Lebanon County Trial Court Agrees to Sever and Stay Bad Faith Claim from Coverage Complaint

In his March 28, 2014, decision in the case of Audrey's Crafts & Home Décor, Inc. v. Penna. Nat'l Ins., No. 2013 - CV - 00511 (C.P. Leb. Co. 2014 Charles, J.), Judge Bradford H. Charles ruled in favor of a severance and stay of Plaintiff’s statutory bad faith claim (42 Pa. C.S. §8371).

The case arose out of a coverage dispute as to whether the insurer owed its insured a duty to defend and/or indemnify it in an underlying copyright infringement lawsuit.

The insured sued the insurer in the Court of Common Pleas of Lebanon County under a Complaint that sought coverage under the policy and recovery of bad faith damages.

The Defendant carrier motioned for a severance and a stay as to the bad faith claims.  The court granted the motion and, in doing so, rejected Plaintiff’s attempt to distinguish this case from those cases involving UIM and bad faith claims (in which this Lebanon County Court of Common Pleas had previously granted severance).  The Court found that the same concerns of prejudice against the insurer in such a scenario are equally applicable to any coverage dispute and should, therefore, be avoided by way of the granting of a motion for severance and stay.

The prevailing defense counsel was W. Darren Powell of the Harrisburg, PA office of Thomas, Thomas & Hafer.

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