SEPTEMBER 2013 BAD FAITH CASES: INSURER PREVAILS ON MOTION TO TRANSFER BASED ON JURISDICTION OF UNDERLYING CASE (Philadelphia Court of Common Pleas)

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The Court of Common Pleas of Philadelphia County transferred a bad faith case to the Court of Common Pleas of Dauphin County because the underlying suit was adjudicated in Dauphin County.

In the underlying case, plaintiffs brought suit against their landlords for personal injuries caused by mold in their rented apartment. The landlords’ insurer refused to indemnify two of the three landlords, but filed preliminary objections on behalf of one landlord, which were sustained resulting in the landlord being dismissed. Prior to any verdict or judgment, the two remaining landlords reached a settlement with the plaintiffs, under which the plaintiffs agreed to indemnify and hold harmless the landlords from any liability which they might have to plaintiffs or their insurers. Following an assessment of damages, a total judgment of $6,690,257.00 was entered in favor of plaintiffs.

Two years later, the insurers filed a petition to intervene in the underlying action seeking to strike the judgment. The judge granted the intervention and struck the judgment despite the delay. The insurers then sought to have the case transferred to Dauphin County where the underlying case had taken place.

The Common Pleas court found the matter was “intricately intertwined with the Court of Common Pleas in Dauphin County” and that “transfer was appropriate given the matter’s extensive procedural history” in the jurisdiction.

The court further described the “the structure of the underlying settlement,” which was entered into prior to the entry of a judgment or verdict as “extremely suspicious” and likely created with “an eye towards manufacturing a breach of contract and bad faith type claim” against the insurers. Based on these assertions, the court found “Philadelphia [was] simply not the best or most logical forum available,” because the bad faith action would require determinations regarding the insurers’ actions in the underlying Dauphin County case.

Date of Decision:  June 14, 2013

Schriner v. Peerless Ins. Co., August Term 2011, No. 01294, 2013 Phila. Ct. Com. Pl. LEXIS 188 (C.C.P. Phila.  June 14, 2013) (Younge, J.)

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