August 2008 Bad Faith Cases Claim Preclusion Directly Barred Bad Faith Claim (Western District)
In Fogarty v. USA Truck, Inc. a ten count complaint was brought by Fogarty, including a bad faith claim arising out of a vehicular accident in which Fogarty was involved. Fogarty was employed as an interstate driver and his employer was self insured and provided insurance coverage to him. Fogarty was scheduled to make a delivery on a morning when there were dangerous road conditions. Fogarty advised the dispatcher that given the situation, he did not want to leave until conditions had improved. Fogarty’s employer, through the risk manager and dispatcher, informed him if he did not leave he would be fired. Fogarty went on the delivery and was involved in a vehicular accident. In the accident report Fogarty told police at the scene that his employer had wrongfully caused him to drive in unsafe conditions by threatening to fire him. The employer was not happy about this statement and the risk manager made a statement that Fogarty would be lucky if they did anything for him. Fogarty was subsequently fired for failure to return to work even though he had presented excuses from two doctors stating that he had not yet recovered from injuries received in the accident. Another driver involved in the accident filed suit against Fogarty and his employer and an attorney named Levin was provided to represent both parties. However, Fogarty claims that his employer would not let the attorney do anything to defend him without first getting permission. Fogarty then hired another attorney and Levin withdrew his representation due to conflict of interest which Fogarty alleged was a breach of fiduciary duty. Fogarty’s employer then hired a third attorney, McKenna, to represent Fogarty but again would not let him fully defend him without prior approval. Therefore Fogarty fired him.
Fogarty filed a ten count complaint including a bad faith claim against his employer and his employer’s risk manager individually. The employer and risk manager individually filed motions to dismiss. The lower court dismissed the insured’s claims. The appellate court affirmed the district court’s dismissal of the bad faith insurance claim because, even if one were to assume a duty on the part of the employer to provide the insured with legal representation, the record showed that the employer had initially provided such service to Fogarty. Therefore the court found that claim preclusion directly barred Fogarty’s bad faith claim against his employer/insurer. In addition since the claims against the employer had been dismissed , no claim could proceed against the corporation’s employee who was acting within the scope of his employment. The court found that since the claims against the employer had been precluded, the claims against the risk manger individually were also barred. Therefore the motions to dismiss were granted.
Date of decision: June 30, 2008
Fogarty v. USA Truck, Inc., 2008 U.S. Dist. LEXIS 50270 (W.D. Pa. June 30, 2008)(Standish, J.)