Insurer’s Proof of a Valid Named Driver Exclusion at Summary Judgment (and Why Duplicative “Contractual Bad Faith” Fails) Under Pennsylvania Law

Introduction

In Jill Durkin v. State Farm Mutual Automobile Insurance Co. (3d Cir. Jan. 23, 2026) (nonprecedential), Jill E. Durkin, as trustee for the bankruptcy estate of Ralph E. Parkhurst, III, sued State Farm for breach of contract and statutory bad faith under 42 Pa. Cons. Stat. § 8371. The dispute arose after Parkhurst’s son, Kevin Parkhurst, driving Parkhurst’s vehicle, caused a serious accident. State Farm denied coverage based on a named driver exclusion identifying Kevin, did not defend the ensuing tort suit, and a $5.29 million judgment was entered against Parkhurst—leading to bankruptcy and this coverage/bad-faith litigation.

The central issues on appeal were: (1) whether a genuine factual dispute existed about the validity of the named driver exclusion under Pennsylvania’s Motor Vehicle Financial Responsibility Law; (2) whether an asserted “contractual bad faith” theory required separate analysis; and (3) whether the record could support statutory bad faith under § 8371 when the insurer asserted a facially reasonable coverage position.

Summary of the Opinion

The Third Circuit affirmed summary judgment for State Farm on all claims. It held that State Farm produced sufficient evidence to support its affirmative defense that the named driver exclusion was valid because State Farm requested the exclusion (making the excluded driver’s other insurance status immaterial). Durkin, by contrast, offered only speculation and the absence of old agent records, which did not create a genuine dispute of material fact.

The court also rejected Durkin’s attempt to fault the district court for not separately analyzing an alleged “contractual bad faith” component of the contract claim, because any such theory was not meaningfully developed and appeared identical to the denial-of-coverage theory.

Finally, the court held the § 8371 claim failed because the record showed a reasonable basis for the denial (the exclusion), defeating the first prong of statutory bad faith.

Analysis

Precedents Cited

  • Jutrowski v. Twp. of Riverdale — Used for summary judgment principles, including that “bare assertions, conclusory allegations, or suspicions will not suffice” to create a genuine issue for trial. The opinion relies on this to characterize Durkin’s showing as speculative rather than evidentiary.
  • El v. Se. Pa. Transp. Auth. — Central to the burden-shifting framework at summary judgment, particularly that the moving party must produce evidence sufficient to support the findings needed to prevail, including on an affirmative defense; once done, the nonmovant must point to record evidence creating a genuine dispute. The court uses this to structure its analysis of State Farm’s exclusion defense.
  • Anderson v. Liberty Lobby, Inc. — Cited for the definition of a “genuine” dispute: whether a reasonable jury could return a verdict for the nonmoving party on the evidence presented.
  • Kramer v. Nationwide Prop. & Cas. Ins. Co. — Invoked to reinforce that, at trial, the insurer bears the burden of proving the validity of an exclusion; the Third Circuit uses this to confirm that State Farm carried the initial burden on its affirmative defense at summary judgment.
  • Oxford House, Inc. v. Twp. of N. Bergen — Applied on preservation/forfeiture: evidentiary challenges not raised below are forfeited. The court uses this to narrow which objections to State Farm’s evidence could be considered on appeal.
  • In re Bressman — Used to support granting summary judgment where the movant’s evidence is corroborated and the nonmovant offers no contrary evidence that would allow a reasonable jury to reject it.
  • Wolfe v. Allstate Prop. & Cas. Ins. Co. — Recognizes Pennsylvania allows bad faith theories both in contract (implied covenant) and via the § 8371 statute, framing Durkin’s “contractual bad faith” argument.
  • Northview Motors, Inc. v. Chrysler Motors Corp. — Supplies the limiting principle: an implied duty of good faith claim is not maintainable where it is “identical to” an established cause of action. The court uses this to dispose of Durkin’s undeveloped “contractual bad faith” contention.
  • Rancosky v. Washington Nat'l Ins. Co. — Sets the two-part test for § 8371 statutory bad faith: (1) no reasonable basis for denial; and (2) insurer knew or recklessly disregarded the lack of reasonable basis. The opinion applies (and ends with) prong one.
  • Gibson v. State Farm Mut. Auto. Ins. Co. — Emphasizes that evidence of a reasonable basis defeats § 8371 bad faith. This precedent is used to confirm that once the exclusion provides a reasonable basis, statutory bad faith cannot survive.
  • Polselli v. Nationwide Mut. Fire Ins. Co. — Cited for the proposition (addressed but not reached on appeal) that a § 8371 claim cannot be the insured’s sole claim. The panel notes it need not decide that issue because prong one failed.

Legal Reasoning

1) The MVFRL rule for named driver exclusions, and why “who requested it” mattered

The opinion turns on 75 Pa. Cons. Stat. § 1718(c)(2), which the court describes as making an insured-requested named driver exclusion valid only if “the excluded person is insured on another policy”. Conversely, if the insurer requests the exclusion, the court explains that validity does not depend on whether the excluded driver is otherwise insured.

Because Kevin Parkhurst had no other insurance, Durkin’s strategy was to argue (factually) that Parkhurst/the agent requested the exclusion, which would (legally) invalidate it under § 1718(c)(2). Thus, the key factual question became: did State Farm request the exclusion?

2) Summary judgment allocation of proof on the exclusion defense

The court treats the named driver exclusion as an affirmative defense invoked by State Farm. Relying on El v. Se. Pa. Transp. Auth. and Kramer v. Nationwide Prop. & Cas. Ins. Co., the panel explains State Farm had the initial burden to produce evidence sufficient for a reasonable jury to find the exclusion valid.

State Farm’s evidence included a claim note (dated 2021), an internal email from a senior underwriter including a screen capture of an older file notation, license-status information, and an affidavit. The court regarded this collection—together with timing and contextual facts—as adequate to meet the insurer’s burden.

3) Why Durkin’s rebuttal failed

Once State Farm carried its burden, Durkin needed record evidence that could allow a reasonable jury to find Parkhurst (not State Farm) requested the exclusion. The panel held Durkin offered only the absence of old agent records and speculation about what they “could” show, without affirmative evidence undermining State Farm’s documents or establishing a contrary narrative. Under Jutrowski v. Twp. of Riverdale and Anderson v. Liberty Lobby, Inc., that is insufficient to create a triable dispute.

The court also noted an undeveloped suggestion of spoliation/adverse inference, observing Durkin cited spoliation elements but did not meaningfully argue them.

4) “Contractual bad faith” as duplicative of a denial-of-coverage contract claim

Durkin argued the district court should have separately analyzed bad faith embedded within the contract claim. While acknowledging via Wolfe v. Allstate Prop. & Cas. Ins. Co. that Pennsylvania recognizes both contractual and statutory bad faith concepts, the court relied on Northview Motors, Inc. v. Chrysler Motors Corp. to hold that an implied-duty claim fails if it merely repackages the same denial-of-coverage breach theory.

Critically, the panel faulted Durkin for not articulating a distinct contractual duty (e.g., a duty to investigate before denial), not explaining how such a duty is independently actionable, and not showing how it survives separately from the coverage dispute. With no non-duplicative theory developed, no separate analysis was required.

5) Statutory bad faith fails when the insurer has a reasonable basis

Applying Rancosky v. Washington Nat'l Ins. Co., the court held Durkin failed on prong one because State Farm’s evidence supported a lawful exclusion—i.e., a reasonable basis for denial. Under Gibson v. State Farm Mut. Auto. Ins. Co., that reasonable basis is enough to defeat § 8371, so the court did not reach prong two (knowledge/recklessness).

The panel also declined to reach an alternative § 8371 theory discussed below (via Polselli v. Nationwide Mut. Fire Ins. Co.) because the claim failed on the merits of reasonable basis.

Impact

  • Practical evidentiary lesson in exclusion litigation: The decision underscores that in Pennsylvania MVFRL named-driver exclusion disputes, “who requested the exclusion” can be dispositive—and at summary judgment, an insurer can prevail with coherent internal records and contextual corroboration if the plaintiff offers only speculation.
  • Limits on “contractual bad faith” pleading and argument: The opinion reinforces that litigants must clearly articulate a distinct implied-covenant theory (with a non-duplicative duty, breach, and remedy theory), or courts may treat it as merged into the coverage dispute.
  • § 8371 discipline—reasonable basis is a gatekeeper: The ruling reiterates that when an insurer can show a reasonable basis for denial, statutory bad faith often ends at prong one, regardless of expert rhetoric about claims-handling quality.
  • Persuasive (not binding) authority: As a “NONPRECEDENTIAL OPINION,” it is not binding under Third Circuit I.O.P. 5.7, but it may still be cited for its persuasive reasoning, especially on how federal summary-judgment burdens operate in exclusion/bad-faith cases.

Complex Concepts Simplified

Named driver exclusion
A policy provision that removes coverage when a specifically listed person drives the insured vehicle. Here, Kevin was listed as excluded, so State Farm denied coverage for the accident he caused while driving.
MVFRL § 1718(c)(2) condition
As described by the court: if the insured requests the exclusion, it is valid only if the excluded driver has other liability insurance. If the insurer requests it, the “other insurance” condition does not apply.
Affirmative defense
A defense where the defendant bears the burden to prove facts that defeat liability even if the complaint’s allegations were true. State Farm treated the exclusion as such a defense and had to produce evidence supporting it.
Summary judgment / “genuine dispute of material fact”
A case can be resolved without trial if no real factual dispute exists that could change the outcome under the law. The nonmoving party must point to evidence; speculation is not enough.
Statutory bad faith (42 Pa. Cons. Stat. § 8371)
A Pennsylvania claim allowing remedies when an insurer denies benefits without a reasonable basis and does so knowingly or recklessly. If the insurer had a reasonable basis for denial, the claim typically fails.
Contractual “bad faith” / implied covenant of good faith
A contract-based theory that a party exercised contractual discretion in a dishonest or unfair way. But it cannot merely duplicate a standard breach claim for the same conduct and damages.

Conclusion

Jill Durkin v. State Farm Mutual Automobile Insurance Co. illustrates how a coverage dispute can hinge on a narrow factual predicate (who requested a named driver exclusion) coupled with strict summary-judgment evidentiary demands. The Third Circuit affirmed that State Farm’s documentary showing was sufficient to establish a valid exclusion absent contrary evidence, that undeveloped and duplicative “contractual bad faith” theories do not require separate adjudication, and that § 8371 bad faith fails where the insurer demonstrates a reasonable basis for denial.