JUNE 2010 BAD FAITH CASES INSUREDS REQUIRED TO AMEND COMPLAINT WHEN INITIAL COMPLAINT DOES NOT SUFFICIENTLY PLEAD BAD FAITH (Philadelphia Federal)

In DeLalla v. Hanover Insurance, the insureds were allegedly Defendants in another litigation which was settled.  They filed a complaint that the insurer and the law firm representing the insurer, who agreed to settle the prior case, breached their obligations to the insureds by entering into the settlement agreement on their behalf.  They alleged bad faith and breach of contract against the insurer.

The insurer filed a Motion to Dismiss, correctly alleging that the insureds described no motive and did not explain any plausible reason why the insurer and the law firm representing the insurer would want to conspire together to harm the insureds.  However, the Court denied the Motion to Dismiss, allowing the insureds to amend their complaint to sufficiently plead facts that would result in bad faith and breach of contract causes of action if true.

Date of Decision:  May 26, 2010

Delalla v. Hanover Ins., Civil Action No. 10-858, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 52653 (May 26, 2010) (Baylson, J.).