MAY 2018 BAD FAITH CASES: (1) THIRD-PARTY CLAIMANT CANNOT BRING BAD FAITH CLAIM, BUT (2) DID PLEAD PLAUSIBLE CLAIM BASED ON ALLEGED INTERPLAY BETWEEN THE SAME CARRIER’S FIRST PARTY AND THIRD PARTY CLAIMS HANDLING BY A SINGLE ADJUSTER (Middle District of Pennsylvania)

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After an auto accident, the insured submitted a (first-party) UIM claim to its insurer. The tortfeasor in the accident had a policy with the same insurer. Thus, the insured was also a third-party claimant with respect to the tortfeasor. The insurer assigned the same claim representative to manage both the first-party claim and the third-party claim. The insured eventually sued for bad faith as to the handling of both claims.

The insurer moved to dismiss aspects of the bad faith claim on the basis that Pennsylvania law precludes a third-party claimant from bringing a cause of action for bad faith against a tortfeasor’s insurer. The Court denied the motion in part and granted in part.

The Court found the insured sufficiently pleaded facts regarding the interplay between the claims handling of first-party and third-party claims to make out a plausible bad faith claim. However, where the insured only pleaded bad faith against the insurer solely for its actions regarding his third-party claim, the Court dismissed these allegations under Pennsylvania law.

Date of Decision: April 23, 2018

Vella v. State Farm Mutual Automobile Insurance Co., United States District Court, Middle District of Pennsylvania, Civil Action No. 17-1900 (SHR), 2018 U.S. Dist. LEXIS 67419 (M.D. Pa. Apr. 23, 2018) (Rambo, J.)

 

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