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February 2006 Bad Faith Cases: Contractual Bad Faith Claim Permitted Independent Of the Statutory Faith, But No Separate Cause Of Action For Spoliation (Lawrence)

In Harlan v. Erie Insurance Group, the Court of Common Pleas of Lawrence County, addressed whether a claim that the carrier breached the implied duty of good faith and fair dealing stated a cause of action.  The Pennsylvania state trial judge pointed out that this was not a statutory bad faith claim under 42 Pa.C.S. § 8371, but was a contract based claim; there being no bad faith tort claim of this nature under Pennsylvania law.  While limited in other contexts, Pennsylvania’s Supreme Court has recognized a contract claim for breach of the implied duty of good faith and fair dealing as the basis for a compensatory damage claim against an insurance carrier. Birth Center v. St. Paul Companies, Inc., 567 Pa. 386, 787 A.2d 376 (2001). The plaintiffs alleged that the carrier refused to cover the loss on a stolen and burned vehicle, and destroyed evidence that could have established coverage.  While permitting the contractual bad faith claim to proceed, the court declined to find that Pennsylvania law permitted a separate cause of action for spoliation.
Date of decision:  February 16, 2006
Harlan v. Erie Ins. Group, Court of Common Pleas of Lawrence County, No. 10388 of 2005, Civil Action (C.C.P. Lawrence  Feb. 16, 2006) (Motto, P. J.)