In a recent decision, a Federal Court in Pennsylvania held that there where there is no coverage, there is no bad faith claim. Hackbarth v. Nationwide Mutual Insurance Co., 2014 WL 3378695 (W.D. Pa. July 9, 2014). The Court in that case went out of its way to grant the defendant's motion to dismiss with prejudice accordingly. Here is how.
The plaintiff conceded that if his claim for declaratory relief (really, for breach of the insurance contract) was dismissed, then his claim for insurance bad faith for unreasonable failure to pay that claim should also be dismissed. The Federal Court noted this concession and declined to rule on that basis. Instead, the Court went forward to examine the law governing the plaintiff's ability to amend the claim for insurance bad faith under Section 8371 in the face of a determination that there was no insurance coverage. Hackbarth v. Nationwide Mutual Insurance Co., 2014 WL 3378695 *10-*11 (W.D. Pa. July 9, 2014).
The Federal Court held that since there was no insurance coverage, there was no claim for insurance bad faith as a matter of Pennsylvania law. The Court accordingly reached out and granted the defendant's motion to dismiss with prejudice. In other words, there was no possibility that the plaintiff could amend the bad faith claim as a matter of Pennsylvania law in the eyes of the Court. Hackbarth v. Nationwide Mutual Insurance Co., 2014 WL 3378695 *11 (W.D. Pa. July 9, 2014).
In reaching this decision, the Pennsylvania Federal Judge followed the rule followed by the vast majority of Courts in the United States: Where there is no insurance coverage under a first-party policy, as the Court determined in this case, then there is no first-party insurance bad faith claim either. See also 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 9:18, Burdens of Proof--Who Has The Burden (Thomson Reuters West 3d ed. and 2014 Supplement).
© 2014 by Dennis J. Wall. All rights reserved. No claim to original U.S. Government works.
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