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A bad-faith suit against Allstate Insurance Co., which stemmed from an auto accident case that produced a $19.1 million verdict in Philadelphia, has been sent back from federal court to common pleas jurisdiction, a federal judge has ruled.

Even though Allstate is headquartered in Illinois, its employees involved in the case reside in Pennsylvania, U.S. District Judge Lawrence F. Stengel of the Eastern District of Pennsylvania reasoned, remanding the case April 14 to the Philadelphia Court of Common Pleas.

Allstate and its agents Kevin Broadhead, Paul Fraver, John Russell and Henry Ricci III were the defendants in Hennessy v. Allstate Insurance. The plaintiff, Patrick Hennessy, sued Allstate for refusal to pay for the judgment entered against its insured, Ryan Caruso, who was partially responsible for the accident that resulted in the amputation of Hennessy’s right leg.

In his opinion, Stengel said he did not agree with the defendants’ contention that Hennessy fraudulently joined Allstate’s Pennsylvania employees in the case solely to defeat diversity of citizenship.

He added that none of the claims against the Pennsylvania defendants are insubstantial or frivolous and makes specific allegations regarding those defendants.

For example, Stengel said, “The complaint alleges that Mr. Ricci created a likelihood of confusion and misunderstanding by ‘unfairly, fraudulently, and deceptively’ representing to the Caruso family before it purchased the policy that Allstate had internal policies that were consistent with its ‘Good Hands’ advertising campaign.”

Stengel said Caruso and his family agreed to change their coverage to Allstate, relying on Ricci’s misleading assurances.

Stengel also noted that Broadhead, Russell and Farver sent letters to Hennessy’s attorneys, insisting that Allstate was conducting claims investigations, “when in fact the letters were actively concealing that Allstate was not investigating the claims at all.”

Additionally, the Caruso family was not informed by the defendants that Hennessy offered to accept the $250,000 policy limit as settlement before the case went to trial, according to Stengel.

Matthew Casey, one of the Ross Feller Casey attorneys representing Hennessy, said subsequent offers of $5 million and $10 million were made, each refused by Allstate, until eventually a Philadelphia jury handed up a $19.1 million verdict in favor of Hennessy. Casey said Caruso assigned his claim against Allstate to Hennessy and that the plaintiff now owns the claim.

“As a direct and proximate result of these defendants’ allegedly unfair, fraudulent or deceptive conduct,” Stengel said, “Mr. Caruso has become personally liable for the excess verdict and has suffered harm arising from the effects of that verdict and obligation.”

Stengel said there was ample basis to support the claims against the individual defendants.

“We have already begun the discovery process and will now depose everyone involved in adjusting this claim,” Casey said. “We have every intention of collecting both the full judgment, with interest, as well as damages to deter Allstate from ever treating its millions of other insureds the way it treated the Caruso family here.”

Marshall J. Walthew of Pepper Hamilton in Philadelphia represented the defendants and did not return a call seeking comment.

On April 10, Philadelphia Court of Common Pleas Judge John Milton Younge upheld the $19.1 million verdict in favor of Hennessy in the underlying case.

Younge issued an opinion in response to an appeal filed by Caruso. Delay damages were awarded in the case, bringing the total up to about $20.2 million.

“The plaintiff was a young man who suffered an extremely painful above-the-knee amputation that will almost certainly cause complications in the future,” Younge said.

“He testified to continuous phantom pain and an inability to ambulate properly, which will continue to plague him for the remainder of his life, estimated at over 40 years,” Younge continued. “Viewed from this perspective, the jury’s award was not excessive.”

The case dates back to July 2009, when Hennessy was a passenger in a car being driven by Caruso. According to Younge, Caruso rear-ended another car being driven by Bruce Reikow (dismissed from the case), which resulted in Caruso’s car stalling in the middle of the road. As Hennessy was pushing Caruso’s car off to the side of the road, another car being driven by Shawn Robertson Jr. rear-ended the Reikow vehicle, spun to the side and crushed Hennessy.

Casey said Caruso was found 45 percent negligent and co-defendant Robertson was found 55 percent negligent. Casey said Robertson never responded to the lawsuit and a default judgment was entered against him. He added that Caruso is on the hook for the entire verdict plus a 6 percent interest rate.

Caruso argued in a motion requesting a new trial that the jury should not have been allowed to assess his responsibility for Hennessy’s amputation and apportion the commensurate liability because Hennessy’s injuries occurred during the second accident while he was pushing Caruso’s car, according to Younge.

“Despite his erroneous phrasing, this first issue averred by Mr. Caruso is, in reality, a question of proximate causation or legal causation, and his argument failed because it is hornbook law that a tortfeasor is responsible for the consequences of his tort,” Younge said.

The second accident would not have happened, Younge said, if Caruso did not collide with Reikow’s car.

“The fact that the plaintiff’s right leg was not injured in the first accident did not relieve Mr. Caruso of responsibility for the harm his negligent conduct created,” Younge said. “Therefore, the extent of the plaintiff’s injuries in the first accident was irrelevant.”

Caruso’s attorney, Daniel J. Divis of Gerolamo McNulty Divis & Lewbart, declined to comment on either case.

P.J. D’Annunzio can be contacted at 215-557-2315 or pdannunzio@alm.com. Follow him on Twitter @PJDAnnunzioTLI.

(Copies of the six-page opinion inHennessy v. Allstate Insurance, PICS No. 14-0573, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.)