Monday, April 25, 2022

Plaintiff's Bad Faith Claim Found To Be Barred by Two Year Statute of Limitations

In the case of Dana Mining Co. of PA v. Brickstreet Mut. Ins. Co., No. 2:21-CV-00700 (W.D. Pa. March 9, 2020 Colville, J.), the Western District Federal Court addressed bad faith issues and the statute of limitations related thereto.

According to the Opinion, in this matter, the carrier refused to defend or indemnify its insured against an underlying tort lawsuit. The insured then sought declaratory relief and claimed a breach of contract and bad faith.

The carrier filed a Motion to Dismiss the bad faith claim on statute of limitations grounds.

In this matter, the carrier had denied coverage in May of 2017. The insured instituted a bad faith claim in April of 2021.

The court in this matter confirmed that the statute of limitations for bad faith claims under 42 Pa. C.S.A. §8371 is two (2) years.

The court additionally confirmed that the statute of limitations for claims of §8371 bad faith begins to run when the Plaintiff’s right to institute and maintain a lawsuit for bad faith arises. The court reiterated the rule that a lack of knowledge, mistake, or misunderstanding does not serve to toll the running of the statute of limitations.

The court more specifically noted that a bad faith claim can arise when a carrier definitively denies coverage and puts the insured on notice of the same.

Judge Colville noted that an insured cannot avoid the limitations period by asserting that a continuing refusal to cover was a separate act of bad faith. He referred to the law that repeated or continuing denials of coverage do not constitute separate acts of bad faith given rise to a new statutory period of time.

While the court did observe that there was case law in support of a proposition that, if a carrier subsequently denies coverage after the insured brings to the attention of the carrier “new evidence,” this may constitute a separate and independent injury that can trigger a new limitations period.

However, in this case, the court found that there were no allegations that the insured presented the carrier with any new facts or evidence regarding the underlying claim such that the carrier should have reconsidered its denial. As such, no new limitations period was found to have been triggered. As such, the case was dismissed.

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

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman Krekstein & Harris for bringing this case to my attention. Please be sure to check out Attorney Applebaum’s excellent Pennsylvania New Jersey Insurance Bad Faith Case Law blog.

Photo by Jordan Benton on

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