SEPTEMBER 2006 BAD FAITH CASES ATTORNEY’S FEES NOT RECOVERABLE IN DECLARATORY JUDGMENT ACTION IF PLAINTIFF HAS NOT ALLEGED INSURER BAD FAITH (Western District)

In E.P. Bender Coal Company v. Chubb Group of Insurance Companies, the carrier asserted that attorney’s fees could not be granted to a plaintiff which had not averred bad faith in the Complaint.  The United States District Court for the Western District of Pennsylvania stated that Pennsylvania case law entitles a party to attorney’s fees in connection with a declaratory judgment action only if two requirements are met:  (1) the party seeking to recover attorney’s fees defended against or prosecuted the insurer in a declaratory judgment action to determine the insurer’s duties to defend and indemnify the insured in an action by a third party; and (2) the insurer failed to indemnify the party seeking to recover attorney’s fees in bad faith.  After reviewing the Complaint, the court found that Plaintiffs had failed to allege any facts that established bad faith on the part of the insurer.  Accordingly, the court granted Defendants’ motion to dismiss as to the issue of attorney’s fees.

Date of Decision:  August 31, 2006

E.P. Bender Coal Co. v. Chubb Group of Ins. Cos., U.S. District Court for the Western District of Pennsylvania,  No. 05-216 J, 2006 U.S. Dist. LEXIS 62607 (W.D. Pa. Aug. 31, 2006) (Gibson, J.)