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A split three-judge Pennsylvania Superior Court panel has vacated a $21 million insurance bad-faith judgment, finding the Pennsylvania judge who had awarded the money in a lengthy and scathing 2014 opinion improperly considered issues far outside the bounds of the case.

“We are troubled by [Berks County Judge Jeffrey] Sprecher’s failure to limit his analysis to the facts of this case and applicable law,” Superior Court Judge Victor Stabile said in the majority’s 61-page opinion. “After an exhaustive review of the very large record in this case, we believe we have no choice but to vacate the judgment.”

The opinion in Berg v. Nationwide Mutual Insurance, which the court issued Monday, not only vacated the $18 million in punitive damages and $3 million in attorney fees that Sprecher had awarded, the ruling also entered judgement in favor of the defendant, Nationwide Mutual Insurance Co.

Ben Mayerson of Mayerson Law, who represented plaintiffs Daniel and Sheryl Berg, said he was “deeply disappointed” by the ruling.

“The facts of record amply support the trial court’s findings, as noted by President Judge Emeritus Correale Stevens in his dissenting opinion,” Mayerson said. “We trust the issues are of sufficient pressing public importance that the Supreme Court of Pennsylvania will grant review.”

According to the chair of Post & Shell’s insurance law practice, Richard McMonigle, who wrote a book on bad-faith law for ALM, but was not involved in Berg, the case has been closely watched by the insurance bar. He said it is one of the largest awards in a bad-faith case since the law was enacted nearly 30 years ago.

“I would call this a stunning decision,” McMonigle said.

It is rare for an appellate court to be so critical of a trial judge, and rarer still to enter judgment for an appellate, rather than simply remand the case, McMonigle said. In terms of takeaways, he said the opinion shows judges reviewing bad-faith cases need to base their decision on the facts before them.

“The trial court deemed to penalize the defendant for its vigorous defense, which the Superior Court majority seemed to criticize,” McMonigle said. ”An insurance company is entitled to zealous representation by its attorney and to vigorously litigate the case against it, just like any other defendant.”

McMonigle said he wouldn’t be surprised if the ruling is appealed, either to an en banc panel, or to the Pennsylvania Supreme Court directly.

The Superior Court’s decision comes after 20 years of litigation in the case, and marks the second time the case has gone up the appellate ladder.

According to court documents, the plaintiffs took their damaged 1996 Jeep Grand Cherokee to a facility participating in the insurer’s “Blue Ribbon Repair Program,” where one appraiser told them the vehicle’s frame had been too twisted to fix and recommended that the vehicle be totaled. But the Bergs submitted that the evidence showed Nationwide reversed that appraisal without informing them and ordered the vehicle off to another repair facility.

The Bergs argued that, despite four months of attempted repairs, Nationwide knowingly returned them their vehicle with an unsound structural frame in order to avoid paying for a new vehicle, according to court documents.

A jury found Nationwide violated the Unfair Trade Practices and Consumer Protection Law during the first phase of a bifurcated trial, according to court documents. However, in the second phase, the trial court granted Nationwide’s motion for a directed verdict on the bad-faith claim because the Blue Ribbon program “is not a part of” Nationwide’s auto-insurance policy.

The Superior Court in 2012 reversed the lower court’s ruling, and allowed the Bergs to present evidence that Nationwide paid its defense counsel just under $1 million as part of a litigation strategy of not cooperating with policyholders who retain lawyers and aggressively litigate claims of less than $25,000.

In June 2014, Sprecher issued his $18 million bad-faith verdict, along with a harshly worded opinion, finding that “Nationwide strong-armed its own policyholder rather than negotiating in good faith to compensate plaintiff for the loss suffered in the automobile collision.”

Although Superior Court Judge Correale Stevens issued a 10-page dissenting opinion, saying the majority had improperly overridden the trial court’s role with its own interpretation of the facts, Stabile said he was concerned by several passages from Sprecher’s opinion, including a portion where the trial judge said insurance companies are at a litigation advantage because of their superior resources and another passage saying that plaintiffs face “astronomical” risks in bringing bad-faith claims.

“The relative power and wealth of the insurer as compared to the insured is not relevant to whether bad faith occurred in a particular case, unless some factual basis can be shown that the insurer used its wealth to engage in bad faith,” Stabile said. “A judge sitting as fact finder in a bad faith case should confine his or her analysis to the facts of the case at bar without any consideration of the perceived ills of the insurance industry in general.”

Dechert attorney Robert Heim, who represented Nationwide did not return a call for comment Tuesday morning.

(Copies of the 71-page opinion in Berg v. Nationwide Mutual Insurance, PICS No. 18-0461, are available at http://at.law.com/PICS.)