0 IN THE COURT OF COMMON PLEAS ALLEGHENY COUNTY, HARRY SCHMIDT, CIVIL DIVISION Plaintiff, NO: GD 11-8406 BRIEF IN vs. ERIE INSURANCE EXCHANGE, d/b/a ERIE INSURANCE AGENCY, INC., a/d/b/a ERIE INSURANCE, a/d/b/a ERIE INSURANCE COMPANY, a/d/b/a ERIE INSURANCE GROUP, a/d/b/a ERIE INSURANCE PROPERTY 8; CASUALTY COMPANY, Defendant. JURY TRIAL DEMANDED gm manor) so moo 90:1 Rd 52 nu ma OPPOSITION TO MOTION FOR SUMMARY JUDGMENT Filed on Behalf of Plaintiff Harry Schmidt Counsel of Record for this party: Victor Pribanic PA ID. 30785 Matthew Doebler PA ID. 304848 Pribanic Pribanic, LLC 1735 Lincoln Way White Oak, PA 15131 412-672-5444 77:! .. . Ala MEG +133 ll -ll< {2:33 MN I Ur Vd 308 0371;; IN THE COURT OF COMMON PLEAS ALLEGHENY COUNTY, HARRY SCHMIDT, CIVIL DIVISION Plaintiff, N0: GD 11-8406 vs. BRIEF IN OPPOSITION TO ERIE INSURANCE EXCHANGE, MOTION FOR SUMMARY JUDGMENT Defendant. BRIEF IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT Erie continues to miss the point of this case. It is an insurance company. By its own admission, during its investigations it is obligated to treat its policyholders? interests with an equal regard as it does its own interests. This obligation, of course, is in keeping with the Suggested Standard Jury Instruction, which states ?An insurance company must give the interests of its insured the same faithful consideration that it gives its own interests.? Pa. SSJI (Civ) 17.300. The question, therefore, isn?t whether the police saw ?t to ?le a Complaint, it isn?t whether the prosecutor decided to prosecute, and it doesn?t have anything to do with what the judge said when she acquitted Mr. Schmidt. The question is whether Erie was treating Mr. Schmidt?s interests with the same ?faithful consideration? as its own when it took his case to the police. Erie has a relationship with Mr. Schmidt that neither the police nor the prosecutor nor the judicial of?cials have. Erie?and Erie alone?owes Mr. Schmidt a duty of good faith. Answering that ?rst question leads to follow-up questions: Did Erie conduct a thorough enough investigation to allow it to form intelligent opinions before it went to the police? Did Erie use an expert that was unbiased? Was Erie honest with the police? These are queries that help inform an answer to the ultimate question of bad faith. And these questions are so important because the insurance industry is inherently con?icted. What is good for insurance companies is often at odds with the interests of its insureds. This is the root of all bad faith litigation. Obviously, the insurance industry would love to have every claim with the slightest bit of suspicion investigated by the police. It would behoove insurance companies if every single fraudulent claim was prosecuted and the offender convicted. And to work towards that end, it is better for the insurance industry to over-report insurance fraud rather than under-report it. But the bad faith statute exists to provide a check on industry?s unfettered referral of cases to police. It seeks to say: you can?t refer every case to the police; there is a minimum floor of belief you must have before you refer a case and if you fall below that ?oor, you have acted in bad faith. And this is that case. This is the case that says: nol?myou?ve gone too far. This case says: you have crossed the line of giving your insured ?faithful consideration? and moved to a place where you are serving only your own interests. Unfortunately, in its Motion For Summary Judgment, Erie clings to its unsubstantiated allegations that Mr. Schmidt stole his truck. Rather than address the suf?ciency of its investigation head on or acknowledge the plainly obvious false statements its employees made to the police, Erie resorts to tactics that show its disregard for its insured. Erie makes misstatements of law and presents legal authority that ?atly doesn?t exist. Factual Background On May 10, 2008, Harry Schmidt went on vacation to Florida. (Tr. of Dep. of Cathy Callahan at 26.) Before he left, he parked his pickup truck on the street in front of his house. (Tr. of Dep. of Cathy Callahan at 26, Tr. of Dep. of Carl Callihan at 22.) When he came back from Florida, the truck was gone. (Tr. of Dep. of Cathy i Callahan at 30.) Mr. Schmidt noti?ed the police and reported the truck stolen. I (McKeesport Police Department Incident Investigation Report; Tr. of Dep. of Carl Callihan at 24.) The police investigated but closed the case after all leads had been exhausted. (McKeeSport Police Department Incident Investigation Report.) Mr. Schmidt also contacted his insurance carrier, Defendant Erie Insurance Company, and ?led a claim. (Email from Diane Svec to Keith Stephan dated May 24, 2009.) Mr. Schmidt did everything Erie asked of him. Speci?cally, he executed an Af?davit of Vehicle Theft (Aff. Of Vehicle Theft; Trial Tr. from November 3, 2010 at 97400), provided a recorded statement (Tr. of Rec. Statement; Trial Tr. from November 3, 2010 at 87-97), and produced both sets of keys to Erie (Trial Tr. from November 3, 2010 at 103). Erie subsequently settled Mr. Schmidt?s claim in the amount of $28,601.10. (Claims Management System File Note Detail Print Dated June 4, 2008.) The money that Erie paid for the settlement of Mr. Schmidt?s claim went directly to the lender who funded the car loan. (Trial Tr. from November 3, 2010 at 105.) Indeed, Mr. Schmidt realized no money in his pocket as a result of the payment from Erie. (Trial Tr. from November 3, 2010 at 105.) Close to ?ve months after it was stolen, Mr. Schmidt?s truck was found on October 19, 2008 abandoned in the parking lot of a mill. (North Braddock Police Department Complaint Report.) A Material Damage Appraiser named Fred Dunning was the ?rst individual from Erie to examine the truck after it was recovered. (Tr. of Dep. of Fred Dunning at 114.) When recovered, the steering column was damaged, the transceiver coil had been removed, and there were scratch marks on the ignition cylinder. (Claims Management System File Note Detail Print October 24, 2008.) An investigator from Erie?s investigation division named Diane Svec was assigned to investigate Mr. Schmidt?s case. (Tr. of Dep. of Diane Svec at 49.) Ms. Svec was too inexperienced to handle Mr. Schmidt?s case. Speci?cally, although Erie documentation represents that all of its investigators have 10 years of experience in law enforcement, Ms. Svec did not meet that quali?cation. (Tr. of Dep. of Diane Svec at 39.) When she started working for Erie, she was handed the Schmidt investigation along with about 40 to 50 additional ?les. (Tr. of Dep. of Diane Svec. At 49.) Finally, Ms. Svec was naive of statutory reporting obligations concerning investigations similar to Mr. Schmidt?s case. (Tr. of Dep. of Diane Svec at 239.) Ms. Svec?s ?investigation? was entirely cursory. (Tr. of Dep. of Diane Svec at 241-256.) Erie hired an expert, Keith J. Stephan, Sr., who examined Mr. Schmidt?s truck and determined that it the truck could not be stolen without one of the two factory coded keys. (Examination Report for Erie Insurance Group by Keith J. Stephan, Sr. dated November 7, 2008 at 39.) Because both of the factory coded keys were in Mr. Schmidt?s possession before and after the truck went missing, Erie and its expert further concluded that Mr. Schmidt must have had some part in the theft of his own truck. Erie?s expert reached these conclusions ignoring several common sense considerations. Indeed, Erie?s expert could not rule out that the possibility that the truck could have been loaded onto a ?atbed truck and removed from the place where it was parked without an ignition key at all. (Tr. of Preliminary Hearing at 39.) Additionally, Erie?s expert admitted that factory coded keys could have been cloned at any one of ?hundreds? of locations locally and throughout the country. (Trial Tr. from November 16, 2011 at 79-81.) Based on false information and its expert?s conclusions, Erie referred Mr. Schmidt to the Allegheny County Police Department for ?investigation.? (Police Criminal Comp.) Mr. Schmidt was subsequently arrested, charged with felony insurance fraud, and prosecuted as a criminal. (Criminal Docket CP-02-CR-0005893- 2010.) Over two and a half years after his truck was stolen, Mr. Schmidt was found Not Guilty after a bench trial in front of Judge Durkin in the Allegheny County Criminal Division. (Criminal Docket Mr. Schmidt ?led this lawsuit against Erie on May 6, 2011, alleging that his insurance company breached its duty of good faith by referring his case to the police based on false information, a biased expert, and without performing an adequate investigation. (Civil Docket GD-11-008406.) Six months later, Erie ?led its Counterclaim, alleging Fraud, Breach of Contract, and Civil Insurance Fraud. (Counterclaim.) Legal Standard Summary judgment motions are governed by 1035.2: lRule 1035.2. Motion After the relevant pieadings are closed, out Within such time as not to unreasonably delay trial, any party may move for summary judgment in whole or in part as a matter of law whenever there is no genuine issue of any material Fact as to a necessary element of the cause of action or defense which could be estahsished by additional discovery or expert report, or (2) if. after the completion of discovery relevant to the motion, indud?ng the production of expert reports, on adverse party who will hear the burden of proof at trial has failed to produce evidence of Facts essential to the cause of action or defen= which in a jury trial would require the issues to be submitted to a jury. 1035.2. Summary judgment is appropriate only in those cases where the record clearly demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Alcovilz v. Gulph Mills Tennis Club, Inc., 571 Pa. 580 (2002). When considering a motion for summary judgment, the trial court must take all facts of record and reasonable inferences from those facts in a light most favorable to the non-moving party. Toy v. Metropolitan Life Ins. Co., 593 Pa. 20 (2007). Summary judgment may be granted only in those cases that are clear and free from doubt. Keystone Aerial Surveys, Inc. 1). Properly Cas. Ins. Guar. Ass?n., 2001 Pa. Super 139 (2001). Bad Faith The elements that must be proven in an insurance bad faith case are set forth in the Suggested Standard Jury Instruction: 17.300 (Civ) INSURANCE BAD FAITH-DEMON The plainti? asserts a claim in this case for what is known as insurance bad faith. Under the law, an insurance company must act with the utmost good faith and fair dealing toward its insured, and give the interests of its insured the some faithful consideration that it gives its own interests. This heightened duty arises because of the special relationship between an insurer and its insured and the nature of the insurance contract. An insurance company acts in bad faith if it: (1) does not have a reasonable basis for what it does, and (2) knows or recklessly disregards its lack of a reasonable basis. Put another way, bad faith occurs if an insurer knowingly or recklessly acts without a rea- sonable basis in handling an insured?s claim. In deciding whether or not an insurance company acted in bad faith toward its insured, you consider all of the company?s actions, including its responses to communications from its insured, its investigation of the claim. and its handling of settlement negotiations. If you ?nd that the defendant knowingly or recklessly acted without a reasonable basis, your verdict must be for the plaintiff. Pa. SSJI (Civ) 17.300. See also, Terletsky v. Prudential Prop. and Gas. Ins. Co., 437 Pa. Super 108 (1994). Concerning the ?recklessly disregards its lack of a reasonable basis? element, the Suggested Standard Jury instruction also sets forth a de?nition: 17.310 (Civ) FIRST-PARTY BAD An insurance company acts recklessly if it acts With conscious disregard or deliberate indifference to the rights of its insured. Pa. SSJI (Civ) 17.310. Paying The Claim Does Not Insulate Erie From A Bad Faith Claim Erie asserts that Mr. Schmidt?s bad faith claim fails because proceeds under the policy were paid. (Br. in Supp. of Mot. for Summ. J. at 25.) Erie cites cases all focused on that variety of bad faith litigation addressing failure to pay claims and asserts that these cases establish that failure to pay is a sine qua non to a bad faith claim. Erie might wish that were the law, but it not and Erie knows that. Indeed, Erie omits from its analysis a 2004 case where it made this exact same argument and the Superior Court of squarely ruled against it. Hollock U. Erie Ins. Exch., 2004 PA Super 13 (2004). In Hollock, the Superior Court wrote ?Erie assert[s] that section 8371 does not apply, as a matter of law, to an insurer?s conduct after the payment of a claim for insurance benefits.? Id. This is the precise argument Erie is again trying to rehash for this Court. The Superior Court, however, relied on the insurer?s duty to act with the utmost good faith towards its insured and rejected Erie?s interpretation as overbroad. Id. Not only is it galling that Erie fails to cite a case in which it lost this precise issue but this is a binding opinion of the Superior Court. As such, this Court is obligated to follow the holding of Hollock. Accordingly, as a matter of law, Erie must not be insulated from bad faith simply because it paid Mr. Schmidt?s claim. Erie?s Investigation Was Deficient, Establishing Bad Faith The Suggested Standard Jury Instruction specifically mentions consideration of the company?s investigation. As Erie is well aware?having been stung by it multiple times before?caselaw also establishes that an action for bad faith may extend to the insurer?s investigative practices. Condio 0. Erie Ins. Exch., 899 A.2d 1136 (Pa. Super 2006); Hollock 0. Erie Ins. Exch., 842 A.2d 409 (Pa. Super 2004). Furthermore, Erie?s own agent agreed that Erie is obligated to conduct an ?in-depth? investigation. (Tr. of Dep. of Gene Robertson at 94-95.) Erie was obligated to conduct an in-depth investigation. Paying the claim didn?t absolve Erie of its obligation to conduct an in-depth investigation. (Tr. of Dep. of Diane Svec at 241.) As Erie?s investigator agreed, not even the case being referred to the police absolved Erie of its obligation to conduct an in-depth investigation: Q. And even the case being transferred to the police didn't absolve your obligation to conduct an in-depth investigation, correct? A. Correct. (Tr. of Dep. of Diane Svec at 241.) Plaintiff, however, has produced ample evidence that Erie?s investigation of Mr. Schmidt?s claim was de?cient prior to its referral to the police. Plaintiff has certainly produced evidence that Erie?s investigation of Mr. Schmidt?s claim was not ?in depth? prior to its referral to the police. 10 While this might appear to be a dif?cult standard to evaluate, Erie makes it easy by providing a document that identi?es steps Erie could take to complete a thorough investigation??-?ISS? is Erie?s investigative team: INFORMATION AVAILABLE THROUGH [88 PROVIDED DIVORCE This involves a check of public records for divorce ?lings. LOCATE SEARCH This search provides possible amt/previous addresses, phone numbers, household members and personal identi?ers (date of security number). MILITARY LOCATOR Provides address information for military personnel. [fa military address is provided, the military base and correct information is provided. If a social security number is available, the search can obtain a military address and obtain correct address information for an individual. MOTOR HISTORY SEARCH Provides information on vehicles owned by name and for other persons in household, VIN, plate numbers, insurance and lienholdcr information or title history. NEIGHBORHOOD SCAN Identi?cation of names, addresses and phone numbers or properties adjacent to a given location. PILR (Property Insurance Loss Register) A computerized record of property losses maintained by insurance Services Of?ce (180). It enables companies to determine undisclosed duplicate insurance coverage and patterns of losses on submitted risks. Information may be searched by name, property location, address, social security number and date of birth. PROPERTY OWN ER The required information for this search is a name or address. A search by name or address yields the following information: property owner name, physical address of property, mailing address of owner, and a legal description of the property. PUBLIC FILINGS This is a check of public records. information can be requested for a specific state or county or by name for all states. Information that is supplied includes public records for bankruptcies, tax liens and judgments. SOCIAL SECURITY This provides the social security number for an individual. SURVEILLANCE Following or watching someone making a claim, often photographing, ?lming or videotaping to establish whether the claim is valid. This service is arranged through an ISS Investigator. (Exhibit 19 to Dep. of Diane Svec.) 11 Using this list to establish things that Erie?s investigator could have done, Plaintiff has produced evidence that Erie?s investigation failed to: 1. Check public records for divorce ?lings (Tr. of Dep. of Diane Svec at 243); 2. Conduct a motor vehicle/driver history search (Tr. of Dep. of Diane Svec at 247); 3. Conduct a neighborhood scan (Tr. of Dep. of Diane Svec at 247); or 4. Conduct surveillance of Mr. Schmidt (Tr. of Dep. of Diane Svec at 248). In addition to these steps that Erie?s materials concede its investigators could conduct, there are also several common sense steps one would expect a professional investigator to take yet Erie did not. These obvious omissions from Erie?s investigation include its failure to: 1. Interview Mr. Schmidt?s neighbors who might have witnessed the theft or have information about the crime (Tr. of Dep. of Diane Svec at 249); 2. Visit the scene of the theft (Tr. of Dep. of Diane Svec at 249); 3. Request surveillance tapes from the mill where the vehicle was recovered (Tr. of Dep. of Diane Svec at 249); 4. Obtain Mr. Schmidt?s air itinerary corroborating his trip to Florida (Tr. of Dep. of Diane Svec at 254); 5. Request Mr. Schmidt?s hotel con?rmation corroborating his trip to Florida (Tr. of Dep. of Diane Svec at 254); 6. Order Mr. Schmidt?s credit card records (Tr. of Dep. of Diane Svec at 253-254); Order Mr. Schmidt?s cell phone records (Tr. of Dep. of Diane Svec at 253% 8. Speak with the people Mr. Schmidt traveled with when his truck was stolen (Tr. of Dep. of Diane Svec at 254); 9. Speak with Mr. Schmidt?s girlfriend (Tr. of Dep. of Diane Svec at 255); 12 10. Speak with Mr. Schmidt?s daughters (Tr. of Dep. of Diane Svec at 256k 11. Ask anybody other than Mr. Schmidt about his ?nances (Tr. of Dep. of Diane Svec at 255); 12. Speak with Mr. Schmidt?s ex-wife (Tr. of Dep. of Diane Svec at 257); 13. Visit the company that towed the truck from its recovery location (Tr. of Dep. of Diane Svec at 2449-250); 14. Visit the dealer that sold Mr. Schmidt his truck (Tr. of Dep. of Diane Svec at 250); 15. Find out if anybody requested additional keys from Mr. Schmidt?s truck (Tr. of Dep. of Diane Svec at 250); 16. Establish whether any employees were recently terminated from the dealership that sold Mr. Schmidt his truck (Tr. of Dep. of Diane Svec at 250); 17. Speak with anybody at the National Insurance Crime Bureau about Mr. Schmidt?s case (Tr. of Dep. of Diane Svec at 251-251); 18. Order titles and registration of motor vehicles owned by Mr. Schmidt from the Department of Transportation (Tr. of Dep. of Diane Svec at 254); 19. Inquire into Mr. Schmidt?s ability to pay his truck payments (Tr. of Dep. of Diane Svec at 255); 20. Establish how much he owed on the truck (Tr. of Dep. of Diane Svec at 256); 21. Determine the extent of Mr. Schmidt?s income (Tr. of Dep. of Diane Svec at 255); 22. Ask the insured about his sources of income (Tr. of Dep. of Diane Svec at 256); 23. Obtain an employment history from the insured (Tr. of Dep. of Diane Svec at 256); 24. Obtain information about carports or garages where the truck is normally stored (Tr. of Dep. of Diane Svec at 256); 25. Conduct any Google research into whether Mr. Schmidt?s truck could be stolen without a key (Tr. of Dep. of Diane Svec at 257); or 13 26. Speak with the police of?cer who reported the theft of Mr. Schmidt?s truck (Tr. of Dep. of Diane Svec at 252). Each of these failed investigative steps could amount to an inadequate investigation by itself that would be suf?cient to make out a case of bad faith. Taken together, they make out an ?investigation? so poor that is shocking that Erie continues to defend it. Suf?ce to say, however, that Plaintiff has produced evidence that Erie?s investigation was insuf?cient, establishing bad faith. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on Plaintiffs bad faith claim. Providing False Information To The Police Establishes Erie?s Bad Faith As a statement of law that should require no supporting authority, an insurance company referring a case to the police must provide truthful information. To be sure, though, Erie?s corporate representative con?rmed that it is Erie?s practice to provide truthful information to the police. (Tr. of Dep. of Gene Robertson at 135-136.) However, Plaintiff has produced evidence that the ?nder of fact could validly determine establishes that Erie provided false information to the Allegheny County Police concerning Mr. Schmidt?s case. 14 Speci?cally, the referral form provided to the police stated that all damage to Mr. Schmidt?s truck when it was recovered was ?cosmetic?: all new (Ins. Fraud Referral Form at 4.) was cosmetic. Cosmetic damage on an automobile is categorized as damage that does not hamper the operational performance of a vehicle. However, the truth was that the truck was inoperable when it was recoveredfact that the removal of the passive anti-theft ignition transceiver coil renders the vehicle inoperable contrary to what you told the Court a few moments ago, that the vehicle could be operated in the condition it was in? Well. yeah, without the transceiver you couldn't start the car. (Trial Tr. from November 16, 2010 at 12.) Defendant can dispute the de?nition of the term ?breached? all it wants to. But there is no denying Erie told the police that the damage to the car was ?cosmetic? when?in reality?the car was inoperable. 15 In fact, when this same individual was questioned about documents he wrote concerning the operability of the vehicle, he was forced to confess that he had ?omitted? information about the transceiver damage: Q. You do not write that there was transceiver damage, right? A. I obviously omitted that, yes. (Tr. of Dep. of Fred Dunning at 108.) Erie?s failure to provide truthful information to the police disquali?es all defenses that authorities made independent decisions of that false information. The false information colors impressions of the case, so even if the falsity of the information might later be uncovered, the initial reaction cannot be undone. ADA Radoycis con?rmed that he expected the information he was getting from Erie was honest. (Tr. of Dep. of Nicholas Radoycis, Jr. at 71.) Furthermore, he made the common sense observation that he expected truthful information so that he could make good decisions about how to prosecute Mr. Schmidt?s case and that if he was not given the facts, he could not make ?proper decisions under the law?. (Tr. of Dep. of Nicholas Radoycis, Jr. at 16 In addition to false information about the operability of the truck when it was recovered, Plaintiff has produced evidence that Erie provided ADA Radoycis with incorrect information about where Mr. Stephan initially inspected the truck: ., - um. - Fm-m: Radars 3. Kick Sean ?33:13, August 2913 it! 57 AM Ya: Svec, {03:10 81mm H2331 amen 01 0 Comedy as 1 was teams cm {a stun Lab Rafting from :13 6:52:13 ?rst mo mammad min on e?ixs manned far a 07651989 I nemertna and mm win him to pt: (n the Enema :3 53:3an 3 Jaws Barth?s mammal. Ska (Sexism gen! un?l the triad data can: {high :h "at? 3.13 an advance at the Us} ear: I: I5 (my ?23 {a 911mm 02:: us. 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As ADA Radoycis plainly states, he conducted the preliminary hearing with an incorrect understanding of where this inspection took place, which affected the testimony of whether it was towed rather than stolen. 17 Erie asserts that Mr. Schmidt had the opportunity to cross-examine witnesses at the criminal hearing. (Br. in Supp. of Mot. for Summ. J. at 20.) This argument, however, completely misses the point of the bad faith claim. Speci?cally, Erie has a special relationship with its insured and it is obligated to treat Mr. Schmidt?s interests with the same faithful consideration that it gives its own interests. An insured should not be in a position where he is obligated to rely on a privately hired attorney to uncover factual falsities provided by his insurance company to the police. Furthermore, Mr. Schmidt was not provided with most of the documents cited in this brief prior to the institution of his criminal charges. These smoking gun documents have come to light only as a result of civil discovery taken in this bad faith case. As if it couldn?t get any worse for Erie, Plaintiff has also produced evidence that Erie withheld key evidence from authorities. At his deposition, Fred Dunning produced photographs that he took of the truck that had never before been produced to anybody. Without question, Mr. Dunning was the ?rst person from Erie insurance to inspect the truck after it was recovered and the photographs that he took were the ?rst that Erie took: Q. Is it your understanding that you were the first person from Erie Insurance to look at this truck after it was recovered? A. Yes. Q. Therefore, the photographs that you took were the first photographs that Erie Insurance took of the car after it was recovered? A. Yes. (Tr. of Dep. of Fred Dunning at 114.) 18 Those photographs were of the ignition cylinder, which turns out to be critical evidence concerning the theft. Furthermore, it became clear that the location of the ignition cylinder had been altered since Mr. Dunning?s ?rst inspection of the truck and when Erie?s expert inspected and photographed the truck. (Tr. of Dep. of Fred Dunning at 92.) Mr. Dunning?s photographs of the condition of the ignition cylinder when it was ?rst recovered, therefore, would have been critical evidence. When asked if he had ever produced those photographs that he took, Mr. Dunning said he didn?t know. (Tr. of Dep. of Fred Dunning at 94.) However, he did speci?cally remember that he did not share them with the prosecutor: Q. Did you produce these photos to the assistant district attorney? A. I didn't. (Tr. of Dep. of Fred Dunning at 94.) Those photographs were not contained in the discovery package the District Attorney?s of?ce produced to Mr. Schmidt during the criminal trial. And there is no evidence that Erie ever produced those photographs to anyone prior to Mr. Dunning?s deposition in this civil case. Furthermore, as these photographs depicted the state of the vehicle differently than the prosecution?s witnesses testi?ed it appeared, its failure to produce these photographs if it possessed them would be a violation of Mr. Schmidt?s rights under Brady 0. Maryland, 373 US. 83 (1963). It is, therefore, impossible to believe that the Allegheny County District Attorney?s Of?ce would have failed to produce those photographs if Erie had provided them. 19 Worse yet, Mr. Dunning was shown photographs of the ignition cylinder at the criminal trial. But those photographs were not the photographs that Mr. Dunning took (they couldn?t be because he never gave his photographs to the prosecutor): Q. And you were indeed shown pictures at the criminal trial, correct? A. Yes. Q. And they were not these pictures that you've produced here today that are Dunning 3 and Dunning 4, correct? A. Right. (Tr. of Dep. of Fred Dunning at 100.) Furthermore the photographs that Mr. Dunning was shown at the criminal trial did not show the truck in the same condition as it was in when he inspected it: Q. All right. The pictures that you saw at trial, was the vehicle in the same condition as it was in at the time that you inspected it? A. No. (Tr. of Dep. of Fred Dunning at 92.) Did Mr. Dunning say anything about this??-no. Did Mr. Dunning inform the of?ce or the court that this key piece of evidence looked different in trial exhibits as it did when he inspected Did he speak up and say that he had pictures that showed the vehicle appearing 2O Plaintiff has produced ample evidence that Erie provided false, material information to the police and withheld evidence that altered the course of the investigation. It also interfered with the authorities making informed decisions about how to handle Mr. Schmidt?s case. These errors and omissions in the information that Erie provided to the authorities at the very least establish bad faith. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on Plaintiffs bad faith claim. Erie Violated Its Statutory Notification Obligations, Establishing Bad Faith As the Suggested Standard Jury instruction points out ?An insurance company acts recklessly if it acts with conscious disregard or deliberate indifference to the rights of its insured.? Pa. SSJI (Civ) 17.310. Under law, a policyholder must be noti?ed when his insurance company refers his case to the police: (ta) scam to polkyl?mfder. The [serum ampere; mail and written notice to the may or swim-2mm about atom the patents writers the {Lemme company waives notice that the 65!?!de ?nds, Disco on speci?c facts. that there is raiser! to hell?re that the win an: In any cf the lemming: (1) to the Mo. or safety a! any mason. (2) ?ght from mm?an (3) Destruction of or mm (4) intmidatinn of mv patents! mimosa or magma. (3) c? or :cn?cus 1539\nd.; to en mumzucn. The insurance catpcay snail send mime name not :13an than 45 days car more than 60 days (mm the time the inhmiatmn is furnished to an authorized agency except when the unnamed agency speci?cs that in maths cheul? not be am! In with the exceptions enumerated in tt?s Lubeecticn In much event an insurance 910': entice to 6'19 pnf.:y1:uid:r not sooner than 159 days nor men: than I91) days {atrium the date the :nfannation is furnished 75 1795(b). Under this rule, Erie clearly had an obligation to notify Mr. Schmidt that it had referred his case to the police. Indeed, there is no evidence that any of the enumerated exceptions apply. 21 Erie, however, clearly acted with conscious disregard or deliberate indifference to Mr. Schmidt?s right to be noti?ed. Indeed, the investigator assigned to Mr. Schmidt?s case was asked directly whether she or anybody else noti?ed Mr. Schmidt that he was being referred to the police and she emphatically answered in the negative: 9. Did you ever inform him that you were referring his case to the police? A. No, I did not. Q. Are you aware of any other Erie employee informing him that his case was being referred to the police? A. Not that I 'm aware of . (Tr. of Dep. of Diane Svec at 238.) Her answer was equally emphatic when she was confronted with the existence of a statute that speci?cally required her to notify Mr. Schmidt that his case was being referred to the police: Q. Did you comply with that statute? A. I did not. (Tr. of Dep. of Diane Svec at 239.) Plaintiff has produced evidence that Erie?s failure to comply with its statutory noti?cation obligations establishes bad faith. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on Plaintiff 5 bad faith claim. 22 Erie?s Use Of A Biased Investigator Establishes Bad Faith Use of a biased expert is conduct that rises to the level of bad faith under Section 8371. Neal 0. State Farm Mut. Auto Ins. Co., 2014 US. Dist. LEXIS 20017 (M.D. Pa. Feb. 18, 2014). Furthermore, the claims supervisor reSponsible for Mr. Schmidt?s case con?rmed that it is not appropriate to use biased experts to assist in investigations. (Tr. of Dep. of Stephen Rengers at 48.) However, Plaintiff has produced evidence that the expert relied on by Erie in deciding to refer Mr. Schmidt?s case to the police was entirely biased. For starters, Erie violated every standard of judicial ethics by paying Mr. Stephan to testify as a witness for the Commonwealth at Mr. Schmidt?s criminal trial. Erie was supposedly nothing but the alleged victim. Erie paying for a witness? testimony would be as inappropriate as it would be for a shooting victim to pay the Commonwealth?s ballistics expert to testify. Indeed, when asked during the criminal trial whether he was being paid to testify, Mr. Stephan lied outright and stated that he wasn?t receiving any compensation for his testimony: Q. Who is paying you in this case, sir? A. ActuaI1y, Mr. Pribanic, at this point in time, today, no one. I have been subpoenaed by 1aw enforcement. I don't receive any compensation for my testimony. I was paid for my initial report from Erie Insurance Company, and that is it. At this point in time, Mr. Pribanic -- (Trial Tr. from November 16, 2010 at 67.) 23 However, this testimony was shown to be completely untrue during discovery in the present civil case when an invoice from Mr. Stephan to Erie was uncovered: Forensic Automotive Services Foremie Automotive Services . mm!? Invouce lm?annln. PA Mail-4W: 79 W}umml.rd 22170?! 08-31! Ne! 30 ?l?ll?lOll 3, a 31 Elie lnsunme Gtuup AW Ms. DE: Siren I new Ommauge um. PA 155118 $1,470.00 ?1 s?ar-?M mpg-mam and .32? a? gaunt; 1 Dam-H :5 1. =32. 1 "1 1mm; 1mm. (mks-2;- Preliminary Hear me a! Judge Hank-y (ill-000007!? Schmidi Claim 9: 2 95.00 [90.09 i 0101950504111?: conference with Allegheny Conn! ADA Nick Rndoyci: Schmidl 93.00 [42.50 conference with Allegheny Com: ADA Nick Rndoycis Schmidl 1.5 95.00 ?2.50 Chin?): 0109503046 0 I Immlolam one Crimnl Cour! Judge Durkin CRWVI-OQ Schmidl Claim ll. 6 95.00 570.00 BIMSBSO-MSIG Conn Judge omen-11110091109 Schmidt Claim 11- (a 95.00 570.00 ?9I09505046l0 Round three Crimal Court Judge Min Claim 4 95 00 380.00 ?:010950504550 I {our Crimnl Com Judge 0min Schmidt Claim ll: 5 95017! 475.00 Ionmsasmma - i011 7 A - TOme?m I $1410.00: (Invoice from Keith Stephan to Erie Insurance Group Dated December 22, 2010.) 24 Erie?s employees were present in the courtroom when Mr. Stephan testi?ed that he was not paid for his testimony. When they received this invoice, did they object? Did they insist that Mr. Stephan was a witness at the criminal trial for the Commonwealth and not the insurance company? Of course not??-they paid thebill: mm. mime mm 3 tczo manna 05-th mum 91-19-43" {5 man ?3369?? a my W-ATM a . mg mama mm g; a mom mm ma massacre-rust Wm? am. 3; came 05?37mm c. to cos. i 2733:: i assume 29 (Check No. 110296977 dated January 19, 2011.) And why??-because they knew of Mr. Stephan?s bias. They wanted his bias. They thought nothing of paying him for testimony at a criminal trial because his bias was part of what they hired him for. This conduct is absolutely abhorrent. It cannot be understated that a corporation paying a witness for testimony at a trial in which it is not a party undermines every notion of ethics and fairness. But it also establishes Mr. Stephan?s bias. It establishes that he was willing to lie on the stand about who was paying him and then later submit a bill for his opinion. 25 However, Mr. Stephan?s bias is further demonstrated directly by the prosecutor from the district attorney?s of?ce. In an email to Erie employees, the ADA implies that Mr. Stephan will not present ?correct information? and asks Erie to help locate a replacement expert: From: Radcyois. Nick Sent: Tuesday. August 03. 2010 10:47 AM To: Svec. Diane Subject: RE: Harry Schmidt 010959504610 ironically as I was heading out to court this morning an attorney from the defense firm came unannounced into our of?ces and requested consent for a postponement. Of coursa lonnsonied and went with him to out in the motion to postpone in Judge Durkin's courtroom. She doesn?t grant postponemnts until the triai date even though she wants the mo?nns died in advance of the trial date. it is better for the defense to narrows than on. The reason for the postponement is that their ?export? needs more time to prepare. They may have a dt?erant expert this time around. This case is going to turn on expert testimony. I want their export report in adyance of trial which I have a right to under the mica of evidence. Keith provided me with some information which I th'nk needs to be veri?ed by another expert from the auto industry. We have to find someone with knovnedge of how those auto computer systems operate and what information is retained by the cor computers that can be read and retained from external devises. til correctly understand the Manhattan that Keith provided then they presented lnacunata testimony at the prelinrinary hearing. 1 think that it this information is available it wiil go a long way to rebut anything they can throw at us. fm looking for a rebuttal witness other than Keith. a stand and even if he presents correct information trig? may be atria to paint it in a light untavorabfo to us. Do you know of anyone associated or not associated with the insurance industry or in the auto industry aiih auto systems and computer retention after the ignition system is damsgas or off? (Email from Nick Radoycis to Diane Svec of Erie Insurance dated August 3, 2010.) However, Mr. Stephan is the ?expert? that Erie relied on entirely in referring Mr. Schmidt?s case to the police. In fact, Erie admits that it relied on Mr. Stephan. (Answer. To 3d Am. Compl. at 1] 29.) Plaintiff has, however, presented ample evidence of Mr. Stephan?s bias, establishing bad faith. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on Plaintiffs bad faith claim. 26 Erie Civilly Accused Mr. Schmidt Of Fraud, Establishing Bad Faith An insurance company must give the interests of its insured the same faithful consideration that it gives its own interests. Pa. SSJ I (Civ) 17.300. See also, Terletsky v. Prudential Prop. and Gas. Ins. Co., 437 Pa. Super 108 (1994). Accusing its insured of fraud without suf?cient basis surely breaches that duty of good faith. Yet that is precisely what Erie has done with its Counterclaim. It has accused Mr. Schmidt of fraud. There is absolutely no merit nor legal support for Erie?s position that the counterclaim cannot amount to bad faith because ?it is part and parcel of Erie?s defense.? (Br. in Supp. of Mot. for Summ. J. at 33.) Erie could assert a defense in its Answer or New Matter. A Counterclaim, however, is not a defensive tool?it is an offensive weapon. Furthermore, there are cases directly on point on this issue. Indeed, it has been Speci?cally held that the ?ling of a counterclaim against an insured may amount to bad faith. Krisa v. Equitable Life Assur. Soc?y, 109 F. Supp. 2d 316 (2000). This holding simply cannot be distinguished and any attempts to do so are futile. 27 Indeed, in issuing such a clear holding on this issue, the Krisa court did interpret O?Donnel v. Allstate Insur. Co., 734 A.2d 901 (Pa. Super. 1999). However, the court?s interpretation of that binding precedent is completely at odds with the interpretation urged by Erie: In 013mg!" 1; A?iggfg' any; [990 BA Sum: 16!. 1.35 25112;. $335 12221, the Supe- rior Conn examined "a an action {or bad faith against an insurer, thejnry is restricted to considering only ovi- of bad faith ?high occurred prior to the ?ling of the lawsuit, or, ?halter it may also consider evidence of an mama?s bad faith conduct occurring during the of litigation." to O'Donnell. the court stated that a em.? Id. c1934. Based upon ?the lack of any restrictive language limiting the scope of bad faith mutual to that which occurred prim to the ?ling of a lawsuit,? the court concludcct broad language of [3?11] 532; was designed to remedy all instances of bad faith conduct by an insurer. whether incurring before. during or after litigation. In so finding, we refuse to hold that an insurer": dutv to act ingood faith ends upon the initiation of suit by the insured. W. Thus. 0012de supports the proposition that "the conduct of an insurer during the of liti- gation may be unnamed as evidence of bad faith under section 8371.? Id. at 907. Krisa, 109 F. Supp. 2d at 320. The last point is worthy of pulling out of the block quote: ?O?Donnell supports the proposition that ?the conduct of an insurer during the pendency of litigation may be construed as evidence of bad faith under section 8317 Id. Erie attempts to end-run the clear holding of Krisa and O?Donnell by suggesting that Mr. Schmidt was required to ?le Preliminary Objections to ?challenge the legality of the cause of actions pleaded.? (Br. in Supp. of Mot. for Summ. J. at 33.) Once again, the lack of understanding of good faith obligations expressed by this sentiment is shocking. Erie has a special relationship with its insured. That relationship does not end upon the initiation of suit by the insured. And that relationship requires the utmost good faith and fair dealing. It does not obligate Mr. Schmidt to ?le objections to frivolous allegations made by Eric simply to avoid baseless claims. 28 The counterclaim is so bad for Erie because by the time it was ?led, all of the facts of the criminal trial had already been established. Mr. Schmidt had been found Not Guilty. And Erie?s expert had been impeached. Erie stammers out that the Counterclaim was based on Mr. Schmidt?s ?motive? and ?misrepresentations?. (Br. in Supp. of Mot. for Summ. J. at 33.) As for misrepresentations, they best they can muster is uncertainty about where his keys were following the theft of his truck. (Br. in Supp. of Mot. for Summ. J. at 33.) But both sets of keys were ultimately provided to Erie in short order. This ?misrepresentation? is so minor as to fall well short of the materiality element to establish a breach of contract. Concerning ?motive? Erie suggests that Mr. Schmidt carried credit card balances and occasionally overdrew his bank account. (Br. in Supp. of Mot. for Summ. J. at 33.) These facts, however, are wholly insuf?cient to support an allegation of fraud by an insurer against an insured. If this were suf?cient to sustain allegations of fraud, a signi?cant portion of the country who owes money on a credit card and occasionally relies on overdraft protection would be subject to allegations of fraud if their insured vehicle were stolen. Furthermore, all of these facts were know at the time of the criminal trial. They had all been analyzed and found?as a matter of fact?to be insuf?cient to make out fraud. And yet, Erie still saw ?t to lob accusations against Mr. Schmidt. They had nothing new to go on. All they had was now-certainly discredited suspicions. 29 To be sure, there is evidence that Erie conducted no additional investigation between the end of Mr. Schmidt?s criminal trial and the date when they ?led the Counterclaim. (Tr. of Dep. of Diane Svec at 258-259.) What is worse for Erie is that the Counterclaim eviscerates any defense of ?we just referred the case to the police and let them decide what to do.? The Counterclaim is entirely Erie?s doing. They can?t hide behind the police, the prosecutor, the district magistrate, or the Common Pleas Judge on the counterclaim. ADA Radoycis con?rmed as much when he testi?ed that he did not make any decisions about whether Erie should ?le a counterclaim against Mr. Schmidt. (Tr. of Dep. of Nicholas Radoycis, Jr. at 90-91.) Plaintiff has, therefore, presented evidence to establish Erie accused him of civil insurance fraud without basis, establishing bad faith. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on Plaintiffs bad faith claim Breach Of Contract Count Under law, a plaintiff may bring a cause of action for breach of the contractual duty of good faith and fair dealing in the insurance context, permitting an insured to recover compensatory damages for an insurer?s failure to act in good faith. Gray 0. Nationwide Mut. Ins. Co., 422 Pa. 500 (1966). 30 Erie asserts?in quotes?a preposition of law that ?In there is no tort cause of action for breach of duty of good faith and fair dealing.? (Br. in Supp. of Mot. for Summ. J. at 35.) Erie cites to Smith v. Lincoln Benefit Life Company, 2009 WL 789900 (W 2009) as authority for this quoted passage. The quoted sentence, however, does not appear anywhere in Smith v. Lincoln Benefit Life Company. It is a blatant and ?agrant effort to mislead this Court as to the law. The true state of the law is that does not recognize a separate breach of contractual duty of good faith and fair dealing where that claim is subsumed by a separately pled breach of contract claim. LSI Title Agency, Inc. v. Evaluation Services, Inc., 2008 PA Super 126 (2008). That is, the implied covenant of good faith does not allow for a claim separate and distinct from a breach of contract claim. Garvey v. Nat?l Grange Mut. Ins. Co., 1995 US. Dist. LEXIS 3283 1995) That is obviously not the case, here. Mr. Schmidt has not plead a breach of contract claim and a breach of good faith and fair dealing claim. To the contrary, Mr. Schmidt had plead an action for bad faith sounding in contract, as permitted by the law of Johsnon v. Beane, 541 Pa. 449 (1995). As such, all of the evidence presented above concerning Erie?s statutory bad faith is equally applicable to the breach of contract claim. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on Plaintiffs breach of contract claim. 31 Malicious Prosecution The elements that must be proven in a malicious prosecution case are set forth in the Suggested Standard Jury Instruction: 17.60 (Civ) MALICIOUS PROSECUTION A person who causes a criminal proceeding to be initiated [or continued] against another, resulting in his or her arrest or a seizure of his or her property, is responsible for the harm resulting from the initiation or continuation of such proceeding, if it was initiated [or contin- ued] with malice and without probable cause, and the proceeding terminated in favor of the plaintiff. As a matter of law, I have decided that the defendant caused criminal proceedings to be initiated against the plainti?? resulting in [[his] [her] arrest] [a seizure of [his] [her] property]. I have also decided as a matter of law that the criminal proceeding terminated in favor of the plaintiff. [First Alternative?Where there is no material con?ict in evidence] Finally, I have decided as a matter of law that the defendant lacked probable cause for [his] [her] actions. [Second Alternative?Where there is a con?ict of material evidenced If you ?nd that the defendant [state which evidence would constitute a lack of probable cause], then the plainti?? has established that the defendant acted without probable cause. If you decide that the defendant sought the advice of a lawyer, and that the defendant ini- tiated criminal proceedings in reliance of this advice, then you must ?nd that probable cause did exist, if you find that the defendant sought the advice in good faith and made a full disclo- sure to [his] [her] lawyer of all facts known to [him] [her]. You as a jury must decide whether the defendant acted with malice. Malice has been de?ned as the doing of a wrongful act intentionally. A criminal proceeding is initiated [or con? tinued] with malice if it is begun [or continued] for a purpose other than to bring the accused person to justice. You may infer that the defendant acted with malice from the fact that [he] [she] acted without probable cause. Pa. SSJI (Civ) 17.60. See also, Kelley v. General Teamsters, Chauffeurs, Helpers, Local Union 249, 544 A.2d 940 (Pa. 1988). There is no question from the record that proceedings were initiated against Mr. Schmidt and that they were terminated in his favor. (Criminal Docket CP-O2- CR-0005893-2010.) 32 The question is whether Erie initiated the proceedings against Mr. Schmidt and whether it did so with malice. Providing False Information To The Police Made Erie Responsible For Mr. Schmidt?s Prosecution When a private party gives false information to police, an intelligent exercise of the officer?s discretion becomes impossible and a prosecution based upon it is procured by the person giving the false information. Restat 2d of Torts, 653, Comment G. This section of the Restatement has been expressly relied upon by the Superior Court of Bradley 1). Gen. Accident Ins. Ca, 2001 PA Super 172 (2001). It is important to note that the element of false information being provided to the police distinguishes the present case from all of the cases cited by the Defendant. Indeed, Bradley speci?cally states ?Appellants do not assert that the insurance companies provide false information to the law enforcement authorities.? Bradley, 2001 PA Super at Similarly, Foman distinguishes itself from the present situation: ?Plaintiff also does not offer any evidence that Defendants provided knowingly false statements to Carobus of the Police Department.? Foman 0. Albert Einstein Med. Ctr., 23 Pa. D. C. 5th 542 (2011). To the contrary, as mentioned above, Plaintiff has produced evidence that the jury could validly determine establishes that Erie provided false information to the Allegheny County Police instigating Mr. Schmidt?s case. 33 Speci?cally, the referral form provided to the police stated that all damage to Mr. Schmidt?s truck when it was recovered was ?cosmetic?: all noted It: was cosmetic. (Ins. Fraud Referral Form at 4.) Cosmetic damage on an automobile is categorized as damage that does not hamper the Operational performance of a vehicle. However, the truth was that the truck was inoperable when it was recoveredfact that the removal of the passive anti-theft ignition transceiver coil renders the vehicle inoperable contrary to what you told the Court a few moments ago, that the vehicle could be operated in the condition it was in? A. Well, yeah, without the transceiver you couldn't start the car. (Trial Tr. from November 16, 2010 at 12.) In fact, when this same individual was questioned about documents he authored concerning the operability of the vehicle, he was forced to confess that he had ?omitted? information about the transceiver damage: Q. You do not write that there was transceiver damage, right? A. I obviously omitted that, yes. (Tr. of Dep. of Fred Dunning at 108.) 34 To the exact point made by the Restatement, ADA Radoycis con?rmed that he expected the information he was getting from Erie was honest. (Tr. of Dep. of Nicholas Radoycis, Jr. at 71.) Furthermore, he made the common sense observation that he needed truthful information so that he could make good decisions about how to prosecute Mr. Schmidt?s case and that if he was not given the facts, he couldn?t make ?proper decisions under the law?. (Tr. of Dep. of Nicholas Radoycis, Jr. at 71? 72.) Plaintiff has also produced evidence that Erie withheld key evidence from authorities. At his deposition, Fred Dunning produced photographs that he took of the truck that had never before been produced to anybody. Without question, Mr. Dunning was the ?rst person from Erie insurance to inspect the truck after it was recovered and the photographs that he took were the ?rst that Erie took: Q. Is it your understanding that you were the first person from Erie Insurance to look at this truck after it was recovered? A. Yes. Q. Therefore, the photographs that you took were the first photographs that Erie Insurance took of the car after it was recovered? A. Yes. (Tr. of Dep. of Fred Dunning at 114.) 35 Those photographs were of the ignition cylinder, which turns out to be critical evidence concerning the theft. Furthermore, it became clear that the location of the ignition cylinder had been altered since Mr. Dunning?s ?rst inspection of the truck and when Erie?s expert inspected and photographed the truck. (Tr. of Dep. of Fred Dunning at 92.) Mr. Dunning?s photographs of the condition of the ignition cylinder when it was ?rst recovered, therefore, would have been crucial evidence. (Tr. of Dep. of Fred Dunning at 94.) Those photographs were not contained in the discovery package the District Attorney?s of?ce produced to Mr. Schmidt during the criminal trial. And there is no evidence that Erie ever produced those photographs to the police. Plaintiff has produced ample evidence that Erie provided false information to the police and withheld evidence that initiated the prosecution. As the prosecution was based upon these false statements, it was procured by Erie, whose employees made those false statements. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on Plaintiff's malicious prosecution claim. Erie Took An Active Role In Mr. Schmidt?s Prosecution A private person who takes an active part in continuing or procuring the continuation of criminal proceedings initiated by himself or by another is subject to the same liability for malicious prosecution as if he had then initiated the proceedings. Restat 2d of Torts, 655. Defendant argues that this section of the restatement has never been expressly adopted by a case. (Br. in Supp. 36 of Mot. for Summ. J. at 18.) However, the same approach to malicious prosecution has most certainly been employed by the Superior Court: Defendant's ?rst contention is that its motion for Mutant n. o. v. should have been granted hematite there was no evidence that its ogmts instituted the criminal promdings against plaintiff. In these proceedings, Chief of Police Fond was the med prosczutncr. Defendant argues that its agents did no more than turn over the information to the chief of police, who then made the formal charge in accordance with his own Plaintiff testi?ed that Eachtel, defendant?s assistant manager. at the hearing before the magistrate. [$539] insiged that she be held on a larceny charge, ?are of defendant?s unploycs. including Bechtel, testi?ed against her at this pmliminary hearing. Thus is ample in the we: ml, which. if known. would saw-mt tho jury's verdict and a finding that dz. fondant, through its. agents and employs was the real 1* and took an active in initiating the Hawaiian. If defendant was the real instigate! of the criminal prosecution, it would not be relieved of liability by showing that it was not the prosecutor of record. rift? No ?5 20 Sr no: (in: ft 33010Q Defendant would be liable as a pony to the prosecution when: the arrest was made at the instance, and with the knowkdgo and consent. of defendant although the of?cer of defendant company was not expressly directed to an WW Where an agent bananas an prosecution. the liabilityal' the principal' 15 governed by the general principles 1r 2 o?wriSimpson 0. Montgomery Ward Co., 165 Pa. Super. 408 (1949). As the Superior Court points out, the analysis goes much deeper than simply a question of who is the prosecutor of record. In this case, Plaintiff has produced evidence that would support a jury?s verdict that Eric took an active role in the prosecution of Mr. Schmidt. For starters, Erie selected, hired, and paid for the prosecution?s expert. As mentioned above, Erie paying for the expert transitioned Erie from a garden variety ?victim? to an integral part of the team prosecuting Mr. Schmidt?s criminal trial. In this regard, the common expression to ?follow the money? makes sense. Not only does the company paying the bill have a vested interest in the outcome of the case, but it exerts signi?cant control over the witness it is paying. That is, the witness feels obligated to serve the interests of the entity that is paying it. 37 In this case, there is simply no doubt that Mr. Stephan sent his bill to Erie, not the prosecutor of record: Forensic Automotive Services Fomsic Automww Service-I l?VOiCe PO Box 095 lndimln. PA I505 HMS 084?? 1.3212" 010 kmq?nn lain-umma - Na 10 mnmun News; -1. ii Erie 113321131!ch i Amino: Ms. Dime Svec Murray Ridge Drive I Bum SPA 15608 i I i Phat-.5131: momma-n at! um um ,uasn hunt: I pan-2.1+ -- NW1: mg ammo"! Pnl'mumry Hem' mg Judge Henley (IR-0000011 419 Sam Clam: it 2 95. 190.00 OIMSOMIG 08103120I0 Pn4nd conference with Allegheny Cm ADA Nick Rndoyda Schmidl 1.5 95.00 [42.50 mm a; conference with Mieghmy Count ADA Nick Rmycia Schmidl 1.5 95.00 142.50 - Claim 13: ("0950504610 one Crime! Conn Judge Duttirl camnm Schmidl Cbim 6 95.00 570.00 0109505046 0 Ctimnl Conn Judge Durkin Schmidt Claim 6 95.00 $70.00 0109505046? 11mm?: Crime! Cour! Judge Duriin I 419 Schmidt Claim 4 95.00 380.00 13: ("0950504610 132112010 Rand four Crimnl Cour! Judge Min Schmidl Claim 0: 5 95.00 "5.00 1 (?09505045Eliot: rah-Isa? i . Md TOTE ~77 ?7 $1470.09! (Invoice from Keith Stephan to Erie Insurance Group Dated December 22, 2010.) There is similarly no dispute that Erie paid that bill ENE antennae mm m. Mimmw no.- I: enema-1m ta a an rm momma 05-17?2031: can mum: 01-1940? E, GEO 2?0691(qu re namiswemmsa :1 wmmomsem 0339} PD 301895 3; momma. PA 151151 was i aims: ?so ERIE INSURANCE Erma: Hm WEEKENSNE - THEFT at. if menace-37:52am! ii a I, to 24qu not I I. I. 2733-: a aqasqsua (Check No. 110296977 dated January 19, 2011.) 38 Furthermore, Erie kept custody of the physical evidence throughout the entire criminal case and its employees?and not the prosecutor of record?arranged for forensic examination of that evidence: From: Records. Nick lNRedoycis@da.aIIegheny.pa.usl Sent: To: Svec. Diane Subject: RE: Schmidt casecan direct and eke amen, cane It] be of! next week to v. ark on my kitchen project and don't want to delay the discovery process. Atso. I don?t have a copy of the Braddock RD. recon otths recovery of the truck. Reminder: the towing merry Infonnetion and interview tfave?ehte. From: Svec, Dtane Sent: Frioay, August 06, 2010 10:52 AM To: Recovers, Nick Subject: RE: Schmidt case. It Is In Adomsburg. Keith Stephan has the he! to It. They can meet leeilh there a. 9 can cm the yard a cer. If you went to work w?hem Irelth that will work. II as a salvage yard. II is there Just tet me know the date a. time so I can call them sheer: ten them who on Is coming From: Radoyds, Nick Sent: Friday, August 06, 2010 10:51 AM To: Svec, Diane Subject: Schmidt case. I have just received a phone cat! hum one of the attorneys In the rtef'ense enamels: ?rm requesting that enengements be - . h' Mr. Alexander exemine the vehicle. Where Is the vehtcte now and what arrangements have to be made to have Mr. Alexander examine the truck? Expeetted attention ts requested The Judge has stated that she wants no delays In discovery matters. (Email chain between to Diane Svec of Erie Insurance and ADA Radoycis dated August 6, 2010.) 39 Finally, Erie employees?and not the prosecutor of record?arranged for witnesses to be present at trial, sometimes even making their travel arrangements: From: Svec. Diane Sent: Friday, November 12. 2816 5:63 AM To: Oldham. MaryAnn; Dunning. Fred . . Cc: Radoycis, Nick; Dawson, James; Carter, Helena; Stevens, William Subject: Harry Schmidt #610956504619 MaryAnn, This note is a reminder of what we discussed yesterday. Igg?nill be subpoenaid to come to the Schmidt Trial on Tuesday, November 16I 2018. Please bring whatever information you have re: howyou obtain. hold release the keys when vehicles are given to Erie Insurance either by theft, totaled etc. I know you mentioned on this case, the keys had to be placed in a special package so you gave it to someone who took care of the insulated envelope mailing it. As discussed I will meet you at the Office 7:09am you can then ride down with me. (Email from Diane Svec of Erie Insurance to MaryAnn Oldham Dated November 12, 2010) Plaintiff has produced evidence that Erie was actively involved in the prosecution of Mr. Schmidt??far beyond the involvement of a typical ?victim?. A jury could validly ?nd that this involvement was suf?cient to make Erie liable for malicious prosecution as if it had initiated the proceedings. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on Plaintiffs malicious prosecution claim. 40 Erie Referred Mr. Schmidt?s Case To The Police With Malice Erie suggests that it is obligated to refer all cases of suspected insurance fraud to the police. However, its own policies dictate that there are some referrals where it does not expect a ?full blown? criminal investigation to take place: Law Enforcement Referral Policy statement future crimes against the industry. In addition. not all humus of claims fraud warrant prosecution. What is important is that claims fraud can. shoulan must be Although not all states have a speci?c statutory requirement to report fraud to law enforcement authorities. it is we position of The ERIE that insurance (loud cases in all stores can and should be reported to law enforcement when a reasonable basis exists to believe that insurance fraud has been oris being committed. With the realization that law enforcement resources will always be source we must judiciously exercise the referral process while or the some time follow state law and company requirements. Since we are required to report law refemrls to suite insumnee departments itIn is negessarycn that we noel: these A referral nggiigtjon gin . onf . - .. .o place in evegcase. Our friends in; log; com need so ling}! the; Ontlre other hand we want to diligently omen: and pursue will! law enforcement. (Erie Investigative Services Section Reference Manual at 1-23.) Were Erie truly to have had the lily white intentions that it portrays it had when it referred Mr. Schmidt?s case to the police, surely it would have told them that they did not expect a full blown investigation. Surely, Erie would have given it?s ?friends? at the police department a heads up that this was a case that was being referred just to satisfy its reporting obligations. 41 Of course, Erie made no such quali?cation when it referred the case to the police: Q. Okay. When you referred Mr. Schmidt's case to the police, did you make any statement to them about whether this was a case in which Erie expected a full blown investigation? A. No, I don't tell them how to do their job. Q. You never comment to them whether it?s a case that you expect to have a full blown investigation? A . No . (Tr. of Dep. of Diane Svec at 185.) To the contrary, Erie dove in head ?rst. As mentioned above, it paid for the Commonwealth?s experts, kept custody of the evidence, and managed witnesses on behalf of the of?ce. This referral was anything but an innocent referral. Plaintiff has produced evidence that Erie acted maliciously. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on Plaintiffs malicious prosecution claim. 42 Erie Is Not Entitled To Immunity Because It Did Not Conduct a Comprehensive Investigation In order to invoke the immunity provided to organizations required to report suspected fraud, those companies are ?rst required to conduct a comprehensive investigation: While us ?nd that the Appellees arc mt liable for malic'ttms pmcutinn. we do not conclude that they conducted an investigation suf?cient to invoke the immunity provided to organizations required to report suspected fraud. Sutton ?ll of the Motor Vehicle Insurance coda roquirea licensed insurers doing business in the Commonwealth who have . to Metal, state or local criminal law enforcement {53312} authorities. 73 if 1817. Section 1818 of the same provider: immunity l'mm civil liability to tltuse entities ?ling these reports or providing infra-marina required by Hanna ifsuch was done . . in good faith and Witlunn malice.? 75 (i 1818. [am] We belies: the of ?good faith? and ?without mafia." tit-trawl} to invoke immunity require an insurance to an conduct a comprehensive investigatitm hcl'urc a; casing an {Willi} insured of fraud. Appellants contend that Appellate did not conduct an ndaqmte investigctinn into the miter before providing infoumtion tn law authorities. Becansco decision on this isms is not necessary to our resolmion of the hsue before us. we reach no comlusioa on tin: queuinn of immunity. We do note that had Appellant ?led a claim of deformation against the result in this case may have been different. Brady, 2001 PA Super at Erie once again blatantly misleads the Court when suggesting that Cantor v. Equitable Life Assur. Sociy of the United States speaks to insurance company immunity. In fact, the Cantor opinion does not mention the word ?immunity? once nor does it have anything to do with the ?immunity provision of Section 1818? as Erie suggests. The investigation involved in that case was ?a methodical five year? medical investigation. It does not change the Superior Court?s requirement that a comprehensive investigation be committed prior to accusing an insured of fraud. Aquila v. Nationwide Mut. Ins. Co. is similarly distinguishable and dubiously presented to this Court. The Aquila court held that the ?red ?ags? ?established a reasonable justi?cation for undertaking the investigation?, not immunity. Aquila v. Nationwide Mut. Ins. Co., 2008 US. Dist. LEXIS 101518 2008) (emphasis added). Once again, the word ?immunity? does not appear and the discussion has nothing to do with Section 1818. All the Aquila court held was that the insurance 43 company was justi?ed in conducting an investigation. In fact, on the question of the ?manner in which Nationwide undertook the investigation?, the court denied summary judgment and reiterated that ?an action for bad faith may also extend to the insurer?s investigative practices.? Id. To the contrary, in this case Plaintiff, has produced ample evidence that Erie?s investigation of Mr. Schmidt?s claim was de?cient?and certainly not ?comprehensive??prior to its referral to the police. Speci?cally, Plaintiff has produced evidence that Erie?s investigation failed to: 1. Check public records for divorce ?lings (Tr. of Dep. of Diane Svec at 243); 2. Conduct a motor vehicle/driver history search (Tr. of Dep. of Diane Svec at 247); 3. Conduct a neighborhood scan (Tr. of Dep. of Diane Svec at 247); 4. Conduct surveillance of Mr. Schmidt (Tr. of Dep. of Diane Svec at 248); 5. Interview Mr. Schmidt?s neighbors who might have witnessed the theft or have information about the crime (Tr. of Dep. of Diane Svec at 249); 6. Visit the scene of the theft (Tr. of Dep. of Diane Svec at 249); 7. Request surveillance tapes from the mill where the vehicle was recovered (Tr. of Dep. of Diane Svec at 249); 8. Obtain Mr. Schmidt?s air itinerary corroborating his trip to Florida (Tr. of Dep. of Diane Svec at 254); 9. Request Mr. Schmidt?s hotel con?rmation corroborating his trip to Florida (Tr. of Dep. of Diane Svec at 254); 10. Order Mr. Schmidt?s credit card records (Tr. of Dep. of Diane Svec at 253-254); 1 1. Order Mr. Schmidt?s cell phone records (Tr. of Dep. of Diane Svec at 253); 12. Speak with the people Mr. Schmidt traveled with when his truck was stolen (Tr. of Dep. of Diane Svec at 254); 44 13. Speak with Mr. Schmidt?s girlfriend (Tr. of Dep. of Diane Svec at 255); 14. Speak with Mr. Schmidt?s daughters (Tr. of Dep. of Diane Svec at 256); 15. Ask anybody other than Mr. Schmidt about his ?nances (Tr. of Dep. of Diane Svec at 255); 16. Speak with Mr. Schmidt?s ex-wife (Tr. of Dep. of Diane Svec at 257); 17. Visit the company that towed the truck from its recovery location (Tr. of Dep. of Diane Svec at 2449-250); 18. Visit the dealer that sold Mr. Schmidt his truck (Tr. of Dep. of Diane Svec at 250); 19. Find out if anybody requested additional keys from Mr. Schmidt?s truck (Tr. of Dep. of Diane Svec at 250); 20. Establish whether any employees were recently terminated from the dealership that sold Mr. Schmidt his truck (Tr. of Dep. of Diane Svec at 250); 21. Speak with anybody at the National Insurance Crime Bureau about Mr. Schmidt?s case (Tr. of Dep. of Diane Svec at 251-251); 22. Order titles and registration of motor vehicles owned by Mr. Schmidt from the Department of Transportation (Tr. of Dep. of Diane Svec at 254); 23. Inquire into Mr. Schmidt?s ability to pay his truck payments (Tr. of Dep. of Diane Svec at 255); 24. Establish how much he owed on the truck (Tr. of Dep. of Diane Svec at 256); 25. Determine the extent of Mr. Schmidt?s income (Tr. of Dep. of Diane Svec at 255); 26. Ask the insured about his sources of income (Tr. of Dep. of Diane Svec at 256); 27. Obtain an employment history from the insured (Tr. of Dep. of Diane Svec at 256); 28. Obtain information about carports or garages where the truck is normally stored (Tr. of Dep. of Diane Svec at 256); 29. Conduct any Google research into whether Mr. Schmidt?s truck could be stolen without a key (Tr. of Dep. of Diane Svec at 257); or 45 30. Speak with the police of?cer who reported the theft of Mr. Schmidt?s truck (Tr. of Dep. of Diane Svec at 252). These failed investigative steps demonstrate that Erie did not conduct a ?comprehensive? investigation prior to accusing its insured of fraud. Plaintiff has produced evidence that Erie?s investigation was not ?comprehensive?, eliminating the Defense of Immunity. Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on the basis of immunity. The Expert Fees Claimed Are Expert Fees For Mr. Schmidt?s Criminal Defense, Not Fees In This Civil Case Erie asserts that expert Witness fees are not permitted in an award of court costs. Plaintiff cannot diSpute the Superior Court?s ruling in this regard as it relates to experts Mr. Schmidt has hired to prosecute this civil case. However, Mr. Schmidt distinguishes the expert fees he paid in his criminal defense case from those he Spent to pursue this civil case. The costs of the expert in his criminal defense trial are compensatory damages, directly resulting from Erie?s conduct. They are not ?court costs? related to the civil case. The expert fees concerning Mr. Schmidt?s criminal defense are, therefore, recoverable. Attorney Fees Claimed In The Breach Of Contract Count Are Attorneys? Fees For Mr. Schmidt?s Criminal Defense, Not Fees In This Civil Case The requirement for contractual or statutory authority for the recovery of attorneys? fees applies to the fees necessary to pursue the civil breach of contract claim. Mr. Schmidt is not claiming entitlement to attorney?s fees in the civil breach of contract matter. In Mr. Schmidt?s situation, thought, his need to hire an attorney 46 to represent him in the criminal matter was separate and distinct from those to pursue the civil breach of contract claim. In that regard, they are a compensatory damage arising from Erie?s breach of the contract. The Damages Claimed By Erie?s Breach Of Contract Were Foreseeable Erie referred Mr. Schmidt to the police for prosecution under felony insurance charges. A jury could validly ?nd that one who is put in that position would be required to spend money on attorney?s fees. Likewise, a jury could validly ?nd that such a predicament would cause one to miss work and hire experts to prove his innocence. To be sure, though, these questions of forcibility are questions of fact to be decided by a jury. Collateral Estopel Does Not Apply Because The Questions 0f Erie?s Bad Faith Were Not Addressed In The Criminal Matter The probably cause needed by the Commonwealth is separate and distinct from the probable cause required for Erie to escape liability for malicious prosecution or bad faith. Indeed, the probably cause needed by the Commonwealth derived from the false information provided by Erie. Determinations made by Magistrate District Justice Hanley and Judge Durkin concerning probable cause had nothing to do with whether Erie acted in good faith in its handling of Mr. Schmidt?s claim. Plaintiff has not had the opportunity to litigate Erie?s probable cause or the bad faith of Mr. Dunning's statements. The required element of collateral estoppel that the issue decided in the criminal case be identical to the one presented in this action is unsatis?ed. 47 Would the police have made an arrest if they had been informed that their entire investigation derived from a false statement? Would the Commonwealth have prosecuted a case whose fruit came from a forbidden tree? Would Magistrate District Justice Hanley have held a case on these grounds for trial? Plaintiff has produced evidence that at least ADA Radoycis was relying on receiving truthful statements from Erie employees. (Tr. of Dep. of Nicholas Radoycis, Jr. at 71.) A jury could validly ?nd that if the police, prosecutor, and magistrate were provided with truthful and accurate information, they would have made different decisions. How, then, can it be said that the issue of Erie?s bad faith was determined in the criminal trial? Drawing reasonable inferences in favor of the Plaintiff, as the Court is required to do under the applicable standard of review, the Defendant is, therefore, not entitled to summary judgment on the basis of collateral estoppel. Conclusion The Plaintiff has presented so much evidence of Erie?s bad faith in this case that the notion of summary judgment is far fetched. To be sure, though, genuine questions of material fact abound. They include: - Whether Erie?s investigative practices were done in good faith; 0 Whether Erie conducted an in-depth investigation; Whether Erie provided false information to the police about the extent of the damage to the ignition cylinder when the truck was recovered; - Whether Erie provided false information to ADA Radoycis about where Mr. Stephan viewed the truck after it was recovered; Whether Erie withheld photographs taken by Mr. Dunning from the police; 48 0 Whether Erie violated its statutory noti?cation obligations when it referred Mr. Schmidt?s case to the police; Whether Mr. Stephan was a biased expert; - Whether Erie?s accusations that Mr. Schmidt committed fraud were made in good faith; 0 Whether Mr. Schmidt made misrepresentations concerning the location of his keys; Whether any misstatements made by Mr. Schmidt concerning his keys were material; Whether the false information provided by Erie to the police made an intelligent exercise of the of?cer?s discretion impossible; - Whether Erie took an active role in Mr. Schmidt?s prosecution by paying for the Commonwealth?s expert witness; Whether Erie took an active role in Mr. Schmidt?s prosecution by maintaining physical custody of the evidence; Whether Erie took an active role in Mr. Schmidt?s prosecution by arranging for witnesses to be present at trial; 0 Whether Erie conducted an investigation that was comprehensive enough to invoke immunity; - What Mr. Schmidt?s damages are; and 0 Whether the damages were foreseeable. As Plaintiff has produced evidence that a ?nder of fact could validly decide all of these questions in his favor, Defendant?s Motion For Summary Judgment must be denied in its entirety. Respectfully submitted, PRIBANIC PRIBANIC, LLC Dated: S) Willow? y: Pittsburg Maggy 49 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing BRIEF IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT was served upon the following via United States First Class Mail, postage prepaid on the 29th day of May, 2015: Arthur J. Leonard, Esquire Robb Leonard Mulvihill, LLP BNY Mellon Center 500 Grant Street, 23rd Floor Pittsburgh, PA 15219 Mattl?niR0 0 80 conclusively not only could you make a key from the original key, a copy, a duplicate, but there could be hundreds of such keys that had been made and they would never register on that computer; is that correct? You can't do hundreds. Why not? Well, you technically could. bet you could. With a factory key you are only limited to six, eight or ten. I understand since it was a clone. It could be hundreds. It could be hundreds of keys because when you made a spare key, and anybody who had access to Mr. Schmidt's house, friends, relatives, anybody could had gone in, taken the key, taken it to Ace Hardware just like you did, got a copy and could have drove off with the truck? Ace Hardware has only had that equipment within the last six months. But somewhere get a new key made? It wasn't very prevalent in the Western area in 2008. I continually check for locksmiths -- JACQUELINE D. FRIDAY, OFFICIAL COURT REPORTER . 81 PD All right. In any event -- -- retailers, that duplicate transponder keys. THE COURT: All right. Wait for a question. It's getting late we are going to have to end this pretty soon. MR. PRIBANIC: Thank you, Your Honor. BY MR. PRIBANIC: Q. When you put the third key that you made into the truck and started it, the computer, when you interrogated it, still said there were only two keys for that vehicle; correct? Yes. I testified to that. Okay. Because that, this is what is called a clone. It fooled the car into thinking it was one of the two factory keys because -- It didn't fool the car. As I testified previously in front of Mr. Radoycis, it was an exact clone of the blue key. Yeah. 30 it was not the blue key, but the car thought it was the blue key; right? Correct? Didn't think it was the blue key. It had the same electronic, same inscription as the blue key. Okay. Whatever. THE COURT: It's only a car. It JACQUELINE D. FRIDAY, OFFICIAL COURT REPORTER HARRY SCHMIDT, Plaintiff, VS. ERIE INSURANCE EXCHANGE, d/b/a ERIE INSURANCE AGENCY, INC., a/d/b/a ERIE INSURANCE, a/d/b/a ERIE INSURANCE COMPANY. a/d/b/a ERIE INSURANCE GROUP, a/d/b/a ERIE INSURANCE PROPERTY CASUALTY COMPANY, Defendant. ORIGINAL IN THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, CIVIL DIVISION GD 11-8406 DEPOSITION TRANSCRIPT OF: Gene Robertson DEPOSITION DATE: August 6, 2013 Tuesday, 9:55 a.m. PARTY TAKING DEPOSITION: Plaintiff COUNSEL OF RECORD FOR THIS PARTY: PRIBANIC PRIBANIC Matthew Doebler, Esq. mdoebler?pribanic.com 513 Court Place Pittsburgh, PA 15219 412.281.8844 REPORTED BY: Kristin Lytle, RPR Notary Public Reference No. KL31472 AKF Reporters, Inc. Pittsburgh Greensburg - Erie 412-261-2323 Locate new potential witnesses? Yes. Request documents from third parties? Yes. Speak to the insured? Yes. So earlier we talked and to some degree your counsel and I locked horns about what documentation exists with respect to investigative responsibilities. Now I want to talk about documentation of what happens during the investigation. And I think this has already been answered, so I think we will move through it very quickly. But do I understand correctly that all steps of the investigative process are documented through the CMS system? Each investigative lead that?s pursued by the investigator is documented in a supplemental report that's contained within the CMS system. Would you agree that during an investigation Erie must treat its policyholders' interests with an equal regard as it does its own interests? MR. LEONARD: I object but you may AKF Reporters, Inc. Pittsburgh - Greensburg - Erie 412-26le2323 answer. I would agree. DOEBLER: And what steps are taken to ensure that Erie treats its policyholders' interests with equal regard as it does its own interest during an investigation? MR. LEONARD: I'm going to object. It's outside the scope of the designation. It's asking for an opinion. You can focus on the scope of the notice. MR. DOEBLER: Well, we're speaking about practices concerning investigation of vehicular theft. DOEBLER: And what practices are taken and I'm going to withdraw the question. I will ask it differently. What practices are taken to ensure that Erie treats its policyholders' interests with an equal regard as it does its own interests during an investigation? MR. LEONARD: Object to form. You may answer. Each step along the way the file is AKF Reporters, Inc. Pittsburgh - Greensburg - Erie 412-261-2323 would include a qualification with respect to vehicular claims in There's never a time when outside counsel would be engaged specifically to help determine whether a file should be sent to law enforcement. Is it Erie's practice during an investigation to provide truthful information to the police when a case is referred? MR. LEONARD: Objection. I think we're so far afield from investigation, documentation, practices that we're now talking about truthfulness. I will allow the witness to answer, but we're going to close this door. You may answer. Can you repeat the question once more, and then I will do that. MR. DOEBLER: Why don't you read it back, please. THE WITNESS: We provide the police with the referral form which delineates the reason for referral, that reasonable basis to AKF Reporters, Inc. Pittsburgh - Greensburg - Erie 412?261-2323 136 believe that we talked about and if they request it the entire claim file, and that file is by its nature truthful. So yes, we -- it is our practice to provide truthful information to the police. BY MR. DOEBLER: Q. Your counsel will be happy to hear that we're taking off your investigative cap, and we're moving on to a different cap. We have covered a lot of what I have on the sort of back end of this, but it's not 10 or 15 minutes left. So if we want to take a lunch MR. LEONARD: I'd just like to finish. MR. DOEBLER: Fair enough. MR. LEONARD: If the witness is -- are you okay? THE WITNESS: Yeah, maybe a two?minute break. MR. LEONARD: Go ahead. (There was a recess in the proceedings.) BY MR. DOEBLER: Q. Back on the record. AKF Reporters, Inc. Pittsburgh - Greensburg - Erie 412-261-2323 NETWORK DEPOSITION SERVICES Transcript of Nicholas Radoycis, Jr. IN THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, HARRY SCHMIDT, DIVISION )No. GD 11-008406 Plaintiff, vs. ERIE INSURANCE EXCHANGE, Defendant. Deposition of NICHOLAS RADOYCIS, JR. Thursday, October 30, 2014 The deposition of NICHOLAS RADOYCIS, JR., called as a witness by the Defendant, pursuant to notice and the Rules of Civil Procedure pertaining to the taking of depositions, taken before me, the undersigned, Dylan C. DiRenna, a Notary Public in and for the Commonwealth of at the Offices of Robb Leonard Mulvihill, 500 Grant Street, 2300 Mellon Center, Pittsburgh, 15219, commencing at 10:05 the day and date above set forth. NETWORK DEPOSITION SERVICES SUITE 1101, GULF TOWER PITTSBURGH, 15219 412-28lw7908 NY -- hawkmfi . .. -MM. .. Johnstown - Erie - Pittsburgh - Greensburg - Harrisburg 866-565-1929 7 NETWORK DEPOSITION SERVICES Transcript of Nicholas Radoycisinsurance fraud cases; right? A Sure. You expect employees of the insurance companies that you deal with to be honest with you? A I expect everyone to be honest with me, police officers, witnesses whoever you're dealing with. That includes employees of insurance companies? A Sure. You can't make good decisions if you're not provided with honest information; correct? A I'm not sure of your question. You can't make good decisions if you're not provided with honest information? MR. SCHNEIDER: Objection to form. You can answer. MR. LEONARD: I join. A I expect factual, truthful, answers, yes. You expect that withdrawn. You expect those factual and truthful answers so that you can make good decisions about V. wAJ??mcahn "4 Johnstown - Erie - Pittsburgh - Greensburg - Harrisburg 866-565-1929 NETWORK DEPOSITION SERVICES Transcript of Nicholas Radoycis, Jr. .2. @00qu prosecute a case; correct? A That's correct. If you're not provided with factual and truthful information, you can't make good decisions about how to prosecute a case? MR. SCHNEIDER: Objection to the form. MR. LEONARD: Objection. THE WITNESS: Answer? MR. SCHNEIDER: You can answer unless I tell you not to answer. A If you're not given the facts, then you can't make proper decisions under the law. THE WITNESS: Can I take a moment. MR. SCHNEIDER: Sure. (Recess taken.) BY MR. LEONARD: In making the decisions that you made about Mr. Schmidt's prosecution, did you rely on the statements in the claim referral worksheet as being accurate? MR. SCHNEIDER: Objection. Don't answer. Investigative information, investigative procedure, work product. Go ahead. If you knew the statements -Mw- inc; . .- - ?a sud?.4. Johnstown - Erie - Pittsburgh - Greensburg - Harrisburg 866-565-1929 NETWORK DEPOSITION SERVICES Transcript of Nicholas Radoycis, Jr. 1 that you could tell us whether or not Exhibits 7 2 and 8 were ever provided to you? 3 MR. SCHNEIDER: Objection. Don't 4. "If-it"was- 5 provided to him, it's investigative material. 6 MR. DOEBLER: I'm not asking I'm 7 asking if there is something that he could 8 look at that could tell him whether these 9 documents were ever provided to him. 10 MR. SCHNEIDER: I apologize. You can 11 answer that question. 12 A I don't know. 13 Did you make any decisions with 14 respect to whether a civil counterclaim should be 15 filed in the civil lawsuit between Erie and 16 Mr. Schmidt? 17 MR. LEONARD: Object to the form of 18 the question. 19 MR. SCHNEIDER: You can answer. 20 THE WITNESS: I'm not sure I 21 understand the question. 22 BY MR. DOEBLERdifferently. 24 Did you make any decisions about 25 whether Erie should file a counterclaim against LL Johnstown - Erie - Pittsburgh - Greensburg - Harrisburg 866-565-1929 NETWORK DEPOSITION SERVICES Transcript of Nicholas Radoycis, Jr. (AMIMr. Schmidt? A No. I'm not involved in any civil litigation whatsoever. I?m not connected with the lease? -In fact, I-didn?t know-a civil suit had - been filed until some time after that. They said that I would be called as a witness or deposed. I got a subpoena. Here I am. That's an interesting question. How did you find out that a civil suit had been filed? MR. SCHNEIDER: I think he has just answered. You can go head and answer again. Who told you that? A I don't recall how I found out. Do you know when you found out? A No, I don?t recall that either. Turning back to the counterclaim, did anybody from Erie Insurance contact you and ask you whether they thought it was a good idea for them to file a counterclaim? A No. Did anybody from Erie Insurance contact you and ask you whether there was appropriate evidence to file a counterclaim . - 4.. a - - ,3 .. 71-4.4: 7? . Johnstown - Erie - Pittsburgh - Greensburg - Harrisburg 866-565-1929 THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, HARRY SCHMIDT Vs. ERIE INSURANCE AGENCY, INC., Plaintiff, Defendant. CIVIL DIVISION GD 11?8406 DEPOSITION TRANSCRIPT OF: STEPHEN E. RENGERS DEPOSITION DATE: October 1, 2013 Tuesday, 10:01 a.m. PARTY TAKING DEPOSITION: Plaintiff Harry Schmidt COUNSEL OF RECORD FOR THIS PARTY: Matthew R. Doebler, Esq. PRIBANIC PRIBANIC 513 Court Place First Floor Pittsburgh, PA 15219 412-281-8844 REPORTED BY: Desiree Guzman Notary Public Reference No. DG32051 Would you agree that it is not appropriate to use bias experts to assist in an investigation? A. Yes. Q. During the ISS investigation, were you ever approached by the investigator about referring the case to law enforcement? A. Do you mean, did I approve of it? Does she approach me and come up to me? How do you mean approach? Does she come up to me and talk to me about it? Q. Did anybody come up to you and talk to you about it, yes. A. I don't remember that. Q. Well, here is the question you wanted to answer. Did you approve of the decision to refer this case to law enforcement? A. Yes. Q. And, again, now, do we mean that, approved, theoretically and authorized specifically? MR. LEONARD: Wait a minute. I'm trying to understand that difference. MR. DOEBLER: Approved, and we talked about this earlier, that approved is sort of, did I think it was a good idea. And authorized is, did I click a button that said that it is authorized.