FEBRUARY 2011 BAD FAITH CASES MOTION TO STAY BAD FAITH CLAIM DENIED BECAUSE BREACH OF CONTRACT CLAIM HAD NOT YET BEEN DISPOSED (Middle District)

In Scotti v. USAA Casualty Insurance Company, the insured was injured in a car accident, and she claimed that the negligence of the diver of the other car caused it when he failed to stop for a traffic signal.  The other driver was insured with a bodily injury limit of $100,000, but the insured claimed that her injuries cost more than that amount.  Her policy with the insurer included underinsured motorist coverage, and she informed the insurer about eight months after the accident that she would pursue a claim.

The insurer notified the insured that although it received authorization to obtain her medical and wage information, her claim would remain unresolved because her treatment was ongoing.  The insured then filed a Complaint with counts for breach of contract and bad faith. 

Before the court in this opinion was a motion by the insurer to strike certain paragraphs from the breach of contract claim and stay the bad faith claim.

With respect to the breach of contract claim, the insurer contended that some of the allegations in that section included phrases more often associated with bad faith, which would unfairly prejudice the insurer before a jury.  The court, however, could not conclude that the disputed paragraphs were “redundant, immaterial, impertinent, or scandalous such that the interests of justice require[d] the drastic remedy requested,” and it denied the motion.

Concerning its motion to stay the bad faith claim, the insurer had argued that because the insured had not succeeded on her breach of contract claim, there was no basis for the bad faith claim.  Prior case law, however, had only suggested that “a bad faith action cannot lie where it has been determined that there has been no breach of a duty under the insurance contract.”  In this case, the breach of contract claim had not yet been decided.  Also, the court felt that it would be best for all parties if discovery occurred for the two claims simultaneously.  The court therefore denied the insurer’s motion for a stay on the bad faith claim.

Date of Decision:  February 11, 2010

Scotti v. USAA Cas. Ins. Co., No. 3:10cv1538, United States District Court for the Middle District of Pennsylvania, 2011 U.S. Dist. LEXIS 13515, February 11, 2011 (Munley, J.)