Thursday, October 17, 2019

No Valid Direct Claim of Bad Faith Can Be Asserted By Third Parties Against Carrier If Not Party to Insurance Contract

In the case of Jones v. Ritchie, No. 4983-Civil-2019 (C.P. Monroe Co. Sept. 2, 2019 Williamson, J.), the court dismissed common law and statutory bad faith claims against a carrier on the grounds that no contractual relationship existed between the carrier and the plaintiffs.
By way of background, the plaintiff was allegedly injured as a result of a rear-end accident allegedly caused by a defendant driver.  The vehicle operated by the defendant driver was rented by a co-defendant. That co-defendant who rented the vehicle that was being operated by the defendant driver at the time of the accident was covered under a personal automobile insurance policy issued by the carrier who filed the Preliminary Objections in this matter.   

As such, the plaintiffs were strangers to the insurance policy issued by the insurance company that they sued in this matter. 

In granting the Preliminary Objections of the insurance on the common law and statutory bad faith claims presented by the plaintiffs, the court initially cited to several cases that have held that the common law claims for bad faith on the part of insurance companies are not recognized in Pennsylvania.   As such, the common law bad faith claims asserted by the plaintiffs were denied on that additional basis.   

Relative to the plaintiff’s statutory bad faith claims, the court emphasized that under 42 Pa. C.S.A. §8371, it was required that the plaintiff pursue an action under an insurance policy and that the claims presented involve claims that the carrier had acted in bad faith “toward the insured.”   

Judge Williamson emphasized that the bad faith statute provides that a carrier has a duty to the person it has insured.  The court otherwise noted that “[t]here is no statutory duty for an insurance company to act in good faith as to third parties.” [other citations omitted].  

Given that the plaintiffs in this matter were not a party to the insurance company’s contract, the court found that the plaintiff had no basis upon which to bring a statutory bad faith claim against that carrier.  

As such, the insurance company was dismissed from this matter as a party defendant.  

Anyone wishing to review a copy of this decision may click this LINK

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