In Houtz v. State Farm Fire & Cas. Co., ___ F. Supp. 3d ___, No. 23-3579, 2024 WL 4556054 (E.D. Pa. Oct. 23, 2024), a Federal Judge in the Eastern District of Pennsylvania said that the suit limitations provision set out in the homeowners insurance policy at bar was enforceable in that case because it was reasonable. Houtz, 2024 WL 4556054, at *2.
The Pennsylvania Bad Faith Statute required a different result because the statute contains its own suit limitations provision. That is the limitations period to look at to determine a limitations defense to a Pennsylvania statutory bad faith claim. Houtz, 2024 WL 4556054, at *3 n.1.
In this case, the Federal Judge consulted both the contractual limitations provision as to the policyholders’ breach of contract claim, and the statutory limitations provision as to the policyholders’ statutory insurer bad faith claim. The Court in this case held that both claims are barred and accordingly dismissed the homeowners’ amended complaint with prejudice in this case. Houtz, 2024 WL 4556054, at *5.
The Court in the Houtz case also began its examination of the statutory limitations period with this universal observation, which is also of universal interest in my judgment: “Every insurance contract is governed by the well-established duty of good faith.” Houtz, 2024 WL 4556054, at *3. Clearly, for Mr. and Mrs. Houtz and policyholders similarly situated as they were in this case, the fact that there may be an implied covenant of good faith and fair dealing is not enough by itself to carry the day in an insurance bad faith case.
A raft of supporting case law is set out for the holding that a covenant of good faith and fair dealing is implied in every contract, including insurance contracts, in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 1:1, Brief Summary of the Area (Thomson Reuters West Publishing Co. 3d Edition & 2024 Supplements). Contractual and Statutory Limitations Periods in first-party cases like Houtz are discussed in 2 id. § 11:15, Statutes of Limitations.
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