More on the Implied Covenant of Good Faith and Fair Dealing

More on the Implied Covenant of Good Faith and Fair Dealing

      In a late December ruling from the US District Court for the Western District of Kentucky, there was provided additional guidance with respect to the application and effect of the implied contractual covenant of good faith and fair dealing. In this instance, where there had been no breach of contract, there could not be a successful claim for breach of the implied covenant. Pogue v. Principal Life Insurance Company, Civil Action No. 3:14-CV-599 CHB, 2019 WL 7372433 (W.D. Ky. Dec. 31, 2019).

      This dispute arose out of whether or not insurance coverage was available. The plaintiff asserted as well that the insurer had engaged in bad faith in denying the coverage. On the merits, it was found there was no coverage. The central question was whether with the denial of coverage it necessarily followed that there could be no claim for bad faith. In finding that there could not be, on those facts, a bad faith claim, the court considered several prior decisions, all cited by the plaintiff in favor of his argument that bad faith claims could survive a determination that coverage was not available. Reviewing each of these decisions, it was determined that none stood for the proposition that there could exist a valid claim for bad faith in the face of the determination that there is not coverage.