JUNE 2008 BAD FAITH CASES BAD FAITH CLAIM SURVIVES PRELIMINARY OBJECTIONS DUE TO POSSIBILITY THAT PLAINTIFFS ARE ENTITLED TO RECOVER AS THEY PLEAD PAID PREMIUMS, BUT DENIED BENEFITS (Lackawanna)

    

In Decker v. Nationwide Insurance Company, the insured filed a bad faith  complaint against Nationwide Insurance Company after the insurer refused to pay plaintiff’s claim under the policy, and allegedly failed or refused to provide adequate insurance coverage, despite accepting and retaining plaintiffs’ premium payments.   Plaintiffs complaint had four counts, including a bad faith claim and breach of fiduciary duty claim against the insurer’s agent. 

Nationwide filed preliminary objections in the nature of a demurrer to the bad faith claim.  For a demurrer the court will examine whether on the facts averred, the law says with certainty that no recovery is possible.  If there is not a  possibility of recovery based on the facts  then the demurrer will be granted.   At this stage the complaint addresses only the assertion that Plaintiffs paid premiums to Defendant Nationwide and therefore Plaintiffs were entitled to certain coverage in exchange for these payments.  Under the demurrer standard, it was not clear from the complaint that the plaintiffs were not entitled to recover from Defendant Nationwide for bad faith.  Therefore, the court denied  Defendant Nationwide’s demurrer because it cannot be shown with certainty that the plaintiffs will not be permitted to recover for bad faith.

In addition, the court found that the breach of fiduciary duty claim was synonymous with a claim for the breach of the contractual duty of good faith and fair dealing.  The insurer’s agent sought to have that claim dismissed, but the court refused.  First, the court found there could be a distinction between an insurer and insurer’s agent in a fiduciary duty analysis.  It then found there remained a factual issue as to whether the insurance agent took actions that would have created some duty between it and the insureds.

Date of Decision: June 5, 2007

Decker v. Nationwide Ins. Co., 2007 Pa. Dist. & Cnty. Dec. LEXIS 359, 83 Pa. D. & C.4th 375 (C.C.P. Lackawanna 2007)

J.M.A.