The opinion of the court was delivered by: Thomas J. Rueter Chief United States Magistrate Judge
Presently before the court are the parties' cross motions for summary judgment: plaintiff's motion for summary judgment (Doc. No. 39) ("Pl.'s Motion"); and defendants' motion for summary judgment (Doc. No. 40) ("Defs.' Motion").*fn1 The court considered all documents submitted by the parties in support of their own motions and in opposition to the other party's motion.*fn2 For the reasons stated herein, plaintiff's Motion is DENIED, and defendants' Motion is DENIED IN PART and GRANTED IN PART.
I. FACTUAL AND PROCEDURAL BACKGROUND
The instant litigation arises out of an insurance coverage dispute. Defendant Travelers Property Casualty Company of America ("Travelers Property") issued a commercial automobile insurance policy, policy number 3IFJ-810-635J1784 to plaintiff Treadways LLC (the "Automobile Policy"). Defendant Travelers Indemnity Company ("Travelers Indemnity") issued a worker's compensation and employer's liability policy of insurance (No. 3VIIUB-635J176-0-02) (the "WC Policy") to plaintiff. The only policy identified in the amended complaint as being at issue in this litigation is the WC Policy. See Amended Complaint. Defendants Travelers Property and Travelers Indemnity shall be collectively referred to herein as the "defendants." Defendant Charter Oak Fire Insurance Company ("Charter Oak") did not issue any policy of insurance which would apply to either of Todd Gonsar's worker's compensation or liability claim against plaintiff.*fn3
On July 28, 2005, Gonsar and his wife filed a lawsuit against plaintiff in the Court of Common Pleas of Philadelphia County (the "Gonsar Litigation"). Plaintiff reported the Gonsar Litigation to defendants. Defendants admit that after the Gonsar accident, a worker's compensation claim was established under the WC Policy. (Defs.' Mem. Supp. Motion at 3.) On or about September 12, 2005, a claim was set up under the Automobile Policy. On or about September 15, 2005, defendants retained Mary Ann Hanna, Esquire, to defend plaintiff in the Gonsar Litigation. The complaint in the Gonsar Litigation was filed on April 24, 2006, setting forth two counts -- fraud and misrepresentation, and loss of consortium. (Defs.' Mot. Ex. D.) On May 1, 2006, after being served with the Gonsar Litigation complaint, plaintiff sent a copy of the lawsuit to John Wright, its insurance broker. Id. Ex. E. Mr. Wright sent an email dated June 7, 2006, to John Rigney and Jeff Norton*fn4 advising that: "[i]t may be wise for you to touch base with Gary [Davis of Travelers, the claim handler assigned to the Gonsar lawsuit] to get a better feel for what Travelers is doing if there are concerns. I think they are going over and above their contractual obligations but did not share that with him." Id. Ex. F. On October 6, 2006, defendants provided a written denial of coverage notice for the claim on the basis that there was no coverage concerning the accident. Id. Ex. G. Defendants agreed to continue to pay Ms. Hanna for a period of sixty days so that plaintiff could "associate new counsel." Id. In a subsequent letter dated October 24, 2006, defendants agreed to pay for a defense for a "key" deposition in mid-December 2006. Id. at H.
Ms. Hanna filed a Petition for Extraordinary Relief with the state court. The petition was denied without prejudice on December 19, 2006, and granted movant permission to request extraordinary relief in the context of a petition to withdraw counsel. Id. Ex. I. Plaintiff retained Ms. Hanna as defense counsel, and did not interview other potential counsel. Id. Ex. J. On April 26, 2007, following submission of the case on stipulated facts, the Honorable Annette Rizzo of the Philadelphia Court of Common Pleas entered judgment in favor of the Gonsar plaintiffs and against Treadways in the amount of $1,000,000.
On May 15, 2007, plaintiff asked defendants that the original claim notice be expanded to include possible employee benefit coverage under the WC Policy. Id. Exs. Q & R. On June 21, 2007, defendants denied coverage under the WC Policy. Id. Ex. S.
On February 17, 2009, plaintiff filed an Amended Complaint against defendants asserting two counts: Count 1 -- bad faith in handling the claim and the Gonsar Litigation in violation of 42 Pa. Cons. Stat. Ann. § 8371; and Count 2 -- waiver and estoppel/ breach of duty to indemnify -- defendants waived all defenses under the Policy. (Amended Complaint.)
II. THE MOTIONS FOR SUMMARY JUDGMENT
The parties each contend that they are entitled to summary judgment on plaintiff's first count asserting a claim of bad faith against defendants. Pennsylvania's bad faith statute, 42 Pa. Cons. Stat. Ann. § 8371, provides:
In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:
(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the ...