In Kakule v. Progressive Casualty Insurance Company, the insured was involved in a motor vehicle accident with another vehicle. The other vehicle did not stop and was never identified. The insured sustained injuries to his upper body and was diagnosed with reflex sympathetic dystrophy. The insured’s policy with defendant insurer provided up to $100,000 in uninsured motorist coverage. The insured filed a claim demanding the maximum amount of benefits under the policy, but the insurer only offered $18,000 in satisfaction of the claim. The insured chose not to accept the offer and an arbitration panel awarded the insured $500,000. The insurer then paid the insured the policy limits and the insured filed an action alleging that the insurer breached its contractual duties under the insurance policy, violated Pennsylvania’s Bad Faith Statute and violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”). The insurer filed a motion to dismiss the insured’s breach of contract and UTPCPL allegations.
The court granted the insurer’s motion and held that the insured cannot bring a common law contract claim for breach of the duty of good faith and fair dealing. Although the Pennsylvania Supreme Court had previously declined to create a common law cause of action in bad faith in D’Ambrosio v. Pa. Nat. Mut. Cas. Ins. Co., 494 Pa. 501 (Pa. 1981), the insured argued that the case of Birth Center v. St. Paul Co., Inc. 567 Pa. 386 (Pa. 2001) changed the court’s position to now allow such causes of action. The Eastern District disagreed with the insured’s argument and held that the Birth Center decision does not create a common law cause of action in bad faith for first party insurance coverage issues. The court relied on the distinction that Birth Center dealt with third party insurance whereas D’Ambrosio as well as the case at bar involved first party insurance benefits. The court made clear that common law bad faith claims in first party coverage situations are not cognizable as the Pennsylvania Bad Faith Statute provides the insured’s remedy.
In addition, the court dismissed the insured’s claim under the UTPCPL as the facts alleged in the insured’s complaint showed proof of nonfeasance, not malfeasance. Only malfeasances, the improper performance of a contractual obligation, raises a cause of action under the UTPCPL.