In Stepanovich v. John McGraw & State Farm Ins. Co., 2013 PA Super 275 (Pa. Super. Oct. 15, 2013), the Pennsylvania Superior Court considered whether the procedural due process rights of a plaintiff were violated by not identifying the defendant insurer as a party in a consolidated UIM case. The court answered this question in the negative.
The issue arose because the plaintiff, who was injured in an automobile accident, was required under his insurance policy to sue his automobile insurer, who had allegedly improperly denied UIM benefits, and the tortfeasor as defendants in the same action. More specifically, the naming of the insurer and the tortfeasor as defendants in the same action raised questions with respect to what extent evidence of insurance should be admissible in the suit, particularly since evidence of insurance is generally inadmissible in proving liability and is prejudicial. The tortfeasor unsuccessfully objected to the joinder of the negligence and contract claims in the same suit. Nonetheless, the trial court decided that the trial would be structured in a way that would ensure that evidence of insurance would not be known to the jury, except as required by Rule 220.1 (voir dire).
This approach raised practical issues, however. Although the plaintiff had originally represented that the claim against the insurer “could be resolved without reference to the policy of insurance, insurance limits, etc.,” the plaintiff argued before trial that, if the insurer was not identified, only one set of lawyers for the defendants should be able to try the case. At the same time, however, the plaintiff also remained opposed to bifurcation, which was suggested by the court. Consistent with the plaintiff’s stated preference for trying the suits in one case, the judge ultimately concluded that counsel for both the insurer and the tortfeasor should be able to participate in the defense, subject to the caveat that duplicative questioning would not be permitted. Following trial, the jury returned a verdict in favor of the defendants. The plaintiff then filed a post-trial motion for a new trial, arguing that it was improper for the insurer and tortfeasor both to be able to participate in the trial if the insurer was not identified as a party. The trial court agreed and reversed its earlier ruling, concluding that the plaintiff’s procedural due process rights had been violated by failing to identify the insurer when the insurer participated in the trial. The defendants appealed.
In resolving the issue in favor of the defendants, the court observed that the plaintiff had cited trial court cases in which the UIM and tort claims were tried together, but noted that “there was … no discussion of the specifics of any of the cases.” The court then suggested that the trial court had correctly recognized (albeit impliedly) that Rule of Evidence 411, which generally prohibits the admission of evidence of insurance to prove liability, was inapplicable since evidence of the plaintiff’s UIM benefits was distinct from the tortfeasor’s liability insurance. In so noting, however, the court commented that the insurer’s policy required the dispute over UIM benefits to be resolved as part of the lawsuit with the tortfeasor, even though there technically could be no breach of contract until a determination of liability or award of damages in excess of the tortfeasor’s liability limits was made. Moreover, the court noted that insurers with policies requiring that UIM disputes be tried with third-party tort claims likely had considered how to try the claims without causing prejudice, while recognizing elsewhere in its opinion that the trial court had wide latitude to resolve the problem posed by the joinder of the insurer and the tortfeasor in the same suit.
Issues of the applicability of Rule 411 and the ability to try the case in a way that avoids prejudice aside, however, the court held that there was no showing of prejudice to the plaintiff to support a due process violation. In particular, the court concluded that the failure to identify the insurer as a party could only support a due process violation if it were first determined that the failure to identify the insurer caused prejudice to the plaintiff. Accordingly, in the absence of evidence demonstrating a connection between the failure to identify the UIM carrier and the jury’s conclusion that the tortfeasor was not negligent, there was no procedural due process violation. On this basis, the court reversed the trial court and directed that judgment be entered in favor of the defendants.
The full decision can be found here: Stepanovich v. McGraw, 2013 PA Super 275 (Pa. Super. Oct. 15, 2013).pdf