NOVEMBER 2010 BAD FAITH CASES INSURED HAS A RIGHT TO FEDERAL JURY FOR HIS BAD FAITH CLAIM DUE TO THE PUNITIVE DAMAGES REMEDY, DESPITE BAD FAITH STATUTE NOT CREATING A RIGHT TO JURY (Philadelphia Federal)

In Pratt v. Victoria Insurance Company, the insured had brought a bad faith insurance claim against the insurer for the insurer’s failure to pay what he maintained was due to him for vandalism to his motor vehicle.  The case was referred to an arbitration panel, which found in favor of the insurer.

The insured proceeded to demand a trial de novo, and the issue before the court was whether the action could be tried before a jury.  The court noted that on his Entry of Appearance in the Court of Common Pleas, the insurer’s counsel wrote, “A jury of twelve (12) persons is demanded.”  Rule 38 of the Federal Rules of Civil Procedure provides that when an issue is triable of right by a jury, a party may demand a jury trial by serving the other parties with a written demand. 

In determining whether this case allowed for a jury trial based on the above information, the court first noted that “under Pennsylvania law, there is no right to a jury trial in the state courts” when the sole claim is a bad faith insurance claim brought under 42 Pa. Cons. Stat. § 8371.  However, it then recognized that the Third Circuit had previously determined that “when a § 8371 claim is brought in federal court, the punitive damages remedy triggers the Seventh Amendment right to trial by jury.”  It therefore held that the insured’s claim was in fact triable by jury in the Eastern District court because one of the parties had properly and effectively made a demand for a jury trial.

Date of Decision:  November 12, 2010

Pratt v. Victoria Ins. Co., Civil Action No. 10-1629, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 120637, (Nov. 12, 2010) (Bartle III, J.)