NO BAD FAITH WHERE NO DUTY TO DEFEND OR INDEMNIFY (Philadelphia Federal) (reversed and remanded)
This breach of contract and bad faith case centers on a coverage dispute over the meaning of “advertising injury.” The underlying complaint alleged the insured made false statements about its own product, not that it had disparaged another’s product. The insurer argued these facts do not constitute advertising injury, and the court agreed, finding no duty to defend the underlying case. Thus, the breach of contract claim was dismissed.
The court also dismissed the bad faith claim “because Defendant has no duty to defend Plaintiff in the [underlying] lawsuit. See e.g. Frog, Switch & Mfg. Co., Inc., 193 F.3d at 751 n.9 (rejecting the bad faith claim because ‘bad faith claims cannot survive a determination that there was no duty to defend….’); Continental Casualty Co. v. Westfield Ins. Co., No. 16-5299, 2017 WL 1477136, at *10 (E.D. Pa. Apr. 24, 2017) (dismissing the breach of contract claim because the underlying complaint did not trigger a duty to defend); Everest Indem. Ins. Co. v. Valley Forge, Inc., 140 F. Supp. 3d 421, 432 (E.D. Pa. 2015) (‘There can be no breach of contract or bad faith claim since [Defendant] has neither a duty to defend nor indemnify [Plaintiff] in the underlying action.’).”