JUNE 2013 BAD FAITH CASES: COURT FINDS BAD FAITH STATUTE ONLY PROVIDES REMEDY TO INSUREDS, NOT AGENTS OR ATTORNEYS OF INSUREDS (Philadelphia Federal)
In Feingold v. Liberty Mut. Group, a pro se plaintiff , who was a disbarred attorney, brought suit against an insurance carrier and affiliated companies (the “carrier”), and against the administratrix of the estate of his former client. Among other things, he claimed that the carrier was directly liable to him for bad faith.
The former client had retained plaintiff to bring suit against her insurer for uninsured motorist benefits. He successfully obtained an arbitration award, but failed to have the award confirmed for 7 years, during which time the client passed away.
The executrix filed to confirm the award, and ultimately filed her own bad faith claim against the carrier. Following some litigation, the carrier paid the estate the full judgment plus interest; and her bad faith claim was not an issue in this case.
The former attorney brought suit against the estate for legal fees, and against the carrier asserting a myriad of claims, including bad faith. He claimed that the carrier was liable to him for failing in bad faith to pay the original arbitration award, and thereby preventing the estate from paying his attorney fees.
The court dismissed the claims against the carrier with prejudice, finding them to be frivolous and lacking legal sufficiency. As to any putative bad faith claim under Pennsylvania’s bad faith statute, the Court stated that the statute only allows recovery against an insurer that “has acted in bad faith toward the insured.” As the insured’s attorney and not the insured, the former attorney lacked standing under the statute.