In the case of Katzenmoyer v. Allstate, 2012 WL 3764998 (E.D. Pa. 2012), Judge Norma Shapiro of the Eastern District Federal Court of Pennsylvania issued an Opinion in which she predicted how Pennsylvania law would address the statute of limitations period in a common law bad faith action arising out of a motor vehicle accident.
According to the Opinion, the underlying facts involved an ATV accident in which the rider of the ATV was injured near the driver’s property. After the property owner’s home insurance company declined to settle with the injured driver for the $100,000.00 liability limits under the policy, a jury rendered a $1.5 million verdict against the property owner in the personal injury case brought by the ATV rider.
Thereafter, the property owner assigned all the claims he had against Allstate Insurance Company, the homeowner’s insurer, to the injured rider. The injured rider then brought a common law bad faith claim against Allstate for its refusal to settle with her in 2004.
In response, Allstate argued that the four (4) year statute of limitations began to run on the date they refused to settle. The injured party rider argued that the statute of limitations did not start until the jury returned its verdict in the personal injury case in 2009.
In her decision, Judge Shapiro stated that neither side presented an on-point, binding decision.
Judge Shapiro ultimately ruled that, "[a]lthough Pennsylvania law is unclear on this issue, it seems unlikely the Pennsylvania Supreme Court would adopt a rule requiring Plaintiffs to file bad-faith suits within four years of a failure to settle without an explicit, unambiguous denial of coverage.”
Judge Shapiro instead ruled that the limitations period would not begin to run until 2009 at which point the jury rendered its verdict in the underlying matter. The judge noted that, when Allstate refused to settle, it was still unclear as to whether Allstate had any duty at all. At that point in time, the insured property owner could not have maintained a suit against Allstate for bad faith in 2004 because the insured had not yet suffered any damages.
Anyone desiring a copy of this decision, may click this LINK.
Source: “Exposure to Damages Starts Limitations Clock in Common Law Bad-Faith Cases” by Saranac Hale Spencer of The Legal Intelligencer (September 11, 2012).