In Gillis v. State Auto. Mut. Ins. Co., No. 2:16-cv-01285, 2017 WL 151637 (W.D. Pa. January 13, 2017), a U.S. District Judge in Pennsylvania held just like the title of this article says:
In this declaratory judgment/bad faith action, the Plaintiff insureds sue their own insurance company, claiming that the insurer has jumped the gun by concretely stating/threatening to begin the pursuit of a subrogation claim before the Plaintiffs have resolved their own coverage claims with the insurer Defendant, and certainly before the Plaintiffs have resolved their excess/uninsured claims with the underlying tortfeasor. They also pile on a “bad faith” claim, asserting that the carrier's concretely stated intention to proceed with its subrogation claim now is “bad faith” entitling them to damages. The Defendant carrier responds with a Motion to Dismiss [ECF No. 7] the whole case, relying on its reading of Pennsylvania law for the conclusion that there is no problem with it proceeding with subrogation full steam ahead right now, and because it is allowed to do that, there can be no bad faith. The Motion to Dismiss will be denied without prejudice.
Gillis v. State Auto. Mut. Ins. Co., No. 2:16-cv-01285, 2017 WL 151637, at *1 (W.D. Pa. January 13, 2017). The reason that the first-party insurance company's motion to dismiss was denied, including as to the policyholders' bad faith claim, was due in part to Pennsylvania law which does not look at the "make whole doctrine" in quite the same way as the Defendant insurance company:
[T]he Pennsylvania appellate courts are not nearly as certain as the Defendant is as to the reach and scope of the “make whole” rule. In Professional Flooring Co. v. Bushar Corp., 2016 WL 7105899, *7-9 (Pa. Super. Dec. 6, 2016), the Pennsylvania Superior Court did not limit the reach of the “make whole” rule to those circumstances in which the underlying tortfeasor had insufficient assets to cover both the subrogation claim and the claim by the tort victim for excess/uncovered losses. In reality, it stated both that the “make whole” rule was the law of the Commonwealth, and that it had no such limitation. Id.
In light of the above, the Court concludes that it would be improvident to dismiss the declaratory judgment claim at this point in the proceedings. Further, in light of the matters set forth above, the Court at this juncture is not in a position to conclude that as a matter of law, the “bad faith” claim is wholly lacking in merit, and the Motion to Dismiss as to that claim will likewise be denied, without prejudice.
The Defendant shall answer the Complaint on or before February 8, 2017.
Gillis v. State Auto. Mut. Ins. Co., No. 2:16-cv-01285, 2017 WL 151637, at *2 (W.D. Pa. January 13, 2017).
So, until your jurisdiction definitively rules to accept, or to reject, the doctrine that subrogation cannot lie until the "subrogor" (in insurance cases, the policyholder/insured) is made whole, then asserting subrogation rights before their time may lead to an unwanted bad faith claim. Patience, people. There is plenty of time to assert subrogation rights later.
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