Monthly Archive for April, 2006
After determining that there was no coverage, the U. S. Court of Appeals for the Third Circuit rejected the bad faith claim against a carrier, which had correctly concluded that its employer’s liability coverage was not invoked under the circumstances of that case. The Court cited its prior case law for the proposition that “’bad faith claims cannot survive a determination that there was no duty to defend, because the court’s determination that there was no potential coverage means that the insurer had good cause to refuse to defend.’”
While recognizing that the duty to defend may be broader than the duty to indemnify, such a duty ends when the insurer can confine the claim to recoveries outside the scope of the insurance coverage. Liberty Mutual had denied coverage under a WC/EL policy, where non-workers’ compensation claims were asserted by USX Corp. employees on the basis of asbestos exposure, and the employer’s liability portion of the policy did not cover claims for bodily injury by disease unless there was a written claim or suit filed within 36 months of the policy period’s end.
Date of Decision: April 10, 2006
USX Corp. v. Liberty Mutual Insurance Company, 444 F.3d 192 (3d Cir. 2006) (Greenberg, J.)
The Philadelphia Commerce Court granted summary judgment to the insurer in Plaintiffs’ action alleging breach of contract, bad faith, and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. After sustaining damage to their home during a wind storm, Plaintiffs were entitled to replacement costs under the policy. Plaintiffs hired a public adjuster who included overhead and profit costs for a general contractor in its estimate, while Defendant’s adjuster did not include such costs.
The court cited U.S. Supreme Court case law which held that these costs must be advanced only when an insured is “reasonably likely” to need a general contractor. The Court noted that Plaintiffs themselves testified that they never intended to hire a general contractor, and held that Plaintiffs were not entitled to profit by receiving compensation for a general contractor when one was neither used nor even contemplated.
Date of Decision: April 10, 2006
Crowley v. Travelers Prop. Cas. Ins. Co., Court of Common Pleas, Philadelphia, August Term 2003, No. 2689, 2006 Phila. Ct. Com. Pl. LEXIS 185 (C.C.P. Philadelphia April 10, 2006)(Bernstein, J.)