NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 13-1977
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ALLEN L. FEINGOLD;
BARBARA QUINN,
Executrix of the Estate of Theresa Thompson, Deceased
v.
LIBERTY MUTUAL GROUP;
LIBERTY MUTUAL INSURANCE COMPANY;
LIBERTY MUTUAL FIRE INSURANCE COMPANY.;
and LIBERTY GUARD AUTOMOBILE COMPANY
BARBARA QUINN,
Appellant
__________
No. 13-1978
___________
ALLEN L. FEINGOLD;
BARBARA QUINN,
Executrix of the Estate of Theresa Thompson, Deceased
v.
LIBERTY MUTUAL GROUP;
LIBERTY MUTUAL INSURANCE COMPANY;
LIBERTY MUTUAL FIRE INSURANCE COMPANY;
and LIBERTY GUARD AUTOMOBILE COMPANY
ALLEN L. FEINGOLD,
Appellant
______________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
(D.C. Civ. Action No. 2-11-cv-05364)
District Judge: Honorable Harvey Bartle, III
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Submitted Under Third Circuit LAR 34.1(a)
January 17, 2014
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Before: AMBRO, HARDIMAN, GREENAWAY, JR., Circuit Judges.
(Filed: April 4, 2014)
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OPINION
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GREENAWAY, JR., Circuit Judge.
Allen L. Feingold and Barbara Quinn brought an action against Liberty Mutual
Group, Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company,
and Liberty Guard Auto Company (together “Liberty Mutual” or “Appellees”) for
violation of Pennsylvania’s bad faith insurance statute, 42 Pa. Cons. Stat. Ann. § 8371.
The District Court dismissed Feingold’s claim for lack of subject matter jurisdiction and
dismissed Quinn’s claim pursuant to Liberty Mutual’s motion for summary judgment.
For the reasons discussed below, we will affirm the District Court’s judgments.
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I. Factual Background
Because we write primarily for the parties who are familiar with the facts and
procedural history, we recount only the essential facts.
Theresa Thompson, a New Jersey resident, sustained serious personal injuries on
June 24, 1997, as a result of an automobile accident in Philadelphia. Thompson made a
claim for uninsured motorists coverage under a policy issued to Thompson by Liberty
Mutual Fire Insurance Company. After Liberty Mutual refused to pay the benefits,
Thompson hired Feingold as her attorney to bring a claim against Liberty Mutual in
Pennsylvania state court. The Court of Common Pleas of Philadelphia County granted
Thompson her motion to compel arbitration. On February 4, 2003, an arbitration panel
found in favor of Thompson in the amount of $90,000.
In a letter dated March 5, 2003, counsel for Liberty Mutual Insurance Company
informed Feingold that it “rejects this award.” (App. 66a.) Thompson thereafter became
seriously ill and died in 2006. Quinn was appointed as Executrix of Thompson’s estate.
On June 3, 2011, Quinn filed a petition in the Philadelphia Court of Common Pleas to
confirm the arbitration award, which was granted. On December 8, 2011, Liberty Mutual
Fire Insurance Co. paid the amount of the arbitration award, plus interest, in the total
amount of $134,744.38.
On August 25, 2011, Quinn and Feingold brought the present action alleging
violation of Pennsylvania’s bad faith statute in the United States District Court for the
Eastern District of Pennsylvania. On February 28, 2012, the District Court granted the
motion to dismiss Feingold’s case for lack of standing, but allowed Quinn’s claims to
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proceed. On March 7, 2013, the District Court granted Liberty Mutual’s summary
judgment motion regarding Quinn’s claims. This appeal followed.
II. Jurisdiction
The District Court had jurisdiction under 28 U.S.C. § 1332. This Court has
jurisdiction pursuant to 28 U.S.C. § 1291.
III. Analysis
A. Claim of Allen Feingold
Feingold claims that the District Court erred in dismissing his complaint for lack
of standing. Feingold maintains that he has standing pursuant to a partial assignment
agreement, which stipulated that Feingold is entitled to forty percent of Quinn’s claim
against Liberty Mutual. (App. 16a.) On appeal, Feingold contends that there is no
prohibition against the assignment of bad faith claims under Pennsylvania law.
Federal courts sitting in diversity apply the substantive law of the state whose law
governs the action. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). Our review of
the District Court’s prediction and application of state law is plenary. Clark v. Modern
Grp. Ltd., 9 F.3d 321, 327 (3d Cir. 1993). When ascertaining Pennsylvania law, the
decisions of the Pennsylvania Supreme Court are the authoritative source. State Farm
Mut. Auto. Ins. Co. v. Coviello, 233 F.3d 710, 713 (3d Cir. 2000). In the absence of a
controlling decision by the Pennsylvania Supreme Court, “we must predict how it would
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rule if faced with the issue.” Spence v. ESAB Grp., Inc., 623 F.3d 212, 216 (3d Cir.
2010).
We need not repeat the District Court’s comprehensive and well-reasoned analysis
that claims under the Pennsylvania’s bad faith statute are not assignable in this context.
The Pennsylvania Supreme Court has determined that Pennsylvania law does not “permit
the assignment of a cause of action to recover for personal injuries.” Hedlund Mfg. Co.,
Inc. v. Weiser, Stapler & Spivak, 539 A.2d 357, 359 (Pa. 1988). Contrary to his
assertion, Feingold does not belong to the class of plaintiffs allowed to pursue a claim
under § 8371. See Ash v. Cont’l Ins. Co., 932 A.2d 877, 882 (Pa. 2007) (explaining that §
8371 “only permits a narrow class of plaintiffs to pursue the bad faith claim against a
narrow class of defendants”). Federal courts must apply substantive state law, as
interpreted by the state courts, when applying that law in diversity. Federal courts cannot
confer broader rights under a state’s law than that state court would itself recognize.
Erie, 304 U.S. at 78; see also F. Andrew Hessick, Standing in Diversity, 65 Ala. L. Rev.
417, 418 (2013) (“As has been clear since Erie . . . [f]ederal courts cannot . . . confer
broader rights under state law than the state court [itself] recognize[s].”).
Therefore, the District Court did not err in granting Liberty Mutual’s motion to
dismiss for lack of standing.
B. Claim of Barbara Quinn
Quinn argues that Appellees violated Pennsylvania’s bad faith statute by engaging
in a frivolous and unfounded refusal to pay her arbitration award. Central to her claim is
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the allegation that Appellees “placed their own interests ahead of those of their insured.”
(Appellant Quinn’s Br. 10.)
This Court exercises plenary review over the District Court’s grant of summary
judgment. See Giles v. Kearney, 571 F.3d 318, 322 (3d Cir. 2009). Summary judgment
is proper “if the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A factual
dispute is “material” only if it might affect the outcome of the case. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). For an issue to be “genuine,” a reasonable fact-
finder must be able to return a verdict in favor of the non-moving party. Id.
Under Pennsylvania law, an insured may bring a cause of action against an insurer
who has acted in bad faith. See Polselli v. Nationwide Mut. Fire Ins. Co., 23 F.3d 747,
750 (3d Cir. 1994). Accordingly, in opposing a summary judgment motion, the
plaintiff’s burden of proof also rises. See id.
Here, Quinn’s claim rests entirely on circumstantial evidence. Even viewed in the
light most favorable to her, the record does not come close to establishing bad faith.
Fatal to her claim, challenging an arbitration award by itself does not indicate bad faith.
As it has been emphasized by Pennsylvania courts, “bad faith must be proven by clear
and convincing evidence and not merely insinuated.” Terletsky v. Prudential Prop. &
Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994) (internal citations omitted). While
Pennsylvania requires that an insurer act with the utmost good faith toward its insured, an
insurer is not required actively to submerge its own interest. See Cowden v. Aetna Cas.
and Sur. Co., 134 A.2d 223, 228 (Pa. 1957) (“[T]he insurer must act with the utmost
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good faith toward the insured in disposing of claims against the latter. . . . But, that does
not mean that the insurer is bound to submerge its own interest in order that the insured’s
interest may be made paramount.”).
Therefore, the District Court did not err in granting Liberty Mutual’s motion for
summary judgment.
IV. Conclusion
For the foregoing reasons, we affirm the judgments of the District Court.
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