Eastern Federal District Court Rules No Third Party Bad Faith Claim Simply For Failing to Settle With Plaintiff

In a recent Pennsylvania Eastern Federal District decision in the case of Leboon v. Zurich Am. Ins. Co., No. 15-05904 (E.D. Pa. April 18, 2016 Pappert, J.), the court ruled that the party injured by an insured has no standing to bring a bad faith claim against the insurer based on allegations of a failure to settle the third party liability case in good faith.  

The court more specifically stated that “[T]he duty to negotiate a settlement in good faith arises from the insurance policy and is owed to the insured, not to a third-party Claimant.” 

The court dismissed the bad faith claims noting that the underlying Plaintiff was a stranger to the insured-insurer relationship.   

Anyone desiring a copy of this decision may click HERE.  

I send thanks to the writers of the Pennsylvania and New Jersey insurance bad faith case law blog for bringing this case to my attention.