Eastern Steel, Cross Aplt v. Int Fidelity Ins. Co.

Summary

The Court held that Pennsylvania’s insurance bad faith statute does not apply to surety bonds because its plain language covers only insurance policies and insurers. It further held that Fidelity was bound by the arbitration award against its principal because Fidelity was jointly and severally liable for all sums due, had notice and an opportunity to participate, and declined to do so. The Court also held that Fidelity was liable for attorneys’ fees included in the arbitration award and that Eastern could recover statutory prejudgment interest at 6% per annum on the definite sum owed by Fidelity. Justice Brobson, joined by Justice Donohue, concurred that the bad faith statute did not apply but would have rejected the arbitration and fee-and-interest rulings.