Insurance Carrier Prevails in Bad Faith Case
The defense succeeded on a motion for judgment on the pleadings in a breach of contract/bad faith claim against an insurance carrier in the U.S. District Court for the Western District of Pennsylvania. The Judge agreed with the defense that the carrier did not owe a duty to defend or indemnify a California technology consultant under his California Business Owners and Technology Professional Liability Policy from a lawsuit filed against the insured for breach of contract, conversion, intentional interference with existing and prospective contractual relations, and for a declaration of rights in a disputed ownership of intellectual property. The insured contended that a duty to defend was owed, particularly because the underlying plaintiff asserted in an answer to counterclaim a demand for attorney's fees purportedly based upon a claim for malicious prosecution. The court determined that the carrier did not owe a duty to defend because no claim had been made for a wrongful act with respect to technology services and no claim for malicious prosecution had been presented. The court additionally held that the bad faith claim was barred by the two-year statute of limitations because the insured was on notice of the denial of coverage more than two years prior to suit, and the insured's contention that additional denials tolled the statute was rejected. The Judge applied Pennsylvania law to the dispute, as he determined there was no conflict between Pennsylvania and California coverage law concerning the duty to defend.