In Wiseman Oil Co., Inc. v. TIG Ins. Co., the federal court refused to dismiss claims for breach of the insurer's duty to defend and duty of good faith in an insurance coverage action filed in 2011 seeking to recover for CERCLA claims brought in 1997 by the federal government. No. 2:11-CV-1011-JFC-LPL (U.S. Dist. Ct. W.D. Pa. May 22, 2012).
In Wiseman, the federal government brought claims in 1997 to recover CERCLA costs relating to the oil company's alleged contamination of soil and groundwater. In 2004, Wiseman contacted TIG requesting a defense to the federal claims and as proof of that TIG provided insurance, enclosed a certificate of insurance for a specific policy number. TIG responded in 2005 that it had conducted a "diligent search" but was unable to find the policy referenced in the certificate. The underlying CERCLA action was "administratively closed" until late 2009. Shortly thereafter, Wiseman provided additional certificates of insurance for the TIG policy and for 3 other TIG policies. In 2010, TIG again said it had had conducted a diligent search and that, in the absence of further information, it would take no further action with respect to Wiseman's demand for a defense.
In 2011, Wiseman filed the instant declaratory judgment action, which TIG moved to dismiss for statute of limitations grounds. The court held that, under Pennsylvania law, the statute of limitations did not preclude Wiseman's suit. First, the court found that a claim that an insurer breached its duty to defend does not accrue until the underlying litigation was concluded. Because the underlying litigation has not yet concluded, the coverage claim had not been filed too late. In reaching its decision, the court expressly rejected TIG's agreement that the duty to defend claim began to accrue when Wiseman first tendered notice of the underlying litigation.
Moreover, the court noted that, in light of TIG's conduct, its ability to rely on the statute of limitations would most likely be estopped. The court stated that "the record suggests that [TIG] purposefully misled [Wiseman] into believing that it was considering taking over the defense and diligently looking for the related missing policy documents." Id. at fn. 11. Rather, deposition testimony showed that TIG's documents were not indexed and that hundreds of thousands of boxes of documents had not been reviewed.
With respect to Wiseman's claim that TIG violated its duty of bad faith also was timely filed. By statute, such claims must be filed within 2 years of when an insurer denies coverage. The court found that, prior to 2005, TIG had not denied coverage, but almost had reserved rights and stated that its investigation was continuing. Only when in 2010 TIG stated that it would take no further action, could Wiseman had known that no defense would be provided. Thus, Wiseman's bad faith claim filed within 2 years of that communication was timely.