The insurer issued a policy to the plaintiff’s lender, the mortgage holder. The plaintiff sought relief under the policy, and the insurer argued plaintiff was not a party or third party beneficiary to the policy. The plaintiff brought breach of contract and bad faith claims. The insurer successfully moved to dismiss both claims.
The court first ruled that plaintiff was not an insured or third party beneficiary to the policy. Thus, the breach of contract claim failed.
The court then held that plaintiff could not bring a statutory bad faith claim when he had no rights under the policy. Thus, it was “immaterial that [the plaintiff] may have sufficiently alleged facts to support the other elements of the bad faith cause of action.”
Finally, plaintiff asserted a “common law” bad faith claim. The court observed that Pennsylvania has no common law bad faith tort remedy. Pennsylvania does recognize a contract based claim for breach of the implied duty of good faith and fair dealing, separate from statutory bad faith. However, this common law contact claim also failed.
As already stated, the plaintiff was not a party or a third party beneficiary to the insurance contract, thus there could be no contract based bad faith claim. Further, the breach of the contractual duty of good faith and fair dealing is not separate from the breach of contract claim. In alleging the insurer “violated the duty of good faith and fair dealing by denying benefits under the policy, his bad faith claim is subsumed into the breach of contract claim and fails with that claim.”
Date of Decision: April 13, 2020
Weiser v. Great American Insurance Co., U. S. District Court Eastern District of Pennsylvania CIVIL ACTION NO. 19-1218-KSM, 2020 U.S. Dist. LEXIS 63839 (E.D. Pa. April 13, 2020) (Marston, J.)