MARCH 2017 BAD FAITH CASES: COURT WOULD NOT BIFURCATE BAD FAITH CLAIMS FROM THE COVERAGE ACTION (Philadelphia Federal)
The insurer sought to bifurcate the insured’s bad faith claim from its coverage claim. The crux of the insurer’s argument was that the bad faith claims were dependent on a finding of breach of contract and that it would impose unnecessary discovery burdens for claims that might be resolved through a finding of no coverage.
In denying the insurer’s motion, the court refused to find that the insured’s bad faith claim was dependent on the insurer’s coverage claim. Instead, the court held that bad faith claims can extend beyond a plain breach of contract. For example, an unreasonable delay in evaluating a claim may provide an independent basis for bad faith, even where the insurer’s assessment ultimately proves correct.
Further, the court also noted that judicial economy would best be served by litigating the two claims together, as bifurcation would essentially double the life of the action – requiring a second discovery period, more motions, and a completely separate trial.