Federal Court Reaffirms That Plaintiffs Have No Standing to Assert Direct Bad Faith Claim Against Tortfeasor's Carrier

In the case of Starrett v. Coe, No. 3:16-cv-02272 (M.D. Pa. June 20, 2017 Saporito, M.J.) (Report and Recommendation, affirmed by Judge A. Richard Caputo under an Opinion dated August 9, 2017), it was held that third party Plaintiffs do not have a contractual relationship with tortfeasor’s liability carriers and, therefore, such Plaintiffs have no standing to assert a bad faith claim against a tortfeasor’s insurer and/or its adjuster.

The district court judge agreed with Federal Magistrate Joseph Saporito's Opinion in this regard and, thereby, dismissed the bad faith failure to negotiate claim lawsuit filed by the Plaintiff.

Anyone wishing to review Federal District Magistrate Judge Saporito's Report and Recommendations may click this LINK.

To review Judge Caputo's Opinion adopting Judge Saporito's decision, please click HERE.

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman, Krekstein & Harris.  Attorney Applebaum is the creator and writer of the Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog.  

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.