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Bad Faith Claims Subject to Two Year Statute

Source: Ash v. Continental Ins. Co.

Analysis

The Pennsylvania Supreme Court in Ash held that causes of action brought under the Pennsylvania bad faith insurance statute, 42 Pa.C.S. 8371, sound primarily in tort. As such, the two-year Statute of Limitations set forth in 42 Pa.C.S. 5524 will apply.

In his opinion, Justice Eakin reasoned that claims under Section 8371 are not within the same subject matter as Unfair Trade Practices and Consumer Protection Law claims. He determined that bad faith claims were more akin to tort claims, and therefore, should not enjoy the benefit of a four or six year Statute of Limitations applicable to contract and “other” actions respectfully. The Supreme Court reviewed both State and Federal decisions on this issue. Also, the Court found that the duty imposed by Section 8371 was imposed as a matter of social policy rather than by mutual consensus. After careful review, the Court held that a bad faith action is a statutorily created tort and the two-year Statute of Limitations applies.

What it Means For You

This decision should effectively resolve the line of conflicting rulings concerning the bad faith statute of limitations. Obviously, a two-year Statute is a significant development, as it limits the lingering specter of bad faith claims. Because a defense based upon the Statute of Limitations is an Affirmative Defense, it is imperative that the same is raised in the New Matter of the Answer. Otherwise, the Defendant runs the risk of waiving this defense. As such, this issue requires early analysis and attention in all bad faith claims.

About C&W

Cipriani & Werner is a professional corporation providing civil litigation and workman's compensation legal services to clients throughout Pennsylvania and New Jersey. If you have questions, feel free to contact at (412) 563-2500.

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