Assign Away: Pennsylvania Supreme Court Says Bad Faith Claims May be Assigned

by Saul Ewing Arnstein & Lehr LLP


On December 15, 2014, in the case of Allstate Prop. & Cas. Ins. Co. v. Wolfe, No. 39 MAP 2014, slip op. at 1 (Pa. Dec. 15, 2014), the Pennsylvania Supreme Court ruled that an insured may assign a statutory bad faith claim under Pennsylvania’s insurance bad faith statute, 42 Pa. C.S.A. § 8371. The United States Court of Appeals for the Third Circuit had certified the question to the Pennsylvania Supreme Court, garnering significant interest from the industry for what could have been a major victory for insurers to change the landscape of insurance litigation.

While there has been a regular practice of assigning bad faith claims, two relatively recent decisions from the United States District Court for the Eastern District of Pennsylvania cast doubt on the practice. In the Supreme Court, the parties and amici curiae advanced numerous public policy and social considerations supporting their respective positions. In the end, the Court focused its resolution on simple statutory construction.

The bad faith statute provides in relevant part that “[i]n an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may… [a]ward punitive damages against the insurer.” 42 Pa. C.S.A. § 8371. Because the statute is silent as to assignability of claims, the court reviewed the legislation’s history, concluding that section 8371 was intended to supplement available remedies, and not to change an insured’s ability to assign claims. The Court articulated that “we simply do not believe the General Assembly contemplated that the supplementation of the redress available for bad faith on the part of insurance carriers in relation to their insureds would result either in a curtailment of assignments of pre-existing causes of action in connection with settlements or the splitting of actions.” Wolfe, slip op at 12. The Court noted that the General Assembly was free to amend the statute it if disagreed with the court’s interpretation.

This significant decision from the high court came from a relatively small dispute. Wolfe was injured in 2007 when his car was struck by an intoxicated driver, Zierle, who was an Allstate insured. Wolfe demanded $25,000 and Allstate counteroffered at $1,200. Wolfe obtained a jury verdict of $15,000 for compensatory damages and $50,000 in punitive damages.  Allstate paid the compensatory judgment only. Zierle then assigned his bad faith claim against Allstate to Wolfe in exchange for an agreement not to execute on the punitive damages award against Zierle. Wolfe then filed a claim against Allstate in Pennsylvania state court, which Allstate removed to federal district court in Pennsylvania’s Eastern District. Allstate argued that Wolfe did not have standing to pursue Zierle’s bad faith claim because such claims cannot be assigned, and the trial court rejected that argument. In relevant part, the trial court awarded Wolfe $50,000 in punitive damages in reliance on Section 8371. Allstate appealed the decision to the Third Circuit, which certified the question regarding Allstate’s argument about assignability to the Pennsylvania Supreme Court.

In some respects the Pennsylvania Supreme Court’s decision returns the insurance landscape to business as usual, as for years it was largely accepted that such assignments were permitted. Had the Court ruled otherwise there would have been a significant change in insurance litigation in Pennsylvania. Insurers can take from this decision that bad faith litigation in Pennsylvania will continue to be hotly contested, and will serve as the proving grounds where many claims handling and institutional practices will be judged. Further, given the relative size of the dispute (approximately $65,000), the case is a reminder that the potential for bad faith litigation exists in nearly all levels of claims

Written by:

Saul Ewing Arnstein & Lehr LLP

Saul Ewing Arnstein & Lehr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.