Wolfe v. Allstate Prop. & Cas. Ins. Co.

Zierle was driving and rear-ended Wolfe. Zierle’s blood alcohol level tested at 0.25%. Zierle had three prior DUIs. Wolfe required treatment at the emergency room. Zierle was insured by Allstate. Zierle’s policy stated that Allstate would not defend an insured for damages not covered by the policy. Zierle’s policy excluded coverage for punitive damages. Wolfe made a settlement demand of $25,000. Allstate counteroffered $1200. Wolfe filed suit. Allstate informed Zierle that he could face damages above the $50,000 policy limit and would be personally liable for the excess. During discovery, Wolfe learned of the extent of Zierle’s intoxication and added a claim for punitive damages. During settlement conferences, judges placed a value of $7500 on the compensatory damage claim. After trial, Allstate paid $15,000 in compensatory damages, but not a $50,000 punitive damages award. Zierle assigned his rights against Allstate to Wolfe, who sued, alleging breach of contract; bad faith; and violation of Pennsylvania’s Unfair Trade Practices Consumer Protection Law. The court denied Allstate’s motions for summary judgment, which argued that, since it had no duty to indemnify for punitive damages, it was not required to consider potential punitive damages when deciding whether to settle and that indemnification for punitive damages was impermissible under Pennsylvania law. The jury found violation of Pennsylvania’s bad faith statute and breach of contract; it awarded no compensatory damages, but $50,000 in punitive damages. The Third Circuit vacated and remanded for a new trial at which Wolfe will be barred from introducing evidence of the punitive damages award, affirming the denials of summary judgment. View "Wolfe v. Allstate Prop. & Cas. Ins. Co." on Justia Law