A federal judge has interpreted how Pennsylvania law would address the impact of limitations periods in common law bad-faith cases. In the case of Katzenmoyer v. Allstate, Judge Norma Shapiro determined that under Pennsylvania law, the four (4) year statute of limitations period for bad-faith claims does not begin to toll until an insurer has been exposed to damages.
The Katzenmoyer case stems from an ATV personal injury claim in 2004, where Katzenmoyer was injured on the property of Dronal Drumheller, who was insured by Allstate. Allstate refused to settle for the policy limit of $100,000.00 after the accident in 2004, and a jury verdict of $1.5 million was ultimately rendered in 2009. After all claims against Allstate had been assigned to him, Katzenmoyer brought a bad-faith claim against Allstate for refusing to settle in 2004.
Allstate argued that the four (4) year statute of limitations had run, and therefore the claim could not be heard. Judge Shapiro opined that the clock began to toll in terms of the statute of limitations when the jury returned its verdict, not when Allstate arguably acted in bad faith. The Court reasoned that Drumheller had not yet suffered damages in 2004, and therefore, Allstate did not yet know its status as a litigant in the case. It was unclear until 2009 if Allstate had any duty at all in this case, therefore, the statute of limitations clock should not have started until that duty was clear. Such duty could only be made clear by the jury verdict.
Even though the court sided with Katzenmoyer on the statute of limitations argument, the court ultimately found in Allstate’s favor. The court found that Katzenmoyer did not put forth sufficient evidence to support a common law bad-faith claim. Ultimately, this case makes it clear that plaintiffs must be exposed to an excess verdict before they may file a common law bad-faith claim.
If you would like additional information concerning this matter, or bad faith matters in general, please contact Jay Branderbit at Jbranderbit@kentmcbride.com or at 267-702-1713.