DECEMBER 2009 BAD FAITH CASES NO BAD FAITH WHERE INSURER FILES DECLARATORY JUDGMENT BEFORE CLAIM WAS MADE (Middle District)

In Principal Life Ins. Co. v. DeRose, the insurer filed a declaratory judgment seeking a declaration that its obligations under insurance policies issued on the life of JoAnn DeRose were not procured for legitimate purposes.  The trustees of DeRose’s estate filed a counterclaim for bad faith under 42 Pa. Cons. Stat. Ann. § 8371, among other counterclaims.  The court granted the insurer’s motion to dismiss the counterclaim for bad faith.  The court held that the filing of a declaratory judgment action is insufficient to give rise to a claim for relief under Pennsylvania’s bad faith statute, particularly where there has been no claim for benefits under the policy, and therefore, no denial of any claim.

Date of Decision: November 23, 2009

Principal Life Ins. Co. v. DeRose, Civil Action No. 1:08-CV-2294, United States District Court for the Middle District of Pennsylvania, 2009 U.S. Dist. LEXIS 109130 (M.D. Pa. October 28, 2009) (Carlson, U.S.M.J.)

This Report and Recommendation of the Magistrate Judge was adopted by the District Court in Principal Life Ins. Co. v. DeRose, Civil Action No. 1:08-CV-2294, United States District Court for the Middle District of Pennsylvania, 2009 U.S. Dist. LEXIS 109126 (M.D. Pa. November 23, 2009) (Conner, J.)