April 2009 Bad Faith Cases Bad Faith Evidence Does Not Meet Clear And Convincing Standard So Summary Judgement Is Granted To Insurer (Philadelphia Federal)
In Bottke v. State Farm Fire and Casualty Company, the court granted partial summary judgment to the insurer because the insured’s bad faith claim was based on evidence that fell short of the clear and convincing standard.
The insured filed for statutory bad faith and breach of contract in a dispute over the amount to be paid for covered homeowner repairs. He alleged that the insurer manipulated the estimate by telling the hired estimator that only one pipe, instead of several, had burst and that the estimate was therefore too low. In support, he relied upon arbitration testimony in which the insured’s public adjustor said the estimator told him that the insurer mentioned only one pipe and that his estimate would have been higher had he known otherwise. There was no transcript of the arbitration and no one was deposed.
The court found the evidence to be insufficient to prove bad faith because the estimate focused on the result (damage throughout the house) so the cause (number of pipes that broke) was irrelevant; the estimate was based on personal inspection, not upon information supplied by the insurer; and the insured was unable to explain how the alleged misrepresentation adversely impacted the estimate.
Additionally, the court found that the insurer had acted in good faith by asking the estimator to revisit the house and submit a revised estimate, by paying additional funds, and by paying promptly for plumbing repairs subsequent to the original claim filing.
Without clear and convincing evidence of the insurer manipulating the estimate, the insurer can demonstrate a reasonable basis for its actions and is, therefore, entitled to summary judgment.
Date of Decision: January 22, 2009