Case Background
Federal Express Corporation (FEC), as successor-by-merger to FedEx Ground Package System, Inc., filed this insurance coverage lawsuit in the Court of Common Pleas of Allegheny County, Pennsylvania, against three of its excess insurers — National Union Fire Insurance Company of Pittsburgh, PA., Great American Insurance Company of New York (GAIC), and Liberty Mutual Insurance Europe Limited. The dispute centered on whether these insurers owed coverage for over $213 million in pre-judgment and post-judgment interest that accumulated during a lengthy and unsuccessful appeal of a massive personal injury verdict in New Mexico. FedEx Ground carried a multi-layered "tower" of excess insurance for the policy period October 1, 2010 through October 1, 2011, with each Defendant insurer occupying a different layer. The insurers paid their respective shares of the base judgment but refused to cover any interest, triggering this lawsuit. FEC brought claims for breach of contract, promissory estoppel, bad faith, and declaratory judgment.
Cause
On June 22, 2011, an automobile accident in New Mexico gave rise to a personal injury lawsuit filed in July 2012 by Alfredo Morga and other Plaintiffs against FedEx Ground in the First Judicial District Court of Santa Fe County (the "Morga Action"). The case went to trial, and on January 23, 2015, a jury returned a special verdict awarding the Plaintiffs $165,533,000 in compensatory damages. After set-offs and credits, FedEx Ground's share came to $156,868,750. The trial Court awarded 5% pre-judgment interest totaling $20,908,670.38 and imposed post-judgment interest at New Mexico's statutory rate of 15% per annum. Approximately $147 million — or 94% — of the base judgment fell within FedEx Ground's excess insurance tower. FedEx Ground appealed the verdict through the New Mexico Court of Appeals and then to the New Mexico Supreme Court, which affirmed the judgment on May 19, 2022. By that time, post-judgment interest alone reached $192,940,688.03.
Injury
FedEx Ground suffered financial harm when its excess insurers refused to cover any of the pre-judgment or post-judgment interest that accrued during the seven-year appeal process. FedEx Ground argued that its insurers — particularly National Union and GAIC — actively participated in, authorized, and benefited from the appeals by hiring counsel, directing strategy, and controlling settlement negotiations, all while post-judgment interest compounded at 15% annually. FedEx Ground also claimed that National Union sent a misleading coverage letter in March 2015 that omitted any reference to the policies' Appeals clause and then failed to correct that misrepresentation throughout the appeals, depriving FedEx Ground of the chance to protect itself against uninsured liabilities.
Damages Sought
Federal Express Corporation (FEC), as successor-by-merger to FedEx Ground, sought over $213 million in pre-judgment and post-judgment interest from its insurers. Against National Union specifically, FEC sought an additional $109,867.99 for interest caused by National Union's delayed payment of its $50 million share of the base judgment. Against Great American Insurance Company (GAIC), FEC sought $2,831,250, representing the remaining balance of GAIC's policy limits toward pre-judgment interest. FEC also sought punitive damages, attorneys' fees, and consequential damages under its bad faith claim against National Union.
Key Arguments and Proceedings
Plaintiff: Federal Express Corporation, successor-by-merger to FedEx Ground Package System, Inc.
· Counsel for Plaintiff: Carolyn M. Branthoover | Kay M. Brady | Joseph C. Safar | Jessica L.G. Moran | Lukus P. Freeman | William George Whitman | Lukus Freeman
Defendant: National Union Fire Insurance Company of Pittsburgh, PA.
· Counsel for Defendant National Union: Marie Milie Jones
Defendant: Great American Insurance Company of New York, Inc.
· Counsel for Defendant GAIC: George C. Thompson
Defendant: Liberty Mutual Insurance Europe Limited
· Counsel for Defendant Liberty Mutual: Elaine Whiteman Klinger
Claims
FEC brought six counts against the Defendants. Count I alleged breach of contract against both National Union and GAIC, arguing they "appealed" the Morga judgment within the meaning of the policies' Appeals clause and owed coverage for all Court costs, expenses, and interest incidental to those appeals. Count II alleged a separate breach of contract against National Union for its delayed payment of the $50 million base judgment share, which caused $109,867.99 in additional post-judgment interest. Count III alleged breach of contract against GAIC for refusing to pay its remaining $2,831,250 in policy limits toward pre-judgment interest. Count IV asserted promissory estoppel against National Union, arguing that National Union's promises and conduct created justifiable expectations of appeal coverage, and FedEx Ground relied on those assurances when it moved forward with the appeals. Count V alleged bad faith against National Union under Pennsylvania's bad faith statute (42 Pa.C.S. § 8371), claiming National Union sent a false and misleading coverage letter on March 6, 2015, that omitted any reference to the Appeals clause, and then capitalized on those misrepresentations throughout the appeals to avoid paying interest. Count VI sought a declaratory judgment against Liberty Mutual regarding its coverage obligations.
Defense
GAIC denied that it "appealed" the Morga judgment as that term was understood under its policy. GAIC maintained it only hired monitoring counsel to observe FedEx Ground's appeals — not appellate counsel to actively participate. GAIC pointed out that FedEx Ground never sought approval from GAIC before filing the appeal and did not communicate directly with GAIC until the New Mexico Supreme Court stage. GAIC further argued that FedEx Ground itself never paid any of the disputed interest; instead, FedEx Corporation made those payments. GAIC also raised a statute of limitations defense, contending that FedEx Ground's claims under the Appeals clause were barred by Pennsylvania's four-year statute of limitations because FedEx Ground began paying appeal-related costs as early as 2015 — more than four years before filing suit. Additionally, GAIC argued FedEx Ground failed to mitigate damages by rejecting a $20 million settlement offer from the Morga Plaintiffs.
National Union similarly contested FedEx's characterization of its involvement in the appeals, arguing its policy's Appeals clause only triggered when the insurer itself elected to appeal in the insured's place — not when the insured voluntarily pursued appeals with the insurer's knowledge.
Jury Verdict
The case proceeded to a jury trial before Judge Mary C. McGinley. The jury returned its verdict on March 25, 2026, using a special verdict form that addressed the bad faith claim against National Union (Count V).
On Question 1, the jury was asked whether FedEx proved that National Union breached the implied duty of good faith and fair dealing owed to FedEx. The jury answered No. Because the jury found no breach of the duty of good faith and fair dealing, it did not reach the remaining questions on the special verdict form regarding damages. The jury found in favor of Defendant National Union and against Plaintiff Federal Express Corporation on the bad faith claim.
Court documents are available upon request at [email protected]
