Statute of Limitations Bars Bad Faith Claim
Barry Zalma
Sep 22, 2023
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Loann T. Phan-Kramer and Jonerik Kramer sued American States Insurance Company for underinsured motorist coverage, won, and collected. Then, they sued American States again asserting statutory bad faith, breach of contract/good faith and fair dealing, and loss of consortium.
In Loann T. Phan-Kramer and Jonerik Kramer v. American States Insurance Company, No. 2:23-cv-01867-JDW, United States District Court, E.D. Pennsylvania (September 14, 2023) the USDC took away part of plaintiffs claim and allowed the rest to proceed in a Solomon like decision.
BACKGROUND FACTS
On April 15, 2016, an underinsured motorist rear-ended Loann T. Phan-Kramer. She suffered a full thickness tear of her rotator cuff, as well as other neck and back injuries. At the time of the accident, American States Insurance Company insured Ms. Phan-Kramer, including underinsured motorist (“UIM”) benefits. After suing then settling with the other driver, Plaintiffs filed their UIM insurance claim with American States. American States denied that claim and Plaintiffs sued. At trial, the jury returned a verdict in Plaintiffs’ favor and the insurer satisfied the verdict.
DISCUSSION
The Tort of Bad Faith
The statute of limitations bars Plaintiffs’ claim. The statute of limitations on a bad faith claim is two years in Pennsylvania. The statute begins to run when the insurer first refuses to pay the claim. When the court denied Plaintiffs’ motion for leave to file a second amended complaint, the court concluded that the statute of limitations began to run on June 28, 2019, when American States denied their claim. Plaintiffs’ time to file this claim expired on June 28, 2021. Therefore, American States’s Motion on the bad faith claim was granted because it was barred by the statute of limitations.
Breach of Contract/Loss of Consortium
The Third Circuit has adopted a bright-line rule that res judicata cannot bar claims that are predicated on events that postdate the filing of the initial complaint. Because Plaintiffs’ breach of contract and loss consortium claims both rely (at least in part) on American States’s conduct following the filing of the initial lawsuit, res judicata cannot preclude these claims.
American States acknowledged that the Amended Complaint “focus[es] . . . on the ways that American States supposedly acted in bad faith during the litigation and trial of the underlying UIM/consortium case.”
Because the bright-line rule bars the application of res judicata, American States’s Motion on the breach of contract and loss of consortium claims was denied.
ZALMA OPINION
Insurance companies, like every person and corporation, are imperfect. American States decided it did not owe UIM benefits to its insured, took the issue to trial and lost. It paid the judgment only to be sued for defending the original suit. The court found that the insured/plaintiffs filed their bad faith claim too late and dismissed that action only to allow the breach of contract and loss of consortium claims to proceed. The decision is a Pyrrhic victory for the plaintiffs since they already recovered in the initial suit the contract damages.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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ZIFL Volume 30, Number 2
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5260
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ This issue contains the following articles about insurance fraud:
Read the full 19 page issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/01/ZIFL-01-15-2026.pdf.
The Contents of the January 15, 2026 Issue of ZIFL Includes:
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In Katherine Crow Albert Guidry, Individually And On Behalf Of The Estate Of Jason Paul Guidry v. Metropolitan Life Insurance Company, et al, Civil Action No. 25-18-SDD-RLB, United States District Court, M.D. Louisiana (January 7, 2026) Guidry brought suit to recover life insurance proceeds she alleges were wrongfully withheld following her husband’s death on January 9, 2024.
FACTUAL BACKGROUND
Jason Guidry was employed by Waste Management, which provided life insurance coverage through Metropolitan Life Insurance Company (“MetLife”). Plaintiff contends that after Jason’s death, the defendants (MetLife, Waste Management, and Life Insurance Company of North America (“LINA”)) engaged in conduct intended to confuse and ultimately deny her entitlement to...
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In Mercury Casualty Company v. Haiyan Xu, et al., No. 2:23-CV-2082 JCM (EJY), United States District Court, D. Nevada (January 6, 2026) Plaintiff Mercury Casualty Company (“plaintiff”) moved to dismiss. Defendant Haiyan Xu and Victoria Harbor Investments, LLC (collectively, “defendants”) did not respond.
This case revolves around an insurance coverage dispute when the parties could not be privately resolved, litigation was initiated in the Eighth Judicial District Court of Nevada. Plaintiff subsequently filed for a declaratory judgment in this court.
On or about April 15, 2025, the state court action was dismissed with prejudice pursuant to a stipulation following mediation. Plaintiff states that the state court dismissal renders its ...
Court Must Follow Judicial Precedent
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Read the full article at https://www.linkedin.com/pulse/sudden-opposite-gradual-barry-zalma-esq-cfe-h7qmc, see the video at and at and at https://zalma.com/blog plus more than 5250 posts.
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Posted on December 29, 2025 by Barry Zalma
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He Who Represents Himself in a Lawsuit has a Fool for a Client
In Pankaj Merchia v. United Healthcare Services, Inc., Civil Action No. 24-2700 (RC), United States District Court, District of Columbia (December 22, 2025)
FACTUAL BACKGROUND
Parties & Claims:
The plaintiff, Pankaj Merchia, is a physician, scientist, engineer, and entrepreneur, proceeding pro se. Merchia sued United Healthcare Services, Inc., a Minnesota-based medical insurance company, for defamation and related claims. The core allegation is that United Healthcare falsely accused Merchia of healthcare fraud, which led to his indictment and arrest in Massachusetts, causing reputational and business harm in the District of Columbia and nationwide.
Underlying Events:
The alleged defamation occurred when United ...
Zalma’s Insurance Fraud Letter
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ZIFL Volume 29, Issue 24
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/
Zalma’s Insurance Fraud Letter
Merry Christmas & Happy Hannukah
Read the following Articles from the December 15, 2025 issue:
Read the full 19 page issue of ZIFL at ...
