JANUARY 2011 BAD FAITH CASES
BAD FAITH STATUE ONLY CONCERNS WHETHER INSURER ACTS BADLY IN PARTICULAR CASE, NOT WHETHER ITS BUSINESS PRACTICES ARE REASONABLE IN GENERAL (Philadelphia Federal)

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The insureds brought suit against their former professional liability insurer for failing to provide them with a defense when claims were asserted against the insureds in a state court case.  The suit included a claim for a violation of Pennsylvania’s bad faith statute, 42 Pa. Cons. Stat. Ann §8731, in connection with which the insureds served a subpoena for documents upon the insurance broker for the policy at issue.

The insurance broker objected to the subpoena and failed to produce any documents, and the insureds filed a motion to compel the production of the documents.  The court noted that the insureds had requested documents containing information about other lawyers who had brought complaints about the insurer’s policy or the broker’s practices.  The bad faith statute, however, only looks to whether a defendant “acted recklessly or with ill will in a particular case, not whether its business practices are reasonable in general.” (quoting Hyde Athletic Indus., Inc. v. Cont’l Cas. Co., 969 F. Supp. 289, 307 (E.D. Pa. 1997)).  Because the information about other lawyers was not relevant to this specific case, the court rejected the insureds’ motion to compel the production of the requested documents.

Date of Decision:  December 21, 2010

Wolk v. Westport Ins. Corp., Civil Action No. 06-cv-5346-JF, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 134923, (Dec. 21, 2010) (Fullam, J.)

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BAD FAITH STATUE ONLY CONCERNS WHETHER INSURER ACTS BADLY IN PARTICULAR CASE, NOT WHETHER ITS BUSINESS PRACTICES ARE REASONABLE IN GENERAL (Philadelphia Federal)”


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