The United States District Court for the Eastern District of Pennsylvania Upholds Position that Litigation is Inherently Adversarial, and that Usual Discovery Dealings Aren’t Enough to Substantiate a Violation of 42 Pa. Cons. Stat. § 8371
In Melissa Rocco v. Farmers Insurance Exchange, et al., 2025 WL 439431 (E.D. Pa. Feb. 7, 2025), Plaintiff sued Farmers Insurance Exchange d/b/a Economy Preferred Insurance Company (“Farmers”) for breach of contract and bad faith.
The Court granted part of Farmers’ Motion to Dismiss regarding portions of Plaintiff’s Amended Complaint that referenced the insurer’s conduct during litigation as evidence of bad faith. Specifically, the Court dismissed those portions of Plaintiff’s Amended Complaint regarding discovery transgressions, including alleged misrepresentations in Farmers’ Rule 26(f) report, that purported to constitute bad faith.
In granting Farmers’ Motion, the Court held that “Pennsylvania law allows for insureds to sue their insurers for bad faith conduct ‘arising under an insurance policy’.” However, that conduct does not include the defensive litigation tactics used a legal adversary – even if they are biased. See 42 Pa. C.S. § 8371 (the “Statute”).
In support of its position, the Court cited to numerous recent decisions which continue to bolster the understanding that absent the use of discovery to conduct and/or delay investigation, an insurer’s discovery practices, after the initiation of litigation, does not by itself constitute grounds for a finding of bad faith
In one such case cited, Phan-Kramer v. Am. States Ins. Co., 2023 WL 4867421 (E.D. Pa. July 31, 2023), the plaintiff there, seeking to file a Second Amended Complaint to save the bad faith claim from dismissal, alleged that American States Insurance Co. and its in-house legal counsel withheld information from its expert to influence a defense report and eventual testimony.
Aside from a statute of limitations issue, Judge Joshua Wolson found persuasive the following reasoning from Judge Waldman in his decision to deny the plaintiff’s Motion to Amend:
Section 8731 provides a remedy for bad faith conduct by an insurer in its capacity as an insurer and not as a legal adversary in a lawsuit filed against it by an insured.
See Slater v. Liberty Mutual Ins. Co., No. CIV A. 98-1711, 19999 WL 178367, at *2 (E.D. Pa. Mar. 30, 1999) (emphasis added).
The Rocco Court thus continues the trend of similar decisions, in which the federal judiciary is rejecting the use of an insurer’s post-litigation behavior, especially during discovery, to substantiate or bolster a claim for bad faith under the Statute. However, this decision is likely to unfold differently throughout the courts in the Commonwealth of Pennsylvania. Therefore, it is important to always investigate earnestly and with purpose to move a matter forward, adversarial or not!
The Rocco decision can be found here.
For additional questions, please contact Conrad James Benedetto, Esq. and / or Caroline B. Zook, Esq.
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