Ash v. Continental Insurance Company - Pennsylvania Supreme Court - October 11, 2007
http://www.aopc.org/OpPosting/Supreme/out/J-7-2006mo.pdf
State bad-faith insurance statute, 42 Pa. C.S. 8371, held to resemble tort more than contract and thus come under the two year statute of limitations in 42 Pa. C.S. 5524.
The court rejected plaintiff's argument that because a bad-faith claim involves both tort and contract concepts, like a consumer-protection claim, Gabriel v. O'Hara, 534 A.2d 488 (Pa. Super. 1987), it should come under the catch-all six-year statute of limitations.
The opinion contains an extended discussion of the duty of good faith and fair dealing, which is most often associated with contract claims. The court held that an action for violation of the statutory duty in sec. 8371 is "distinct from the common law cause of action for breach of the contractual duty of good faith" and distinguished the contract cases involving that duty.
The court said that "Pennsylvania courts have held that the key difference between tort actions and contract actions is this: ' [t]ort actions lie for breaches imposed by law as a matter of social policy, while contract actions lie only for breaches of duties imposed by mutual consensus agreements between particular individuals....With this distinction in mind, we note the legislature apparently determined the protections afforded by the Unfair Insurance Practices Act [40 P.S. 1171.1 et seq.] were insufficient to curtail bad faith acts by insurers and that it was in the public interest to enact sec. 8371 as an additional protection....Therefore, the duty under sec. 8371 is one imposed by law as a matter of social policy rather than one imposed by mutual consensus, and an action to recover damages for a breach of that duty derives primarily from the law of torts."
