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 www.pexels.com.

Federal Court Reviews Statute of Limitations for Insurance Bad Faith Claims

In the case of McAteer v. State Farm Ins. Co., No. CV-20-101 (E.D. Pa. Nov. 23, 2020 Goldberg, J.), the court granted a Motion to Dismiss a UIM bad faith claim but allowed the Plaintiff the right to file an Amended Complaint.  In so ruling, the court addressed statute of limitations issues.

The two year statute of limitations for 42 Pa.C.S.A. Section 8371 bad faith claims was reaffirmed by the court.

The court generally noted that the claim arises when the Plaintiff is harmed and not when the precise amount or extent of damages is determined. The court also noted that a bad faith claim can accrue when a carrier definitively denies coverage.

The court also confirmed that a Plaintiff cannot avoid the statute of limitations period by asserting that a continuing refusal to cover a claim was a another, separate act of bad faith. The court additionally noted that repeated or continuing denials of coverage do not constitute separate acts of bad faith that give rise to a new statutory period.

Applying this law to the case presented, the court found that the Plaintiff’s claim for statutory bad faith  under 42 Pa.C.S.A. Section 8371was barred by the statute of limitations.

Anyone wishing to review a copy of this decision may click this LINK.  The companion Order of Court can be viewed HERE.


I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman, Krekstein & Harris for bringing this case to my attention.  Attorney Applebaum is the writer of the excellent Pennsylvania New Jersey Insurance Bad Faith Case Law blog, which can be viewed HERE.

Third Circuit Reviews Statute of Limitation Issues in Context of Bad Faith Claim (Not Precedential)

In the case of Finegold v. Brooks, No. 19-1495 [Not Precedential] (3d. Cir. Jan. 24, 2020 Jordan, J., Scirica, J, Rendell, J.) (Op. by Scirica, J.), the Third Circuit Court of Appeals affirmed a trial court’s finding that the two (2) year statute of limitations for bad faith action barred this suit where the alleged bad faith conduct occurred in 2011 and the suit was not filed until 2019.

The Third Circuit rejected the Plaintiff’s argument under the discovery rule as well as the Plaintiff’s argument that there was a continuing breach that restarted the statute of limitations.

In this regard, the Third Circuit noted that, in terms of an alleged continuing breach, under Pennsylvania law, the statute of limitations “runs when the first denial occurs, but continuing or subsequent denials do not newly trigger the statute of limitations.”

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

I send thanks to Attorney Lee Applebaum, the writer of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law blog and of the Philadelphia law firm of Fineman Krekstein and Harris for bringing this case to my attention.

Insurance Policy's Limitation of Action Provision Upheld

In the case of Mazzoni v. Travelers Home & Mut. Ins. Co., No. 3:19-cv-2169 (M.D. Pa. Feb. 13, 2020 Mannion, J.), the court dismissed a contract and bad faith case under a statute of limitations argument.

According to the Opinion, the carrier denied coverage on November 3, 2015.

The Plaintiff did not sue for breach of contact or bad faith until September 20, 2019.

The carrier moved to dismiss the breach of contract claim based upon a two (2) year statute of limitations contained in the policy itself. The carrier also moved to dismiss the bad faith claim under the two (2) year statute of limitations under Pennsylvania law.

The court upheld a two (2) year suit limitation contained in the policy as there was no merit to the Plaintiff’s claim that Pennsylvania’s four (4) year statue of limitations with contract claims under 42 Pa. C.S.A. §5501 should control in the case. This was particularly so where the Plaintiff did not allege that the carrier led the Plaintiff to believe that the two (2) year limitations period contained in the policy would not be enforced, or that the carrier took any steps that induced the Plaintiff to file her Complaint after that two (2) year deadline.

The contract claim was therefore dismissed with prejudice.

With regard to the bad faith claim, the court would not let the Plaintiff escape the statute of limitations issue by virtue of the Plaintiff leaving out of the Complaint the date upon which the carrier had denied coverage, or by not attaching the denial letter to the Complaint.

The court stated that it could rely upon and review the November 3, 2015 denial of coverage letter since the Defendant attached that letter to its Motion to Dismiss.

Judge Mannion found that there was “no doubt” that the two (2) year statute of limitation on the bad faith claim began to run when the insured first learned that the carrier was denying coverage. As such, the statutory bad faith claim was found to be barred in this matter as well.

The court also rejected the Plaintiff’s efforts to assert a common law bad faith claim that would allegedly be subject to a four (4) year contract statute of limitations. The court noted that, separate and apart from the fact that the Complaint alleged a statutory bad faith claim, under Pennsylvania law, a common law bad faith claim is solely a contract based claim in Pennsylvania and is deemed to merge with the breach of contract claim. Accordingly, the court found that the alleged common law bad faith claim would be subject to the same two (2) year contractual limitation period at issue in this case.

The court additionally noted that, in any event, common law bad faith claims did not apply to first party property damage claims as were at issue in this case.

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

I send thanks to Attorney Lee Applebaum of the Philadelphia law office of Fineman, Krekstein & Harris for bringing this case to my attention. Please be sure to check out Attorney Applebaum’s excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog for continuing updates on important bad faith cases in Pennsylvania and New Jersey.

Carrier Need Not Show Prejudice to Enforce Limitations of Action Provision

In the case of Mail Quip v. Allstate Ins. Co., No. 19-223 (E.D. Pa. May 23, 2019 Kenney, J.)(Mem. Op.), the court held that a carrier was not required to show prejudice to enforce a suit limitations provision of the policy.

In this case, the Plaintiff sued the carrier for breach of the insurance contract and for bad faith.  Allstate filed a motion to dismissed based upon its two year limitation of actions provision in the policy.  The Plaintiff had filed suit almost four years after the loss.

The federal district court noted that there was no Pennsylvania Supreme Court precedent on point but that the Third Circuit had issued decisions predicting that the Pennsylvania Supreme Court would rule that a showing of prejudice was not required for a carrier to enforce its limitation of actions provision.  As such, this court followed that precedent and dismissed the claims.

The court additionally held that the Plaintiff's bad faith claims were also barred by the two year statute of limitations applicable to those types of claims.

Anyone wishing to review this decision may click this LINK.

Source: Article:  "Court:  Insurer May Enforce Policy's Suit Limitations Provision" by Steven A. Meyerowitz in the Pennsylvania Law Weekly (June 18, 2019).

Judge Pappert of Eastern Federal District Court Rules that Plaintiff's Post-Gallagher Efforts to Revive Old UIM Claim Denied Under Household Exclusion Time Barred

Another post-Gallagher Household Exclusion has been issued by a judge in the Eastern Federal District of Pennsylvania -- this one favoring the carrier's statute of limitations argument on a plaintiff's effort to revive an old UIM claim that was previously denied by the carrier under an application of a Household Exclusion in the policy.

In O'Brien v. GEICO, No. 19-01920 (E.D. Pa. July 3, 2019 Pappert, J.), a plaintiff sued GEICO for breach of contract and bad faith based upon allegations that GEICO breached the contract by applying the Household Exclusion contained in the policy.

With the suit being originally filed in Philadelphia County Court, GEICO removed the case to the Federal District Court for the Eastern District of Pennsylvania.

GEICO then filed a motion to dismiss based upon a statute of limitations argument.

By way of background, the plaintiff was injured back on May 31, 2014 while operating a motorcycle which was not covered by the GEICO policy at issue in this matter.  Although the opinion does not explain, the plaintiff presumably recovered from the tortfeasor, then recovered under the UIM policy that covered his motorcycle.  He then likely turned to another UIM policy under which he was insured but which covered a separate vehicle in the same household.

The court's Opinion does explain that, following that accident, the plaintiff presented a UIM claim to GEICO under a separate policy with GEICO.  That claim was denied by the carrier on September 19, 2014 under an application of the Household Exclusion in the policy.

Fast forward to January 23, 2019 at which point the Pennsylvania Supreme Court issued its Gallagher v. GEICO decision in which it found the GEICO Household Exclusion to be void as violating the stacking statute under the MVFRL (in footnote 8 the Pennsylvania Supreme Court noted that it was voiding the Household Exclusion across the board and not just in the Gallagher case).

After the issuance of this Gallagher v. GEICO decision by the Pennsylvania Supreme Court, the plaintiff in this O'Brien case revived his previous UIM claim and requested, on February 12, 2019, that GEICO now tender to him the $100,000 UIM limits under that policy.  GEICO denied the demand on March 1, 2019.

The plaintiff filed this breach of contract and bad faith action against GEICO on April 3, 2019.  The plaintiff alleged that GEICO had breached the insurance contract by previously applying the Household Exclusion and denying the plaintiff's claims back on September 19, 2014.

Judge Gerald J. Pappert of the Eastern District granted GEICO's motion to dismiss after finding that this plaintiff could have made the same arguments as made in the Gallagher v. GEICO case before the four year statute of limitations applicable to his breach of contract claim had expired.  The court cited to recent case law holding that the statute of limitations in this context begins to run when a UIM claim is denied by the carrier.

More specifically, Judge Pappert noted that, with GEICO's original denial of the claim being back on September 19, 2014, the statute of limitations expired on September 19, 2018 and the Plaintiff did not file this suit until April 3, 2019.

Notably, Judge Pappert also ruled that the discovery rule did not apply in this matter to extend the statute of limitations.  As noted, the court found that this plaintiff could have raised the same types of issues and arguments as asserted in the Gallagher v. GEICO  when his claim was denied.

The Court in this O'Brien case went on to also hold that the plaintiff's bad faith claim was also barred by the statute of limitations.  The court additionally found that the plaintiff's bare bones and conclusory allegations of bad faith were insufficient to survive the F.R.C.P. 12(b)(6) motion to dismiss challenge.

Please click this LINK to view the O'Brien decision.

I send thanks to Attorney Scott Cooper of the Harrisburg, PA firm of Schmidt Kramer for bringing this case to my attention.