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A bad faith claim arose from an automobile accident in which plaintiff was a passenger in a car insured by the insurer defendant.   The insured had an auto insurance policy with the insurer.  The plaintiff made first party and Underinsured motorist (UM) claims against the insurer for her losses caused by the accident.  The insurer refused to pay these claims.  The plaintiff then brought suit against the insurer seeking the appointment of a neutral arbitrator and alleging that the insurer handled her insurance claims in bad faith.

The Judge stayed the case pending the outcome of arbitration and litigation of the plaintiff’s underlying claims in a related state court action.  However, the scheduled arbitration failed to occur because plaintiff did not pay the neutral arbitrator’s fee in advance as requested.  The plaintiff took no action subsequently to move her case forward in federal or state court for seven years.  The insurer then filed a motion to dismiss the claims as moot because of the plaintiff’s failure to prosecute any of her claims for over seven years.

The court found that given the long period of inactivity, the motion to dismiss should be granted.  The plaintiff had the burden of diligently pursing her claim if she was still interested in seeking damages. While the plaintiff did not take any positive steps to delay trial, she also did not take any steps to expedite trial.

The plaintiff’s inaction was sufficiently dilatory to dismiss the claims and this lengthy period of delay gave rise to a presumption of prejudice to the insurer.  While the delay by plaintiff may not have amounted to bad faith itself, it appeared willful and there was no other alternative sanction that was appropriate under these circumstances. It would be unusual for a  plaintiff  with a strong case to sit on her hands as long as the plaintiff did.  Therefore the court granted the insurer’s motion to dismiss the plaintiff’s claims.

Date of Decision: September 10, 2008

Herman v. Allstate Ins. Co., Philadelphia Court of Common Pleas, October Term 2007, No. 110, 2008 Phila. Ct. Com. Pl. LEXIS 213 (C.C.P. Philadelphia Sept. 10, 2008) (Keogh,J.)