MARCH 2013 BAD FAITH CASES: COURT DENIES CARRIER’S MOTION TO DISMISS INSURED’S CLAIMS FOR BAD FAITH, BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING, AND ATTORNEY’S FEES, BUT DISMISSES INSURED’S BREACH OF FIDUCIARY DUTY CLAIMS (Philadelphia Federal)
In Keppol v. State Farm Ins., a carrier moved to dismiss its insured’s suit for declaratory judgment, bad faith, breach of duty of good faith and fair dealing and breach of fiduciary duty. The insured originally filed this action after the carrier denied his claim for wage loss benefits.
First, the court permitted the insured’s bad faith claim to proceed because the carrier’s alleged refusal to pay wage loss benefits supports a claim for bad faith.
The court also permitted the breach of duty of good faith and fair dealing claim to proceed, reasoning that such a claim may arise from the insurance contract between the parties.
Last, the court refused to dismiss the insured’s claim for attorney’s fees, holding that such an award may be proper in the insurance context for declaratory judgment actions.
However, the court dismissed the insured’s claim for breach of fiduciary duty because a contract between insured and insurer does not automatically create a fiduciary relationship and such causes of action are duplicative of bad faith claims.