Plaintiff initiated a bad faith claim against the insurer stemming from an automobile accident in which he was a passenger. Plaintiff was involved in an accident in which he was a passenger in the vehicle and the driver had an automobile insurance policy with State Farm.
Prior to the accident, the insurer alleges that plaintiff’s wife cancelled the policy. However, plaintiff alleges that it was not her intention to cancel the policy. Plaintiff’s wife stated that she was under the impression that the insurance was not to be cancelled immediately, but would be covered for an extended period of time on both vehicles under the policy.
The insurer’s claim representative investigated the matter, and recommended the claim be denied on the basis that the policy had been cancelled prior to the accident. The insurer admits that but for this cancellation the policy would have covered the claim; however on it denied the claim .
Plaintiff was awarded a judgment against the driver insured, and the insured assigned his rights against the insurer to plaintiff.
Plaintiff filed breach of contract and bad faith claims against the insurer. The insurer filed a motion for summary judgment and argued that the plaintiff’s bad faith claim was untimely.
The court stated that the statute of limitations begins to run on a bad faith claim when coverage is denied. However, the plaintiff claims that due to the “no action clause” in the policy, the bad faith claim did not accrue until he obtained judgment against the insured driver.
The court found that “no action” clauses do not preclude suits by an insured against an insurer, and therefore the statute of limitations began when coverage was denied. Plaintiff’s suit was brought more than 2 years later and was untimely. The court therefore granted insurer’s motion for summary judgment on the bad faith claim.
With regard to plaintiff’s breach of contract claim, the insurer argued that the plaintiff failed to adduce any evidence to support the claim. However, the court found that the plaintiff had produced sufficient evidence; and there was genuine issues of material fact on this issue and therefore denied the insurer’s motion for summary judgment on the breach of contract claim.
Date of Decision: April 4, 2008
Campbell v. State Farm Mut. Auto. Ins. Co.,2008 U.S. Dist LEXIS 28361 (W.D. Pa. Apr. 4, 2008)(Lancaster, J.)