JANUARY 2008 BAD FAITH CASES
PENNSYLVANIA DOES NOT RECOGNIZE A CLAIM FOR COMMON LAW BAD FAITH (Middle District)
In Westport Insurance Corporation v. Black, Davis & Shue Agency, Inc., the plaintiff-insurer issued to the defendant-insured, an insurance brokerage company, a policy obligating the plaintiff-insurer to pay for any losses for which the defendant-insured was legally liable and which was caused by a wrongful act arising out of services rendered to others. The defendant acted as an agent for its client, an insurance company, in procuring and servicing workers’ compensation insurance. The client alleged that the defendant improperly transferred certain premiums directly to a reinsurance company in which one or more of the defendant’s principals held financial interests. The court was called upon to decide the defendant’s motion for partial judgment on the pleadings and plaintiff’s motion for summary judgment arising in a declaratory judgment action brought by plaintiff against defendant to determine whether plaintiff had a duty to defend or indemnify the defendant in a pending lawsuit. In setting forth the procedural history of the case, the court noted that the defendant had filed several counterclaims against plaintiff alleging breach of contract, statutory bad faith and common law bad faith. The court further noted that the common law bad faith counterclaim was dismissed by previous order of court because Pennsylvania does not recognize a claim of common law bad faith.
Date of decision: May 30, 2007
Westport Ins. Corp. v. Black, Davis & Shue Agency, Inc., United States District Court for the Middle District of Pennsylvania, Civil Action No. 1:05-CV-1252, 513 F. Supp. 2d 157, 2007 U.S. Dist. LEXIS 39039 (M.D. Pa. 2007) (Conner, J.).