March 2014 Bad Faith Cases: Court Refused To Dismiss Bad Faith Claim On Statute Of Limitations Grounds Where Both Timing Of When Claim Began And Discovery Rule Application Should Be Left To Trier Of Fact (Middle District)

In Agrotors, Inc. v. Ace Global Markets, the insured claimed bad faith, which the court analyzed solely as a section 8371 claim.  Such a claim is subject to a two year statute of limitations which accrues when the right to institute and maintain a lawsuit arises. However, pursuant to the discovery rule, the statute of limitations may be tolled until a party knows or reasonably should know that he has the right to sue. The parties disputed whether a pleaded action by the insured was an acknowledge of damages or an effort to mitigate losses. The insured further alleged that pursuant to the discovery rule, it could not have been aware that it suffered damages due to the carrier’s bad faith until a later date when it received a declination of coverage letter.

Drawing all reasonable inferences in the insured’s favor, and recognizing the Third Circuit’s admonition that when commencement of the limitations period is in dispute, the trier of fact should determine the point at which a plaintiff reasonably should have been aware of its cause of action, the trial court should not determine the commencement of the limitations period as a matter of law unless the facts are so clear that reasonable minds cannot differ,” the court refused to dismiss the claim.  Rather, it found it was not clear when the cause of action arose, nor when the insured should have reasonably been aware of its accrual. Thus, at that early stage of the litigation, the court was unable to conclude as a matter of law that the applicable statute of limitations barred the bad faith claim.

Date of Decision:  February 24, 2014

Agrotors, Inc. v. Ace Global Mkts., CIVIL ACTION NO. 1:13-CV-1604, 2014 U.S. Dist. LEXIS 22560 (M.D. Pa. February 24, 2014) (Conner, J.)