Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


5-20-2003

Willow Inn Inc v. Public Service Mutl
Precedential or Non-Precedential: Non-Precedential

Docket 02-2145




Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2003

Recommended Citation
"Willow Inn Inc v. Public Service Mutl" (2003). 2003 Decisions. Paper 548.
http://digitalcommons.law.villanova.edu/thirdcircuit_2003/548


This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2003 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
                                                                 NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT




                                      No: 02-2145


                                 WILLOW INN, INC.,
                              A Pennsylvania Corporation

                                            v.

               PUBLIC SERVICE MUTUAL INSURANCE COMPANY,
                           A New York Corporation
                                          Appellant


                    On Appeal from the United States District Court
                       for the Eastern District of Pennsylvania

                 District Court Judge: The Honorable Berle M. Schiller
                             (D.C. Civil No. 00-cv-05481)




                                Argued on April 10, 2003

        Before: ALITO, FUENTES, Circuit Judges, and PISANO* District Judge

                             (Opinion Filed: May 20, 2003)




__________________
       *Honorable Joel A. Pisano, United States District Judge for the District of New
Jersey, sitting by designation.
                                          Edward M. Koch [Argued]
                                          Louis J. Brown
                                          White and Williams LLP
                                          One Liberty Place
                                          Suite 1800
                                          Philadelphia, PA 19103

                                          Counsel for Appellant

                                          Howard G. Silverman [Argued]
                                          Kane & Silverman, P.C.
                                          2401 Pennsylvania Avenue
                                          Suite 1C-44, The Philadelphian
                                          Philadelphia, PA 19130

                                          Counsel for Appellee




                               OPINION OF THE COURT




PER CURIAM:

       Willow Inn, Inc. (“Willow Inn”), a restaurant, bar, and residence in Willow Grove,

Pennsylvania and an insured of Public Service Mutual Insurance Company (“PSM”) at all

relevant times, commenced this breach of contract and bad faith action, 42 Pa. Cons. Stat.

§ 8371 (2001), to challenge PSM’s adjustment of its property damage claim arising from

a windstorm on June 1, 1998. After a two day bench trial, the District Court found PSM

liable to W illow Inn for breach of contract and bad faith, and awarded $2,000 in

compensatory damages and $150,000 in punitive damages. The District Court granted

                                            2
Willow Inn’s post-trial motion for attorney’s fees and costs, but denied all other post-trial

motions. PSM then filed this appeal.1

       On appeal, PSM raises four issues: (1) Did the District Court err in finding that

PSM breached the contract of insurance between Willow Inn and PSM?; (2) Did the

District Court err in finding that PSM acted in bad faith under the Pennsylvania Bad Faith

Statute?; (3) Is the District Court’s punitive damages award in the amount of $150,000

constitutionally excessive?; and (4) Did the District Court abuse its discretion in awarding

attorney’s fees and costs? This Court granted oral argument, but, after notice to the

parties, limited the argument to the punitive damages issue.

       Only days before oral argument was held in this matter, the United States Supreme

Court filed an opinion in State Farm Mutual Automobile Insurance Company v.

Campbell, ___ U.S. _____, 

, *1 (April 7, 2003), in which the Court,

reinforcing the particular guideposts it enunciated in BMW of North America, Inc. v.

Gore, 

(1996), articulated the principles that courts shall strictly apply before

imposing upon a defendant in a civil case a punitive damages award. In short, the three

guideposts are: (1) “the degree of reprehensibility of the defendant’s misconduct; (2) the

disparity between the actual or potential harm suffered by the plaintiff and the punitive




       1
         Although Willow Inn attempted to untimely file a cross-appeal, it ultimately
withdrew it after the District Court denied a motion to extend time to file a notice of
appeal under Rule 4(a)(5)(A)(i) of the Federal Rules of Appellate Procedure and after this
Court requested briefs on the issue of timeliness.

                                              3
damages award; and (3) the difference between the punitive damages awarded by the jury

and the civil penalties authorized or imposed in comparable cases.” Campbell, ____ U.S.

at ____, 

, at *7 (citation omitted). The District Court’s written

memorandum opinion, however, does not explicitly apply the Gore/Campbell guideposts,

and simply concludes that a $150,000 punitive damages award is appropriate “[b]ased on

the evidence presented at trial and in light of the aforementioned factors [,“the character

of a defendant’s conduct, the nature and extent of the harm intended or caused to the

plaintiff, and the wealth of the defendant]. While our review is de novo in determining

whether sufficient evidence in the record exists to support a punitive damages award,

Alexander v. Riga, 

, 430 (3d Cir. 2000) (citation omitted), we recognize

nevertheless that the District Court is in the best position to first determine whether to

allow a punitive damages award, and, if so, the quantum of those damages. To be sure,

the District Judge presided over a two day bench trial, observed the demeanor of

witnesses, listened to witness testimony, and gained an overall sense of the case.

       Because the District Court did not have the benefit of the Campbell decision when

it imposed upon PSM a punitive damages award, see, e.g., Casey v. Planned Parenthood

of Southeastern Pennsylvania, 

, 856-57 (3d Cir. 1994) (discussing generally

the mandate rule and the Supreme Court’s mandate to lower courts), we vacate the

District Court’s Memorandum and Order filed January 4, 2002 and remand to the District

Court for a determination on the punitive damages issue in accordance with the Supreme


                                              4
Court’s dictates in Gore/Campbell. On all remaining issues, we affirm without further

discussion.

      Accordingly, for the reasons stated above, we affirm in part and reverse in part the

judgment of the District Court.




                                            5