BAD FAITH SUIT BARRED BY TWO-YEAR STATUTE OF LIMITATIONS: (1) DISCOVERY RULE INAPPLICABLE AND (2) CONTINUING BREACH THEORY REJECTED (U. S. Court of Appeals for the Third Circuit)

In this case, the alleged bad faith conduct at issue occurred in 2011. The statutory bad faith suit was filed in 2019. The Third Circuit affirmed the trial court’s finding that the two-year bad faith statute of limitations barred the suit.

The Third Circuit rejected both a discovery rule argument, and an argument that there was a continuing breach that restarted the statute of limitations.

As to the first argument, the court upheld the finding that the insured and counsel witnessed the 2011 conduct at issue. The court quoted the principle: “’Where, however, reasonable minds would not differ in finding that a party knew or should have known on the exercise of reasonable diligence of his injury and its cause, the court determines that the discovery rule does not apply as a matter of law.’” Thus, the discovery rule did not toll the statute of limitations in this case.

On the second argument, the appellate court stated: “As to a continuing breach, in Pennsylvania, the statute of limitations runs when the first denial occurs, but continuing or subsequent denials do not newly trigger the statute of limitations.” (Emphasis in original) Thus, the statute ran in 2013.

Date of Decision: January 24, 2020

Feingold v. Brooks, U. S. Court of Appeals for the Third Circuit No. 19-1495, 2020 U.S. App. LEXIS 2279 (3d Cir. Jan. 24, 2020) (Jordan, Rendell, Scirica, JJ.)