April 2014 Bad Faith Cases: Court Denies Carrier’s Summary Judgement Motion Because Insured Alleged Conduct Which a Jury Could Find Amounts To Bad Faith (Middle District)

In Universal Underwriters Ins. Co. v. J. Murray Co., an insured automotive dealer, service center, and financier purchased an insurance policy from the defendant-carrier to insure property at its place of business.  During Tropical Storm Lee in September 2011, the insured suffered $1,700,000 in storm damage, notified its carrier of the damages and received assurances from an authorized representative of the carrier that the policy would indemnify them for the loss. However, the carrier halted the inspection of the insured’s property and informed the insured that the policy contained an explicit coverage exclusion for damage due to storms.

Magistrate Judge Arbuckle, III recommended, and Judge Brann adopted, a decision denying the carrier’s motion for summary judgment.  The court held that evidence presented by both sides raised questions for a jury to resolve at trial.  Moreover, the court determined that the insured provided enough evidence that a reasonable jury may find clear and convincing evidence that the carrier acted in bad faith in denying insurance coverage to its insured by virtue of the way the policy was amended to include a storm damage exclusion.

The court also noted that several acts undertaken by the carrier that could reveal bad faith: (1) the alleged unilateral change to the Policy and (2) the alleged failure to notify or even attempts to mislead the insureds about the extent of their flood coverage.

Date of Decisions:   October 28, 2013 by Magistrate Judge, and January 29, 2014 by District Judge

Universal Underwriters Ins. Co. v. J. Murray Co., CIVIL NO. 4:11-CV-1851Civ., 2013 U.S. Dist. LEXIS 184474 (M.D. Pa. Oct. 28, 2013) (Arbuckle, III, M.J.)

Adopted in full in, Universal Underwriters Ins. Co. v. J. Murray Co., CIVIL NO. 4:11-CV-1851Civ., 2014 U.S. Dist. LEXIS 10761 (M.D.Pa. Jan. 29, 2014 (Brann, J.)