JULY 2009 BAD FAITH CASES
NO BAD FAITH WHERE A REASONABLE BASIS TO DENY COVERAGE EXISTS EVEN WHERE COURT FOUND DUTY TO EXIST (Philadelphia Federal)
In Post v. St. Paul Travelers Insurance Company
, the court granted summary judgment to the insurer on a bad faith claim. This was the second of a series of three opinions issued in this case. In the final decision on a motion for reconsideration, the court stood by this and its earlier opinion
(Case 3, 5/22/9); (Case 1, 1/7/9
). The court observed that under Pennsylvania law, questionable conduct giving the appearance of bad faith is not sufficient to establish a bad faith refusal to provide coverage if the insurer had a reasonable basis for denying the claim. The insured’s allegations of misconduct could not amount to proof that the insured did not have a reasonable basis to deny coverage. So it could not meet the first prong of the bad faith test, i.e. the absence of a reasonable basis to deny coverage. In that case, even though the court had previously held that coverage was required, the insurer had a reasonable basis to deny coverage.
Date of Decision: March 31, 2009