JULY 2012 BAD FAITH CASES: COURT STAYS BAD FAITH CLAIMS PENDING UIM CLAIM (Philadelphia Federal)

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In Moninghoff v. Tillet, the court heard a carrier’s motion to stay an insured’s bad faith claims until the accompanying underinsured motorist (“UIM”) claims were disposed.

The court granted the carrier’s motion and stayed the insured’s bad faith claims until the UIM claim was addressed. Specifically, the court reasoned that UIM claims require a determination of liability and an assessment of the insured’s injuries. By contrast, bad faith claims require an analysis of the process that the carrier went through to investigate the insured’s claims.

At a trial for a UIM claim, the insured would need to prove liability, requiring the carrier to pay those damages up to the insured’s $200,000 policy limits. On the other hand, the court explained, the insured’s bad faith claims focus on the carrier’s investigative procedures and the deliberative process that it went through in handling the insured’s UIM claims.

The court went on to state that this difference is also obvious when discovery is considered. In the insured’s UIM claim, discovery would be rather limited with respect to the carrier. Yet, in the insured’s bad faith claims, there would be broad discovery of the carrier’s investigation. Moreover, the bad faith claim may become moot as the UIM claim is litigated, or its focus may become the carrier’s conduct during the UIM litigation.

Therefore, the court granted the carrier’s motion to stay the insured’s bad faith claim.

Date of Decision: June 27, 2012

Moninghoff v. Tillet, No. 11-7406 (E.D. Pa. June 12, 2012) (McLaughlin, J.)

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