NON-INSURED ASSIGNEE STANDING REQUIRES BOTH STATUS AS AN INJURED PARTY AND AS A JUDGMENT CREDITOR (Philadelphia Federal)

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Keeping with today’s theme, Eastern District Judge Leeson, like Judge Pratter, dismissed an amended bad faith claim with prejudice, after the insured did not correct pleading deficiencies to set out a plausible claim.  The nature of the bad faith claim here presents a different twist, however, as it involves assignments and standing.  Judge Leeson’s first decision is summarized here.

Aside from an insured, the only parties with standing to bring a statutory bad faith claim are injured parties receiving assignments who are also judgment creditors.  Judge Leeson cites Wolfe v. Allstate Prop. & Cas. Ins. Co., 790 F.3d 487, 491 (3d Cir. 2015) and Feingold v. Palmer & Barr, 831 Fed. App’x 608, 609 n.5 (3d Cir. 2020) to support this dual requirement. These cases in turn rely upon the Pennsylvania Supreme Court’s Allstate v. Wolfe decision, summarized here.

Judge Leeson found the plaintiff in this case is an assignee, but not an injured person.  “[T]he assignment of proceeds, in and of itself, was insufficient to confer standing to bring a bad faith claim. Accordingly, [plaintiff’s] argument that the assignment itself confers standing upon him is unavailing.”

“Moreover, assuming arguendo that [the plaintiff] sufficiently alleges that he is an injured plaintiff, [he] fails to plausibly allege that he is a creditor to any judgment related to the fire. The effort to plead assignment alone creates standing is “unavailing, as the Court in Wolfe did not treat Wolfe’s assignment as sufficient to render him a ‘judgment creditor.’ … [The plaintiff] fails to allege any judicial judgment related to the fire to which he is a creditor. Since [the plaintiff] does not allege that he is both an injured plaintiff and judgment creditor, he lacks standing to bring a bad faith claim ….” [Emphasis added]

Date of Decision:  September 9, 2021

Williams v. State Farm, U.S. District Court Eastern District of Pennsylvania No. 5:21-CV-00058, 2021 WL 4099534  (E.D. Pa. Sept. 9, 2021) (Leeson, J.)

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