SEPTEMBER 2014 BAD FAITH CASES: CLAIM FOR BREACH OF THE IMPLED COVENANT OF GOOD FAITH AND FAIR DEALING SUBSUMED IN BREACH OF CONTRACT CLAIM; ECONOMIC LOSS DOCTRINE BARS UTPCPL CLAIM (Middle District)
In Zeglen v. Northwestern Mutual Life Insurance Company, the case involved a disability insurance policy, and the insured brought action for breach of contract, breach of the implied duty of good faith and fair dealing, statutory bad faith, and under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL).
The court found that the contractual duty of good faith and fair dealing is subsumed in the breach of contract claim, and dismissed that claims, finding it could not stand separately from the breach of contract claim. The statutory bad faith claim remained.
The court also found that the economic loss doctrine barred the UTPCPL claim under the Third Circuit’s Werwinski case, observing that while this is a subject of dispute since the Pennsylvania Supreme Court has not ruled on it, federal district courts are bound by Third Circuit precedent.