In Vitamin Energy, LLC v. Evanston Ins. Co., ___ F.4th ___, No. 20-3461, 2022 WL 39839, *1 (3d Cir. Jan. 5, 2022), the Court applied Pennsylvania law, where a liability insurance company's duty to defend is determined by comparing the allegations in the underlying complaint against the insured, with the provisions of the policy at issue. In that case, Vitamin Energy "took its insurer to court" for declaratory relief, breach of contract, and "bad-faith denial of coverage[.]" Vitamin Energy, 2022 WL 39839, at *2. The appellate court determined that the underlying complaint adequately alleged an "Advertising Injury," holding that there is a duty to defend here.
Note that Pennsylvania law on the duty to defend requires a comparison of the policy with the factual allegations in the underlying complaint. Vitamin Energy, 2022 WL 39839, at *3, *6.
The Third Circuit panel said nothing about the bad-faith claim. The appellate court vacated and remanded in an appeal from a judgment on the pleadings, not intending "to signal how the coverage dispute here should ultimately be decided," but "focused now solely on the duty to defend." Vitamin Energy, 2022 WL 39839, at *6.
Other jurisdictions determine the liability carrier's duty to defend differently, such as by comparing the policy to the claims alleged in the underlying complaint. The different tests are examined in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH §§ 3:53-3:54 (West 3d edition, 2022 Supplements in process).
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