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Eastern District of Pennsylvania Enforces Assignment of Statutory Bad Faith Claim to Water Mitigation Contractor

In nearly identical holdings, the U.S. District Court for the Eastern District of Pennsylvania in Royal Water Damage Restoration Inc. v. Allstate Vehicle Prop. Ins. Co. and Royal Water Damage Restoration v. State Farm Fire Cas. Co. recently found that Royal Water Damage Restoration, a water remediation company, has standing as an assignee to sue an insurance carrier for statutory bad faith.

In reaching his decision in Royal v. State Farm, Judge Pappert interpreted Pennsylvania Supreme Court case, Wolfe v. Allstate, which previously held that bad faith damages “may be assigned by an insured to an injured plaintiff and judgment creditor.” Judge Pappert reasoned that a contractor taking an assignment could be an “injured” third party. Following this decision, Judge Goldberg in Royal v. Allstate adopted Judge Pappert’s reasoning and holding.

Post-loss assignments of benefits are a rapidly evolving issue. HKR will continue to closely monitor this issue and report on any further developments. If you would like additional information, please contact any member of HKR’s team.