1200th POST —- MAY 2016 BAD FAITH CASES: PARTY INJURED BY INSURED HAS NO STANDING TO BRING BAD FAITH CLAIM AGAINST INSURER BASED ON ALLEGATIONS OF FAILURE TO SETTLE IN GOOD FAITH (Philadelphia Federal)

This is our 1200th post summarizing individual bad faith cases since beginning this blog 9 years and 11 months ago. The ongoing presence of bad faith litigation represented by just these available opinions reflects the persistence of bad faith claims as a regular presence in insurance coverage litigation.

In Leboon v. Zurich American Insurance Company, the court stated that: “[T]he duty to negotiate a settlement in good faith arises from the insurance policy and is owed to the insured, not to a third-party claimant.” In that case, the party that had sued the insured subsequently sought to bring bad faith claims against the insurer for failure to settle that plaintiff’s claims against the insured. The court stated that the insurer’s fiduciary duty ran solely to its insureds, and that the underlying plaintiff was a stranger to the insured-insurer relationship. The court dismissed the claims with prejudice.

Date of Decision April 18, 2016

Leboon v. Zurich Am. Ins. Co., CIVIL ACTION NO. 15-05904, 2016 U.S. Dist. LEXIS 51381 (E.D. Pa. Apr. 18, 2016) (Pappert, J.)

The court’s decision was upheld on appeal.