WHERE THERE IS NO DUTY TO DEFEND THERE IS NO STATUTORY BAD FAITH; NO COMMON LAW BAD FAITH WHERE NO BREACH OF CONTRACT (Western District)

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The court determined there was no coverage due under an additional insured endorsement. Thus the insured lost on its breach of contract and declaratory judgments claims. It likewise failed to salvage its bad faith claims.

In addressing the bad faith claim, the court relied on the Third Circuit’s recent decision in 631 N. Broad Street v. Commonwealth Land Title, observing “that where there is ‘no duty to defend, there could be no [statutory] bad faith claim against’ the insurer.”

The insured tried to evade this result by asserting it still had a common law bad faith claim. However, the only common law bad faith cause of action available in Pennsylvania arises out of the insurance contract. If the contract claim fails, the common law bad faith claim fails of necessity. Thus, “[b]ecause the Court dismisses [the] breach-of-contract claim based on lack of potential for coverage, so too must it dismiss a subsumed claim of common law bad faith.”

On the common law bad faith holding, the court relied upon the Eastern District decisions in CRS Auto Parts and Tubman, and the Middle District decisions in Bukofsi and Porter.

Date of Decision: March 13, 2020

NVR, Inc. v. Mutual Benefit Insurance Co., U.S. District Court Western District of Pennsylvania No. 2:19-cv-26-NR, 2020 U.S. Dist. LEXIS 44135 (W.D. Pa. Mar. 13, 2020) (Ranjan, J.)

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