                                                                                                                           Opinions of the United
2000 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


2-2-2000

Keefe v. Prudetial Property
Precedential or Non-Precedential:

Docket 99-1292




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Filed February 2, 2000

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

NO. 99-1292

CINDY KEEFE

v.

PRUDENTIAL PROPERTY AND
CASUALTY INSURANCE COMPANY,
       Appellant

On Appeal From the United States District Court
For the Eastern District of Pennsylvania
(D.C. Civ. No. 97-cv-03312)
District Judge: Honorable Robert S. Gawthrop, III

Argued: September 27, 1999

Before: BECKER, Chief Judge, McKEE, and
NOONAN,* Circuit Judges.

(Filed: February 2, 2000)

       BENJAMIN E. ZUCKERMAN,
        ESQUIRE (ARGUED)
       Cozen and O'Connor
       The Atrium - 5th Floor
       1900 Market Street
       Philadelphia, PA 19103

Counsel for Appellant



_________________________________________________________________

* Honorable John T. Noonan, Jr., United States Circuit Judge for the
Ninth Circuit, sitting by designation.


       JOSEPH F. RODA, ESQUIRE
        (ARGUED)
       Roda & Nast
       801 Estelle Drive
       Lancaster, PA 17602

       Counsel for Appellee

OPINION OF THE COURT
BECKER, Chief Judge:

This bad faith insurance claim, founded on diversity
jurisdiction, presents an important question of
Pennsylvania insurance law: whether a carrier offering
uninsured motorist (UM) coverage has a duty to pay an
undisputed part of a UM claim while another part remains
in dispute. However, because this case is before us in the
unusual procedural posture of an appeal from a consent
judgment, before we reach this question we must consider
whether the stringent conditions for appellate jurisdiction
over a consent judgment have been met. The case also
presents an interesting issue of justiciability insofar as the
consent judgment is founded on a settlement of the
underlying claim under which the plaintiff gets more or less
depending on the legal rule we apply on appeal.

The plaintiff, Cynthia Keefe, suffered three injuries in a
motor vehicle accident with an uninsured motorist. Two of
her injuries--to her knee and to her shoulder--were clearly
caused by the accident. The third, an injury to her wrist,
was more difficult to evaluate because Keefe had a
preexisting problem with her wrist, and it was not
immediately clear how much of the post-accident condition
of her wrist was attributable to the accident. About
eighteen months after the accident, the defendant,
Prudential Property and Casualty Insurance Company,
Keefe's insurance carrier, settled her UM claim for the
highest amount available to her under her policy. Although
Keefe acknowledges that she failed to provide medical
records regarding the preexisting problems with her wrist
until less than a month before Prudential agreed to settle

                               2


her claim, she asserts in this suit that Prudential acted in
bad faith by failing to settle her claims for her knee and
shoulder injuries while it was awaiting more information
regarding her wrist injury.

At close of discovery, the parties filed cross motions for
summary judgment. In ruling on the motions the district
court held that: (1) Pennsylvania would recognize a UM
claim under the circumstances; (2) a reasonable jury could
conclude that Prudential, in administering Keefe's
uninsured motorist claim, violated its duty of good faith;
and (3) genuine issues of material fact nonetheless
precluded the entry of summary judgment in favor of either
party. The parties thereupon settled the case and stipulated
to the entry of judgment in favor of the plaintiff in the
amount of one dollar. Prudential now seeks to appeal from
that judgment.
We consider first whether Prudential waived the right to
an appeal by consenting to the entry of judgment against it,
but are satisfied that the understanding between the
parties that Prudential would appeal was sufficiently clear
to avoid waiver. We also conclude that the parties remain
adverse and hence that this appeal presents a genuine case
or controversy under Article III of the Constitution. We then
turn to the merits, predicting that the Pennsylvania
Supreme Court would not recognize a bad faith claim under
the circumstances of this case, and we therefore reverse
and remand with directions to enter judgment for
Prudential.

I. Facts and Procedural History

In August 1995, Keefe was injured in an automobile
accident with an uninsured motorist. The next day, she
contacted Prudential to report the accident. Her policy with
Prudential included $200,000 in UM coverage, under which
an insured can recover damages from his or her own
insurer for personal injuries sustained in an accident
caused by the owner or driver of an uninsured vehicle. The
contract provided that, if Prudential and Keefe could not
agree on the amount of compensatory damages due, either
party could make a written demand for arbitration. Subject

                                  3


to coverage limits, compensatory damages are "the amount
that an insured is legally entitled to recover for bodily
injury but could not collect from the owner or driver of the
uninsured motor vehicle," including damages for pain and
suffering. Prudential's representative determined that the
driver of the vehicle with whom Keefe had had the accident
was uninsured and sent her an application for UM benefits.

Keefe initially reported two injuries in the accident: an
injury to her right shoulder and an injury to her left knee.
Keefe underwent arthroscopic surgical repair of her
shoulder in February 1996 and her knee in July 1996, and
provided records regarding these injuries to Prudential. In
February 1996, Keefe added a report of an injury to her
right wrist. Keefe's wrist injury was the most serious of her
injuries, but assessing it was difficult because Keefe had a
preexisting condition in her wrist. In June of 1995, about
three months before the accident, Keefe had undergone a
partial wrist fusion surgery. Several weeks after the
accident, Keefe visited her wrist specialist, who monitored
her progress throughout the fall and eventually concluded
both that the partial fusion had not healed properly and/or
was aggravated by the accident and that Keefe required a
full wrist fusion. Keefe underwent the surgery to fuse her
wrist in April 1996.
The medical records that Keefe initially provided to
Prudential lacked any information regarding the condition
of her wrist prior to the accident. Without adequate records
regarding the preexisting condition in her wrist, Prudential
could not determine whether the wrist fusion was required
because of the accident or because of the preexisting
condition. As a result, Prudential requested, and Keefe's
lawyer agreed to provide, medical records regarding her
preexisting condition. Despite the fact that he had not yet
produced the promised medical records relevant to Keefe's
preexisting wrist problems, Keefe's lawyer asked Prudential
to settle her claim at or near the policy limits on three
occasions between March and June of 1996. These
requests were for settlement of the entire claim, including
the wrist injury.

Keefe's attorneys finally made the full records regarding
Keefe's wrist condition available to Prudential in mid-

                               4


December 1996. On January 21, 1997, Keefe's lawyer
advised Prudential that Keefe was having financial difficulty
and, for the first time, requested that Prudential make at
least a partial payment. Keefe concedes that she never
requested a partial settlement for the shoulder and knee
injuries before January 1997. In response to this request,
Prudential decided to make a settlement offer. By the end
of January 1997, Prudential agreed to settle Keefe's claim
for $200,000, her policy limit, which they paid her on
March 3, 1997. Prudential represents that the decision to
settle for the policy limits was made before it conducted a
full review of the medical records and even though there
were several grounds for believing that the case was not
worth $200,000.

In May 1997, Keefe filed this suit, alleging (1) that
Prudential violated PA. Stat. Ann., tit. 42, S 8371 (West
1998), Pennsylvania's law imposing a duty of good faith
with respect to insurance claims; and (2) that Prudential
was liable for breach of the common law contractual duty
of good faith and fair dealing for failing to compensate her
for her knee and shoulder injuries while it gathered more
information about the preexisting condition in her wrist.
Prudential counterclaimed alleging violation of PA. Stat.
Ann., tit. 42, S 8371 (West 1998), and a breach of the duty
of good faith and fair dealing based on Keefe's delay in
providing medical records. The district court had
jurisdiction over these claims pursuant to 28 U.S.C.S 1332.

At the close of discovery, the parties filed cross motions.
Prudential sought judgment on the pleadings, or, in the
alternative, summary judgment, on Keefe's claims that
Prudential violated S 8371 and committed a breach of the
common law contractual duty of good faith and fair dealing.
Keefe sought summary judgment on Prudential's
counterclaim. The district court denied Prudential's motion
and granted in part and denied in part Keefe's motion,
ruling that there were genuine issues of material fact
regarding (1) whether Prudential ever placed a specific
value on Keefe's knee and shoulder injuries; and (2)
whether Keefe's delay in providing medical records
regarding her wrist was a reasonable basis for the delay in
payment. In so doing, the court concluded that a

                               5


reasonable jury could find that a defendant's refusal to
make an unconditional payment of an undisputed amount
of a UM claim while some additional portion of the claim
remained in dispute violated S 8371.

Prudential moved for reconsideration on this issue,
arguing that UM insurers have no duty under Pennsylvania
law to pay an undisputed part of a UM claim while any
other part remains in dispute. The district court denied
Prudential's motion to reconsider, but certified an
interlocutory appeal pursuant to 28 U.S.C. S 1292(b). This
court denied Prudential's S 1292(b) petition (in which Keefe
had joined). The parties thereupon entered into a
stipulation providing that the district court would enter
judgment in favor of Keefe in the amount of one dollar. The
district court entered a one paragraph final judgment
pursuant to the stipulation, and Prudential now appeals
from that consent judgment.

II. Appellate Jurisdiction

A. The Stipulation

The stipulation between the parties does not settle the
factual disputes between them. Instead, the parties recite
their opposing versions of the facts and then set forth their
agreement that the legal issue in question, i.e. whether a
reasonable jury could find that a defendant's refusal to pay
unconditionally the undisputed amount of a plaintiff's
uninsured motorist claim constitutes bad faith,

       is of sufficient importance to this case that[the parties]
       have reached an agreement to resolve this case based
       solely on the ultimate resolution of this issue on
       appeal, without the need for trial. Under this
       agreement: (a) The record for appeal will consist of
       matters developed during discovery, as governed by
       rulings of the district court in connection therewith. (b)
       Defendant will pay to Plaintiff an agreed amount that
       depends upon the outcome of the appeal, and
       encompasses all contingencies on an appeal, thereby
       allowing the entry of a final judgment by stipulation.

                               6


Although the stipulation clearly contemplates an appeal,
the defendant, in agreeing that the judgment should be
entered against it, made no explicit reservation of the right
to appeal. We turn to the question whether the defendants
have waived their right to appeal.

B. Waiver

This court has acknowledged the general rule that a
party cannot appeal a consent judgment, as well as two
limited exceptions to that rule. See Atlantic Richfield Corp.
v. Sharon Steel Corp., 918 F.2d 434, 437 n.3 (3d Cir. 1990)
(noting rule that a party can only appeal from a consent
judgment if there was a failure of consent or the court
lacked subject matter jurisdiction to enter the consent
judgment); see also Tel-Phonic Servs., Inc. v. TBS Int'l, Inc.,
975 F.2d 1134, 1137 (5th Cir. 1992) (party who consents to
the entry of judgment forfeits any right to appeal from that
judgment); Clapp v. Commissioner, 875 F.2d 1396, 1398
(9th Cir. 1989) (same).

We have never considered, however, the appealability of
a consent judgment where the party seeking to appeal has
made explicit in a stipulation its intent to appeal the
consent judgment. Accordingly, we must decide whether it
is possible to consent to judgment and explicitly preserve
the right to appeal, and, if so, whether the parties' clear
understanding that Prudential would appeal the denial of
summary judgment was sufficient to preserve the right to
appeal.

Appeals from judgments entered by consent are
disfavored because, as the purpose of a consent judgment
is to settle the case without further litigation, an appeal
would undermine the agreement reached by the parties.
Moreover, a party "should not be left guessing about the
finality and hence efficacy of the settlement." Ass'n of
Community Organizations for Reform Now v. Edgar, 99 F.3d
261, 262 (7th Cir. 1996). When it is clear from the
agreement between the parties that the losing party intends
to appeal, however, it is unlikely that an appeal will
undermine the settlement agreement or catch a party
unawares. Indeed, in some situations, the option to craft a

                               7
settlement agreement that provides for the possibility of an
appeal on some contested issue may facilitate settlement of
other issues. Recognizing these principles, some of our
sister circuits have held that a party to a consent decree or
other judgment entered by consent may appeal from that
decree or judgment if it explicitly reserves the right to do
so. See, e.g., INB Banking Co. v. Iron Peddlers, Inc., 993
F.2d 1291, 1292 (7th Cir. 1993); Dorse v. Armstrong World
Industries, Inc., 798 F.2d 1372, 1375 (11th Cir. 1986);
Coughlin v. Regan, 768 F.2d 468, 470 (1st Cir. 1985).

Adopting this approach, we conclude that, when the
losing party in a consent judgment makes its intent to
appeal clear in its agreement with the opposing party, an
appeal from a consent judgment does not undermine the
settlement. Where the terms of a stipulation clearly show
that one of the parties has an unequivocal intention to
appeal, the court has "discretion to accept the appeal
insofar as it relates to a prior (contested) order
notwithstanding the [parties'] later consent to the entry of
the final judgment itself." BIW Deceived v. Local S6,
Industrial Union of Marine and Shipbuilding Workers of
America, 132 F.3d 824, 828 (1st Cir. 1997). Where as here,
it is clear from the record that the parties stipulated to a
consent judgment with the express understanding that the
party against whom judgment was entered would appeal a
contested issue decided by the district court, there is no
reason to hold the right to appeal waived. Prudential has
not waived the right to appeal.

C. The Effect of the Stipulation

It is our duty to assure ourselves of the existence of
subject matter jurisdiction even if the parties fail to raise
the question. See Commonwealth of Pennsylvania v.
Flaherty, 983 F.2d 1267, 1275 (3d Cir. 1992). At oral
argument, we raised with counsel the possibility that their
settlement agreement mooted the controversy between them
or put them into a position in which they lacked the
adversity necessary to meet the case or controversy
requirement of Article III. The parties filed supplemental
briefing on this issue. They also provided information on
the terms of their private settlement agreement, which

                               8


reflected that Prudential has agreed to pay Keefe one
amount if Prudential's argument prevails; a second (and
higher) amount if we do not decide the issue; and a third
(and still higher amount) if Keefe's argument prevails.

We are satisfied that the settlement has not mooted the
controversy. As the stipulation makes clear, the parties
continue to be adverse regarding the correctness of the
district court's prediction of the cognizibility of Keefe's bad
faith claim under Pennsylvania law. They have, in effect,
only settled a damages issue.

In Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982),
the Supreme Court considered a letter agreement between
two parties providing that, if the Court denied certiorari or
granted certiorari and affirmed, the defendant would pay
the plaintiffs $400, but if the court granted certiorari and
reversed, the plaintiffs would receive nothing. The Court
held that the agreement did not moot the controversy
between them, reasoning that:

       respondents continue to seek damages to redress
       alleged violations of the Fair Housing Act. The letter
       agreement, if approved by the district court, would
       merely liquidate those damages. If respondents have
       suffered an injury that is compensable in money
       damages of some undetermined amount, the fact that
       they have settled on a measure of damages does not
       make their claims moot. Given respondents' continued
       active pursuit of monetary relief, this case remains
       "definite and concrete, touching the legal relations of
       parties having adverse legal interests."

Id. at 371 (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S.
227, 240-41 (1937)).

Like the plaintiffs in Havens, Keefe continues to seek
monetary damages. The agreement between the parties here
is an agreement to liquidate damages similar to a high-low
settlement agreement, in which the parties agree on the
minimum and maximum amount that the plaintiff will
recover depending on the outcome of a suit. See United
States Fire Ins. Co. v. Royal Ins. Co., 759 F.2d 306, 308 (3d
Cir. 1985) (describing a high-low settlement agreement).
Their positions are truly adverse with respect to the critical

                               9


legal issue that they ask us to resolve, and the dispute
between them is not feigned. Moreover, we have reviewed
the private settlement agreement and are satisfied that both
parties have a significant stake in the outcome. We
therefore conclude that we have subject matter jurisdiction
over this appeal.

Our jurisdiction over this appeal includes review of the
issue decided by the district court in the order denying
summary judgment. Although an order denying a motion
for summary judgment is an interlocutory order that
cannot be immediately appealed, after final judgment the
losing party may seek review of an issue decided in an
order denying summary judgment to the extent that that
ruling was dispositive of some issue relevant on appeal. As
this Court has explained, "since . . . only a final judgment
or order is appealable, the appeal from a final judgment
draws in question all prior non-final orders and rulings."
Drinkwater v. Union Carbide Corp., 904 F.2d 853, 858 (3d
Cir. 1990) (quoting Elfman Motors Inc. v. Chrysler Corp.,
567 F.2d 1252, 1254 (3d Cir. 1977); see also In re
Westinghouse Securities Litigation, 90 F.3d 696, 706 (3d
Cir. 1996) (holding that prior interlocutory orders merge
with final judgment and the interlocutory orders may be
reviewed on appeal from the final order). Thus, the entry of
final judgment in this case opens the door for us to review
the district court's order denying summary judgment, in
which it ruled that an insurance company's refusal to pay
unconditionally the undisputed amount of an insured's
uninsured motorist claim could constitute bad faith under
Pennsylvania law.

III. Would Pennsylvania Recognize A Bad Faith Claim
       Under These Circumstances?

Although there is no common law remedy for bad faith in
the handling of insurance claims under Pennsylvania law,
see D'Ambrosio v. Pennsylvania Nat'l Mutual Casualty Ins.
Co., 431 A.2d 966 (Pa. 1981), the Pennsylvania legislature
has provided a statutory remedy. The statute provides that

       [i]n an action arising under an insurance policy, if the
       court finds that the insurer has acted in bad faith

                                10


       toward the insured, the court may take all of the
       following actions:

       (1) Award interest on the amount of the claim from the
       date the claim was made by the insured in an amount
       equal to the prime rate of interest plus 3%.

       (2) Award punitive damages against the insurer.

       (3) Assess court costs and attorney fees against t he
       insurer.

PA. Stat. Ann., tit. 42, S 8371 (West 1998).

In the insurance context, the Pennsylvania Superior
Court has explained that the term bad faith includes " `any
frivolous or unfounded refusal to pay proceeds of a policy.' "
Terletsky v. Prudential Property and Casualty Insurance Co.,
649 A.2d 680, 688 (Pa. Super. 1997) (quoting Black's Law
Dictionary 139 (6th ed. 1990)). " `For purposes of an action
against an insurer for failure to pay a claim, such conduct
imports a dishonest purpose and means a breach of a
known duty (i.e., good faith and fair dealing), through some
motive of self-interest or ill will; mere negligence or bad
judgment is not bad faith.' " Id. Therefore, in order to
recover under a bad faith claim, a plaintiff must show (1)
that the defendant did not have a reasonable basis for
denying benefits under the policy; and (2) that the
defendant knew or recklessly disregarded its lack of
reasonable basis in denying the claim. See id. ; Klinger v.
State Farm Mutual Automobile Ins. Co., 115 F.3d 230 (3d
Cir. 1997); Polselli v. Nationwide Mutual Fire Ins. Co., 23
F.3d 747, 751 (3d Cir. 1994).

Prudential asserts that an insured never has an
obligation to make a partial payment on an UM claim,
because the pain and suffering component of compensatory
damages cannot be divided into separate assessments for
each injury. Surprisingly, there are no Pennsylvania
appellate decisions on this subject. The authority in other
jurisdictions is divided, and in some cases deals with
statutes markedly different from Pennsylvania's bad faith
statute. It is useful nonetheless to canvass the cases, as
they provide background and context. Arizona and Alabama
have rejected similar claims, but the Arizona claimant

                               11


sought relief under an implied covenant of good faith and
fair dealing (rather than a statute regarding bad faith) and
the Alabama defendant was able to rely on Alabama
decisions holding that there can be no undisputed amount
prior to an arbitration award or the execution of a release.
See Voland v. Farmers Ins. Co. of Ariz., 943 P.2d 808 (Ariz.
1997); LeFevre v. Westberry, 590 So.2d 154 (Ala. 1991).

In Millers Mutual Ins. Ass'n of Illinois v. House, 675
N.E.2d 1037 (Ill. App. 1997), an Illinois intermediate
appellate court held that, where the parties disputed the
limits of coverage, the trial court did not abuse its
discretion in holding that the insurance company's failure
to pay the amount of the lower policy limit to the claimant
while litigation was pending--an amount it admitted it
owed--violated an Illinois statute prohibiting unreasonable
delay in paying claims. The parties did not dispute that the
plaintiff would be entitled to recover at least the lower limit.
In Kehoe v. Lightning Rod Mutual Ins. Co., 685 N.E.2d 255
(Ohio App. 1996), the Ohio court of appeals held that
whether a failure to pay an undisputed portion of UM claim
for eleven months after a jury verdict in favor of the plaintiff
constituted bad faith was a question for the jury. Unlike
this case, however, the claim there was for underinsured
motorist coverage, and the undisputed amount that the
defendant failed to pay to the plaintiff was the amount that
the defendant had received from the underinsured
motorist's insurance company before the defendant entered
the case to protect its subrogation interests.

Finally, the Louisiana Supreme Court has held that, if
the insured shows that he was not at fault, that he was
injured, and that the other driver was underinsured, the
insurer cannot refuse to pay any damages until the insured
is able to prove the exact extent of his general damages, but
must unconditionally tender the reasonable amount that is
due. McDill v. Utica Mutual Ins. Co., 475 So.2d 1085 (La.
1985). The McDill case, however, involved a claim that was
clearly worth more than the $10,000 limit of the plaintiff 's
policy, and the Louisiana statute at issue provided for
penalties for any failure to pay a claim within sixty days
after receipt of satisfactory proofs of loss from the insured
that was found to be arbitrary, capricious, or without

                               12


probable cause. See id. at 1088-89. In sum, the authority
from other jurisdictions provides some helpful guidelines,
but has no great persuasive effect in our task of predicting
Pennsylvania law.

At all events, we need not go so far as Prudential asks.
Based on Terletsky, 649 A.2d 680, and the cases applying
it, we are convinced that, if Pennsylvania were to recognize
a cause of action for bad faith for an insurance company's
refusal to pay unconditionally the undisputed amount of a
UM claim, it would do so only where the evidence
demonstrated that two conditions had been met. Thefirst
is that the insurance company conducted, or the insured
requested but was denied, a separate assessment of some
part of her claim (i.e., that there was an undisputed
amount). The second is, at least until such a duty is clearly
established in law (so that the duty is a known duty), that
the insured made a request for partial payment.

Until a partial final assessment is made or requested,
there is a reasonable basis for failing to make a offer of
partial settlement: namely, it is unclear what the separate
injuries are worth, or what the plaintiff would have been
legally entitled to recover for bodily injury if the uninsured
motorist had had coverage. A request for a partialfinal
assessment or evidence that the insurer conducted such a
partial final assessment is a precondition of success on a
bad faith claim because of the subjective components of a
pain and suffering award. As the Arizona Supreme Court
has noted, "a personal injury claim is unique and generally
not divisible or susceptible to relatively precise evaluation
or calculation. The `pain and suffering'/general damage
elements of a personal injury claim . . . are inherently
flexible and subject to different and potentially changing
evaluations." Voland v. Farmers Insurance Company of
Arizona, 943 P.2d at 812 (citing Lefevre v. Westberry, 590
So.2d 154, 163 (Ala. 1991)).

Our decision in Klinger, 115 F.3d 230, 234-35, is not to
the contrary. In upholding a jury verdict for the plaintiffs
on an uninsured motorist claim brought under
Pennsylvania law, it suggests the principle that there must
be some undisputed amount before the insurance company
can be liable for bad faith refusal to pay. Id. Klinger held

                               13


that "[a] rational jury could well have concluded that [the
insurer], by not making an offer to [the insured] based
upon some objective criteria it believed compensated
adequately for her injuries, knowingly or recklessly acted
without reasonable basis," but only after noting that "the
extent of [the insured's] injuries had become clear" to the
defendant insurance company. Id. at 235.

The district court correctly recognized that Pennsylvania
would require a plaintiff in Keefe's position to establish that
there was an undisputed amount that the defendant would
owe to her. The parties dispute whether Prudential ever
made a partial assessment of Keefe's knee and shoulder
injuries. Keefe argues that Prudential's records from 1996
regarding the value of her injuries establish that Prudential
had at least assessed the lower limit of liability that was an
"undisputed amount" it would owe to Keefe. Prudential
denies that these records establish that it had assessed an
undisputed amount and characterizes them instead as
preliminary estimates made with the understanding that
some information was still missing, including information
on the wrist injury.

According to Prudential, without information regarding
the preexisting condition in the wrist, it was simply not in
a position to make anything more than a preliminary
evaluation of Keefe's pain and suffering attributable to the
accident. The district court ruled on the motions for
summary judgment that there was a genuine issue of
material fact as to whether, at any point during 1996, there
was an undisputed amount that Prudential knew it would
have to pay to Keefe. We view this decision as a
determination that there was a genuine issue of material
fact as to the first prerequisite we have identified, i.e.
whether the insurance company conducted, or the insured
requested but was denied, a separate assessment of some
part of her claim. We agree with the district court that this
genuine issue of material fact precluded summary
judgment. Were this the only prerequisite that we predicted
Pennsylvania would make for such a claim, we would affirm
the district court.

However, as noted above, we also believe that
Pennsylvania would require that the plaintiff establish that

                               14


she had made a request for partial payment. Until a
plaintiff makes a request for partial payment, the insurance
company has no notice that the plaintiff claims a partial
payment. Keefe argues that her requests for the policy
limits "implicitly included a request for partial payments,"
but we are not persuaded that Pennsylvania is likely to
consider it unreasonable for an insurance provider to treat
a request for the policy limits as just that--a request for the
policy limits. Cf. Kehoe, 685 N.E.2d at 256 (holding that
question of bad faith was one for jury where there was a
clear undisputed minimum amount that the insurer would
have to pay on a UM claim, but noting that the insured
made a demand for partial payment). This is especially true
given that under Pennsylvania law bad faith must be
proven by clear and convincing evidence. See Cowden v.
Aetna Casualty & Surety Co., 134 A.2d 223, 229 (Pa. 1957);
Hall v. Brown, 526 A.2d 413, 416 (Pa. Super. 1987); see
also Polselli v. Nationwide Mutual Fire Insurance Company,
23 F.3d at 750 (3rd Cir. 1994).

Without a request for partial payment, and unless and
until Pennsylvania recognizes a duty to make partial
payments, we believe that an insurance company does not
act in bad faith when it assumes that an insured desires
settlement of the entire claim, at least where the contract
provides for general damages, and does not explicitly
require separate assessments and payments for separate
injuries in the calculation of compensatory damages. We do
not believe Pennsylvania would require an insurance
company--on its own initiative--to determine whether a
partial payment is due under an UM contract before
information regarding all of the injuries has been provided
to it. To require such initiative would be tantamount to
imposing a duty on the insurance company above and
beyond the duty imposed by the implied duty of good faith
and fair dealing. Under the duty of good faith and fair
dealing, the insurer need only "accord the interest of the
insured the same faithful consideration it gave its own
interest," United States Fire Insurance Company v. Royal
Insurance Company, 759 F.2d 306, 311 (3rd Cir.1985)
(citing Cowden v. Aetna Casualty and Surety Co., 134 A.2d
223 (Pa. 1957); the good faith standard requires that the
evaluation of the case by the insurance company must be

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"honest, intelligent and objective." Id. ; see also Shearer v.
Reed, 428 A.2d 635, 638 (Pa. Super. 1981)). Under
Pennsylvania law, a fiduciary duty higher than the duty of
good faith and fair dealing does not arise out an insurance
contract until an insurer asserts a stated right under the
policy to handle all claims asserted against the insured. See
Gedeon v. State Farm Mut. Auto. Ins. Co., 188 A.2d 320,
322 (Pa. 1963); see also Lee R. Russ & Thomas F. Segalia,
3 Couch on Insurance S 40.7 (3d ed. 1995).

When this requirement is applied to these facts, Keefe
cannot make out a claim for bad faith under Pennsylvania
law. As Keefe concedes that she never requested a partial
settlement for the shoulder and knee injuries before
January 1997, she cannot show that she made some sort
of request for partial payment. Accordingly, we conclude
that the district court erred in denying summary judgment
to Prudential. The judgment of the district court will
therefore be reversed, and the case remanded with
directions to enter judgment for Prudential.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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