Ciotola v. RSA INSURANCE GROUP, PLC et al

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
CARMEN CIOTOLA, as assignee
of QUARTERBACK
TRANSPORTATION, INC.,
:
:
Plaintiff 	: 	CIVIL ACTION NO. 3:21-1020
v. 	: 	(JUDGE MANNION)
RSA INSURANCE GROUP, 	PLC,
et al.,
:
:
Defendants
MEMORANDUM
Pending before the court is plaintiff Carmen Ciotola’s request to re-
open this matter following the completion of arbitration in order to proceed
with his claims for breach of contract and bad faith. (Doc. 24). For the
reasons that follow, Plaintiff’s request will be DENIED.
I. 	Factual and Procedural Background 1
On June 9, 2021, plaintiff Carman Ciotola filed this insurance action as
the alleged assignee of Quarterback Transportation, Inc., (“Quarterback”), a
1 The full background of this case can be found in the court’s 2020
Memorandum in civil action 19-cv-753, M.D. Pa., denying plaintiff’s and
Quarterback’s cross-motions for summary judgment, see Ciotola v. Star
Transportation & Trucking, LLC, 481 F.Supp.3d 375 (M. D. Pa. 2020).
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Canadian policyholder, against defendants RSA Insurance Group, PLC, now
known as RSA Insurance Group Limited, and two of its subsidiaries, Royal
and Sun Alliance Insurance Company of Canada and Royal and Sun Alliance
Insurance 	Agency, 	Inc. 	(herein 	collectively 	referred 	to 	as 	“RSA” 	or
“Defendants”). While the court will not recite the full background in detail, a
brief summary of the events leading up to this request is necessary to better
understanding the court’s discussion.
The underlying dispute in this case stems from a motor vehicle
accident 	that 	occurred 	on 	November 	12, 	2018, 	in 	Luzerne 	County,
Pennsylvania, between Ciotola and Quarterback. At the time of the accident,
Quarterback 	had 	a 	$7,000,000 	primary 	insurance 	policy 	with 	Chubb
Insurance Company and a $1,000,000 policy of excess liability coverage with
RSA under the Comprehensive Logistics Policy, CLP 0070, (“RSA Policy”).
Subsequently, Ciotola filed a personal injury action against Quarterback.
According to the complaint in the instant matter, RSA breached its
duties under the RSA policy by failing to assign counsel or defend the
interests of Quarterback against Ciotola’s lawsuit. (Doc. 1., ¶ 83). After
several failed attempts to negotiate, Ciotola demanded the full $1,000,000
excess policy held by RSA. Id., ¶ 84-87. When it became clear that RSA had
no intention of entertaining Ciotola’s demands, Quarterback settled with
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Ciotola 	by 	consenting 	to 	a 	judgement 	against 	it 	for 	$9,000,000 	and
transferring any potential claims it had against RSA under the RSA policy to
Ciotola through an Assignment Agreement. (Doc. 24, p. 7-8). Quarterback
also agreed to pay Ciotola $500,000 after the consent judgement was
entered. Id. In return, Ciotola agreed not to enforce the $9,000,000 consent
judgement against Quarterback. Id.
Utilizing the rights transferred by the Assignment Agreement, Ciotola
brought this against RSA for bad faith and breach of contract. In response,
RSA filed a joint motion to compel Ciotola to proceed with arbitration to
resolve his claims in accordance with the arbitration clause in the RSA policy.
(Doc. 11). This court granted RSA’s motion, issuing an order to stay Ciotola’s
claims pending arbitration and administratively closing the case. (Doc. 23).
On February 21, 2025, Arbitrator Scott W. Densem rendered his
findings. (Doc. 24). Notably, it was Quarterback, rather than Ciotola, who
initiated this arbitration against RSA. In his decision, Mr. Densem found that
the Assignment Agreement between Quarterback and Ciotola was “a nullity”
and that it “has no legally binding effect on RSA”. Id., at 17. He further found
that Quarterback was entitled to indemnity under the RSA policy for the
$500,000 	amount 	that 	it 	paid 	to 	Ciotola 	as 	part 	of 	their 	Settlement
Agreement. Id., at 126.
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Thereafter, Ciotola filed the instant request to re-open this case in
order to proceed with his claims for bad faith and breach of contract against
RSA. 	However, 	given 	the 	Arbitrator’s 	findings 	that 	the 	Assignment
Agreement was legally invalid, it was unclear how Ciotola had standing to
proceed with his claims against RSA. Thus, the court ordered the parties to
brief this issue. (Doc. 26). Ciotola’s brief was filed on June 2, 2026. (Doc.
27). On June 16, 2026, RSA filed its brief in opposition, (Doc. 28), to which
Ciotola filed a reply. (Doc. 29). The matter is now ripe for review.
II. 	Discussion
Initially, the parties dispute whether Ciotola’s instant claims of bad faith
and breach of contract should have been resolved through arbitration. The
parties hold conflicting interpretations of the court’s 2022 memorandum,
(Doc. 22), and order, (Doc. 23), concerning the scope of issues subject to
arbitration. According to Ciotola, the only issue to be resolved through
arbitration was the determination of coverage under the RSA policy, while
the remaining claims for bad faith and breach of contract were stayed for
future litigation pending that determination. (Doc. 27, p.2). However, a
complete reading of the court’s memorandum and order makes it clear that
all of Ciotola’s claims were to be resolved through arbitration.
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In support of his position, Ciotola states that “a simple review of the
terms 	of 	the 	Dispute 	Resolution/Arbitration 	Clause 	in 	the 	RSA 	policy
confirms that [he] was not required to arbitrate his bad faith claims in
Canada” as it only covers claims related to coverage. (Doc. 22, p. 1-2).
However, 	this 	argument 	fails 	to 	acknowledge 	the 	court’s 	findings 	that
Ciotola’s instant claims were related to coverage. For instance, at the end of
the court’s discussion, the court explicitly categorized Ciotola’s instant claims
as coverage disputes, stating:
In short, since Ciotola avers that Quarterback assigned its rights
to him under the RSA Policy, he is bound by the provision of that
policy which requires that coverage disputes under the policy,
as 	he 	raises 	in 	his instant 	claims, 	shall 	be 	resolved 	by
arbitration in Canada.
(Doc. 22, p.6). In fact, the majority of the court’s discussion was based on
the question of “whether the claims Ciotola raises in his instant complaint are
covered by [the arbitration clause].” (Doc. 22, p.16). While the court found
that none of Ciotola’s claims could proceed without a determination that the
RSA Policy affords coverage, that was simply an additional factor that the
court used to conclude that his claims were all within the scope of the policy.
The court made this clear after analyzing each of Ciotola’s claims, stating:
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While Ciotola 	points 	out 	that 	insurance 	contracts 	are to 	be
construed in favor of the insured, he neglects the well-settled case
law that “regarding the scope of the arbitrable issues, a district
court should resolve all doubts in favor of arbitration.”
(Doc. 22, p, 23). In its entirety, the court’s memorandum and order make it
clear that all of Ciotola’s claims were found to be covered by the arbitration
clause.
Nevertheless, 	the 	court 	also 	finds 	that 	the 	Arbitrator’s 	findings
rendering the Assignment Agreement legally invalid leaves Ciotola without
standing to bring his instant claims. According to Ciotola, this conclusion from
the Arbitrator “was made in the context of 	indemnity rights 	under the
insurance contract, and not assignment of rights to pursue claims for bad
faith.” (Doc. 27, p.6). However, the decision as a whole provides plenty of
context to reject this. For example, when analyzing whether Quarterback had
standing to pursue the arbitration, he stated the following:
In effect, what Quarterback did to settle the personal injury
litigation was to agree to try to transfer its rights under the RSA
policy to Ciotola, without guaranteeing it could validly do so.
Ciotola accepted those terms. By executing the Assignment
Agreement, Quarterback fulfilled its obligations pursuant to the
Settlement Agreement, but there was no transfer of rights legally
enforceable against RSA.
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(Doc. 24, p.18). Further, in his analysis on the issue of whether Quarterback
breached the terms of the RSA policy by assigning those policy rights to
Ciotola without RSA’s consent, Mr. Bensen explained that:
Ontario law governs the interpretation of the contract between
Coast/RSA and Quarterback. The assignment was not valid
under the terms of the contract, nor under Ontario law, so it was
a nullity. It has no legally binding effect on Coast/RSA. As I have
noted, Quarterback astutely provided for this situation in the
Settlement Agreement, which explicitly states that Quarterback
does not guaranty to Ciotola that its attempted assignment of
rights would be binding on Coast/RSA. Ciotola assumed all risk
with respect to whether the assignment of rights was valid.
Therefore, although Quarterback may have technically breached
the RSA policy by attempting to assign its rights under the RSA
policy to Ciotola, the breach has resulted in no loss or prejudice
to Coast/RSA, and it is of no consequence.
(Doc. 24, p.105-106). Certainly, if Mr. Bensen’s decision merely referred to
the transfer of indemnity rights, and not the policy rights in general, he would
not have concluded that the breach was of no consequence to RSA. Further,
if Quarterback had relinquished his claims of breach of contract and bad faith
through the Assignment Agreement, as Ciotola asserts, the Arbitrator would
not have issued an award to Quarterback on the basis that RSA breached
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its duties to defend and investigate under the insurance contract, as was the
result.
To the extent that Ciotola argues that the transfer of policy rights under
the insurance contract is unnecessary to bring his instant claims of bad faith,
that argument fails as well. As RSA correctly points out in its opposition brief,
“[a] plaintiff without contractual rights under the insurance policy lacks
standing to pursue a bad-faith claim.” (citing Strutz v. State Farm Mut. Ins.
Co., 	609 A.2d 	569, 	571 	(Pa. 	Super. 	1992); 	see also 	Bonenberger v.
Nationwide Mut. Ins. Co., 791 A.2d 378, 383 (Pa. Super. 2002) (rejecting the
argument that a “bad faith claim is a separate and distinct claim from the
insurance policy contract claim” and therefore does not “arise under an
insurance policy”).
In sum, the court finds that Ciotola’s claims could only proceed through
a valid assignment of policy rights from Quarterback. However, it is evident
from the Arbitrator’s decision that the Assignment Agreement was invalid
due to the non-assignment clause in the RSA policy and therefore had no
legal effect. As a result, Ciotola lacks legal standing to proceed with his
claims in this instant action.
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III. 	Conclusion
Accordingly, Ciotola’s request to re-open this case in order to proceed
with his claims of bad faith and breach of contract (Doc. 24) will be DENIED.
An appropriate order follows.
s/ Malachy E. Mannion_
MALACHY E. MANNION
United States District Judge
DATE: March 2, 2026
20-1020-02
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