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Claims Of Bad Faith And Vicarious Liability Fall Like Dominoes With Speculative Damages (PA)

November 24, 2021

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<p style="text-align: justify;">In an action brought by the Moses Taylor Foundation (the “Foundation”) in the Middle District of Pennsylvania, it sought to recover damages for an alleged breach of contract by Coverys and its primary insurer (“Coverys”) for failure to negotiate an appropriate settlement in a previous lawsuit. Moses Taylor, additionally, uniquely asserted a claim for bad faith for almost exhausting the available limits of insurance as well as vicarious liability through the breach of contract claim.</p>
<p style="text-align: justify;">In response, Coverys argued the breach of contract claim should be dismissed because the Foundation compiled and pled speculative damages, and therefore, the required predicate cause of action necessary to litigate a claim of bad faith––essential under 42 Pa. Con. Stat. § 8371––could not be established. Specifically, given that the insurance policy limits were not exhausted and there were no pending lawsuits utilizing the same limits, Coverys argued that the claimed damages were too speculative. Likewise, such a failure to establish the necessary cause of action disappeared the Foundation’s vicarious liability claim as well because, given the word’s syntactical underpinnings, “vicarious” implies a predicate cause-of-action.</p>
<p style="text-align: justify;">Under Pennsylvania law, damages are speculative when uncertainty exists concerning the existence of damages, not the amount, and the Court in <em><a href="">Moses Taylor</a></em> held that the possibility of future suits against the Foundation was not concrete enough to fit the law’s corporeal requirement. Therefore, like dominoes, the claims for bad faith and vicarious liability were downed in a fashion that would have made Rube Goldberg smile.</p>
<p style="text-align: justify;">This case represents the importance of attention to detail and provides another arrow in the litigator’s tactical quiver.</p>
Thanks to Richard Dunne for his contribution.  Should you have any questions, please contact <a href="">Matthew Care</a>.

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