Insurance – Tort/Negligence – Bad Faith – Contract — Implied Warranty of Good Faith & Fair Dealing – Civil Practice – Pleadings – Affirmative Defenses

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Sentry Select Insurance Co. v. Guess Farm Equipment, Inc. (Lawyers Weekly No. 002-180-13, 19 pp.) (J. Michelle Childs, J.) 5:12-cv-03504; D.S.C.

Holding: Bad faith and breach of the implied warranty of good faith and fair dealing are not separate causes of action; rather, all bad faith actions arise out of the implied warranty of good faith and fair dealing.

The court grants the plaintiff-insurer’s motion to dismiss the defendant-contractor’s counterclaim for bad faith/negligence. However, the court grants the contractor 15 days to amend its counterclaim for breach of the covenant of good faith and fair dealing to address allegations of bad faith that were dismissed. The contractor’s motion to bifurcate is denied as moot. The court grants the insurer’s motion to dismiss the contractor’s defenses of waiver and estoppel, but the contractor has 15 days to amend its defenses. This matter is stayed pending the resolution of the underlying S.C. lawsuit.

Since the insurer has agreed to defend the contractor in the underlying action, subject to a reservation of rights, the contractor’s motion to bifurcate is moot.

The pleading standard established in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), applies to affirmative defenses. The contractor’s defenses of waiver and estoppel, as pleaded, lack the minimum threshold of specificity to allow the court to assess their sufficiency. The court grants the insurer’s motion to dismiss these defenses; however, the court grants the contractor 15 days to remedy the deficiencies in these defenses.