Dec. LEXIS 213 (Pa. Super. Ct. 2002).

Opinion

REIBMAN, J.,

Plaintiff, L.S.S. Realty Corporation, seeks to enjoin an insurer, defendant Liberty Mutual Insurance Company, from refusing to renew a property insurance policy. Because plaintiff’s petition centers on an alleged noncompliance with the insurance laws of the Commonwealth, which are overseen by the Commonwealth’s Insurance Department, jurisdiction lies administratively. Therefore, plaintiff’s petition for an injunction is dismissed.

[46]*46Since 1991, defendant has provided, and renewed annually, a property insurance policy to plaintiff. On September 21, 2001, defendant issued plaintiff a notice of non-renewal of that policy, effective December 11,2001. On December 10,2001, plaintiff commenced the instant proceeding, requesting a preliminary or special injunction to enjoin defendant from cancelling plaintiff’s property insurance policy.1 A preliminary injunction was entered pursuant to Pa.R.C.P 1531(a) on that date, pending a hearing, which followed on December 18, 2001. At issue now is the decision whether to continue that injunction.

At the outset, the question arises whether the court of common pleas has jurisdiction over claims relating to the non-renewal of commercial insurance policies. Although the higher courts have addressed the issue of exclusive jurisdiction of the insurance commissioner in cases involving claims by private individuals under the Unfair Insurance Practices Act (UIPA), 40 Pa.C.S. §1171.1 et seq. (Purdon’s Supp. 2001), the question as to the viability of causes of action resting on violations of the “[njotice requirements of property and casualty insurers,” 40 Pa.C.S. §3401 et seq., has not been specifically addressed, and thus presents a case of first impression.

The Pennsylvania Legislature has empowered the insurance commissioner with discretionary authority to issue regulations, pursue complaints, and to enforce the [47]*47various provisions of the insurance laws of the Commonwealth. 40 Pa.C.S. §41 et seq.; see also, 40 Pa.C.S. §§1171.7,3408, and 3409. More specifically, under chapter 14 of the Insurance Department Act of 1921,2 40 Pa.C.S. §§3403 and 3409, the legislature has set forth rules concerning “[njotice requirements for midterm cancellations and non-renewals,” established penalties, and authorized the commissioner to investigate and impose fines upon insurers in violation of the Act. Id. The question remains, however, as to whether private causes of action exist as part of, or in addition to, the regulatory scheme established by the legislature.

In the context of construing claims brought under the guise of the UIPA, the courts of the Commonwealth have been forced to confront whether the jurisdiction of the commissioner is exclusive or, alternatively, whether an insured may bring a private suit in the courts against insurers.3 In deciding whether a private cause of action for noncompliance under that act might lie, the Supreme Court held that a judicially created cause of action under the act was improper. D‘Ambrosio v. Pennsylvania National Mutual Casualty Insurance Company, 494 Pa. 501, 431 A.2d 966 (1981) (plurality opinion). Believing that the penalties authorized by the Act provided an adequate deterrent to bad faith conduct by insurers, the court re[48]*48jected a supplemental, judicially created cause of action for punitive damages and emotional distress as “unnecessary in view of the present legislatively-created regulatory scheme.” Id. at 508, 431 A.2d at 970. Instead, the court found that when a plaintiff sought redress of alleged violations of the Act, exclusive jurisdiction to enforce the Act rested with the commissioner. Id.

As it has been explicated by the Superior Court, however, the D ’Ambrosio opinion left intact an insured’s right to bring a common-law cause of action, e.g., fraud or deceit, or a cause of action under a separate statutory provision specifically conferring such a right, e.g., the Unfair Trade Practices and Consumer Protection Law. Hardy v. Pennock Insurance Agency Inc., 365 Pa. Super. 206, 214, 529 A.2d 471, 478-79 (1987). Distinguishing cases resting upon independent claims, as opposed to those wherein only noncompliance with the Act itself was alleged, the Superior Court reasoned that the argument for exclusive jurisdiction of the commissioner in such cases loses its force. Id.

The Hardy court relied heavily on the rationale of Pekular v. Eich, 355 Pa. Super. 276, 513 A.2d 427 (1986); Hardy, supra at 215, 529 A.2d at 478-79. And in deciding whether common-law causes of action survived the passage of the UIPA, the Pekular court looked to the Statutory Construction Act of 1972, 1 Pa.C.S. §1929, which states that “[t]he provision in any statute for a penalty ... for its violation shall not be construed to deprive an injured person of the right to recover... damages sustained by reason of the violation.” Pekular, supra at 282, 513 A.2d at 430. In the UIPA context, the court read this as allowing for the “continued viability [49]*49of causes of action cognizable under the common law existing when the UIPA was enacted.” Id. Thus, the Superior Court drew a critical distinction between judicially created causes of action arising from violations of the Act and those causes which had erstwhile existed at common law. Id. at 283, 513 A.2d at 431. The former are precluded by the commissioner’s exclusive jurisdiction; the latter are not. Id.

The critical inquiry, then, in determining whether a plaintiff may circumvent the administrative process and seek immediate redress in the courts, looks to the nature of the claim alleged. If an insured is pursuing a common-law cause of action, such as fraud or deceit, against an insurer, the claim will lie in the court of common pleas. Hardy, 365 Pa. Super, at 215, 529 A.2d at 478-79. Likewise, if an insured states a cause of action that is conferred by a statute other than one which empowers the insurance commissioner to investigate, a private suit in the courts is properly filed. Id. If, however, the claim seeks to enforce compliance with regulations or statutes specifically relating to insurance, then sole jurisdiction lies with the insurance commissioner. D’Ambrosio, 494 Pa. at 508, 431 A.2d at 970. In the last scenario, an aggrieved insured must follow the normal complaint procedure, as promulgated in the Administrative Code. 1 Pa. Code §35.9 et seq. See e.g., J.C. Penney Casualty Insurance Co. v. Commonwealth Department of Insurance, 43 Pa. Commw. 360, 402 A.2d 558 (1979) (Insured, complaining of insurer’s noncompliant cancellation of policy, must file complaint with commissioner and follow appellate procedure pertinent thereto, from an administrative hearing to the Commonwealth court.).

[50]*50Inasmuch as the case law has addressed the survival of common-law causes of action with respect to the UIPA, it has not specifically addressed the situation concerning commercial policies. This, therefore, poses a case of first impression.

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Related

Hardy v. Pennock Insurance Agency, Inc.
529 A.2d 471 (Supreme Court of Pennsylvania, 1987)
Pekular v. Eich
513 A.2d 427 (Supreme Court of Pennsylvania, 1986)
Kramer v. State Farm Fire & Casualty Insurance
603 A.2d 192 (Superior Court of Pennsylvania, 1992)
Muntz v. Commonwealth, Department of Transportation
674 A.2d 328 (Commonwealth Court of Pennsylvania, 1996)
J. C. Penney Casualty Insurance v. Commonwealth
402 A.2d 558 (Commonwealth Court of Pennsylvania, 1979)

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Bluebook (online)
58 Pa. D. & C.4th 44, 2002 Pa. Dist. & Cnty. Dec. LEXIS 213, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lss-realty-corp-v-liberty-mutual-insurance-pactcompllehigh-2002.