Insurance Coverage and Bad Faith

In Fazio v. Guardian Life Insurance Co., 62 A.3d 396 (Pa. Super. 2012), Plaintiffs purchased various life insurance policies from Guardian Life Insurance over the course of four years. Subsequently, their investment advisor suggested less expensive term life insurance and referred Fazio to an attorney who advised stopping payments on the Guardian Life policies. The attorney then wrote to Guardian alleging the Fazios had been deceived and demanded a refund of all premium payments. In 2001 the Fazios filed suit and Judge R. Stanton Wettick handled the litigation for the next nine years. In 2010, the Fazios requested a jury trial which was denied by Judge Wettick. The case was then transferred for a non-jury trial in which the court found that the Fazios had not proven their case by a preponderance of the evidence and Guardian was therefore, not liable.

On appeal, the Pennsylvania Superior Court principally examined the issue of whether the Unfair Trade Practice and Consumer Protection Law (“UTPCPL”) provides for a right to a jury trial. The court began with an analysis of the UTPCPL, specifically 73 P.S. §201-9.2 which provides for a private cause of action. Finding that the statute does not specify that a jury trial is available, the court considered Pennsylvania case law construing other statutes such as the Bad Faith Statute and the Pennsylvania Human Relations Act (PHRA), which are also silent regarding the right to a jury trial. In analyzing the decision in Mishoe v. Erie Ins. Co., 824 A.2d 1153 (Pa. 2003) (holding no right to a jury trial under the Bad Faith Statute), the court noted that “Jury trials are not available in proceedings created by statute unless the proceeding has a common law basis or unless the statute expressly or impliedly so provides.” Id.

The court then went through an extensive analysis of the UTPCPL as well as evolving jurisprudence of private causes of actions under the statute to determine if the law contained the notion that all unfair trade practice claims are based in fraud, a common law tort. Looking to the “catchall” provision which was amended in 1996, the court cited cases which found that proof of common law fraud was unnecessary where a plaintiff alleged deceptive conduct. However, in addition to the fraud or deceptive conduct analysis, the court cited its holding in Keller v. Volkswagen of Am., Inc., 733 A.2d 642, (Pa. Super. 1999), in which it stated that a private individual must establish the following under the UTPCPL: 1) that he or she is a purchaser or lessee; 2) that the transaction is dealing with “goods or services”; 3) that the good or service was primarily for personal, family, or household purposes; and 4) that he or she suffered damages arising from the purchase or lease of goods or services. The plaintiff must then prove the following: 1) the defendant was engaged in unfair methods of competition and unfair or deceptive acts or practices, and 2) the transaction between the plaintiff and defendant constituted “trade or commerce” within the meaning of the UTPCPL.

Applying these requirements to the Fazio case, the court found that in addition to having to prove the common law elements of fraud (or alternatively, deceptive conduct) a claimant needs to establish a consumer transaction in order to fall under the UTPCPL. Citing numerous other Pennsylvania cases including Gabriel v. O’Hara, 534 A.2d 488 (Pa. Super. 1987), which addressed the statute of limitations issue under the UTPCPL, the court found that the statute creates a civil action which is legally distinct from fraud and therefore refused to engraft a right to jury trial inherent in a common law fraud claim onto a private cause of action under the UTPCPL. In short, the Court held that because the UTPCPL did not merely codify common law fraud but also created a distinct cause of action for consumer protection, the plaintiffs were not entitled to a jury trial on their stand-alone UTPCPL claim.