For more than ten years, state and federal trial courts in Pennsylvania have been wrestling with the question of the appropriate statute of limitations to apply to actions for bad faith damages brought pursuant to 42 Pa. C.S.A. section 8371. Although some early opinions suggested that a six year statute of limitations might be appropriate, more recent trial court opinions tended to apply the two year statute of limitations applicable to tort claims. Those courts reasoned that the cause of action under section 8371 most closely resembled an action in tort, given the fact that the determination of liability focused on the reasonableness of the conduct of the insurer and that the punitive damages permitted by the statute were most commonly, if not solely, allowed in actions in tort.
Last year, the United States Court of Appeals for the Third Circuit in deciding Haugh v. Allstate Insurance Company, predicted that when Pennsylvania appellate courts ultimately reviewed the issue, they would conclude that a two year statute applied. That prediction has now proven accurate as the Pennsylvania Superior Court in Ash v. Continental Insurance Company has concluded that a two year statute of limitations applies to actions brought under section 8371. In doing so, the court essentially accepted the rationale of the lower courts which had reached the same conclusion finding that the action most closely resembles a claim in tort and noting that virtually all courts in other states which have decided a similar issue have concluded that the tort statute of limitations applies to actions for bad faith.
Since there is some split of opinion in the lower courts concerning this issue, it is certainly possible that the Ashes may attempt to have the Pennsylvania Supreme Court review the matter and that the case could be accepted for review by that court. However, for now the applicable statute of limitations for such claims, whether pursued in state or federal court, would appear to be two years.
If you would like to read a copy of the Superior Court's opinion, please click here, or you can obtain a copy by phoning my secretary, Denise Patsch, at 215-665-3349. If you have any questions about the opinion itself, please feel free to give me a call.
Very truly yours,
Louis E. Bricklin
For further information, please contact Louis E. Bricklin, Esquire.
Telephone: 215-665-3400
E-mail: bricklin@bbs-law.com
