BAD FAITH NOT POSSIBLE WHERE NO COVERAGE DUE; INSURER CANNOT WAIVE POLICY EXCLUSION BY IMPLICATION (Western District)
In this case, the court found no coverage due. In addressing whether the insured could still pursue a statutory bad faith claim, Magistrate Judge Eddy states:
In Pennsylvania, the law is clear that a bad faith claim fails where a court concludes there is no potential coverage under the policy. SeeUSX Corp. v. Liberty Mut. Ins. Co., 444 F.3d 192, 202 (3d Cir. 2006) (granting “summary judgment in favor of Liberty Mutual on [bad faith] claim because USX’s bad faith claim necessarily fails in light of [the court’s] determination that Liberty Mutual correctly concluded that there was no potential coverage under the policy”). Thus, because this Court concludes that there is no coverage for [the injured party’s] claim [against the insured] under any of the three policies at issue, the bad faith claims … fail.
The Court also rejected the notion that the carrier could be estopped from denying coverage because it did not issue a reservation of rights letter, and waived policy exclusion by not pleading them. Magistrate Judge Eddy rejected this argument, observing:
As the Superior Court of Pennsylvania has noted, [t]he rule is well established that conditions going to the coverage or scope of a policy of insurance may not be waived by implication from the conduct or action of the insurer….
Of equal importance, the Superior Court has held that [t]he doctrine of implied waiver is not available to bring within the coverage of an insurance policy, risks that are expressly excluded therefrom. In Pennsylvania, the doctrine of waiver or estoppel cannot create coverage where none existed. Thus, the doctrine of estoppel may not be used to affirmatively expand coverage under the insurance policies where none existed.