April 2017 Bad Faith Cases: Summary Judgement Granted Where Insurer Did Not Act In Bad Faith Where It Properly Evaluated Scope of Coverage, Made Good Faith Payments, And Arranged For Temporary Housing For Insured (Middle District)

In this case, the insured owned two adjacent properties, which both the Magistrate Judge and District Court Judge concluded were distinct properties, and which had distinct insurance policies over time. The policy lapsed on one property (property 1), but a different policy remained in effect on property 2. A fire started on property 1, which ultimately damaged both property 1 and property 2. The insurer for property 2 would not pay for claims on property 1.

The insured asserted breach of contract and bad faith and argued that the insurer failed to act promptly on the insured’s claims, failed to undertake a reasonable investigation and make timely payment, and refused to cover losses arising at an adjoining property, which was not covered under the insured’s policy. The insurer sought summary judgment on the basis that its insurance policy only applied to property 2. The insurer argued that the undisputed facts showed that it properly evaluated the scope of coverage, made good faith payments totaling over $50,000 to the insured, and arranged seven months of temporary housing for the insured, based on the fire damage to property 2.

The court found that the insurer acted reasonably in addressing the insured’s claim, and noted that the insured was seeking coverage from the insurer for losses on a property that was not covered by the insurer’s policy. Additionally, the insurer immediately began investigating the claim after notice of the loss, arranged and paid for immediate short-term housing lasting more than seven months, and promptly attempted to undertake remediation and restoration efforts.

The insurer addressed any coverage questions with the insured, and paid undisputed claims totaling approximately $30,000 within two months of the reported loss. Further, the insurer worked with the public adjuster retained to evaluate other potentially covered losses, and made an additional $20,000 in payments over the course of approximately four months.

The Magistrate Judge found that these facts could not support a finding of bad faith, but may “at most – represent the remnants of a good faith insurance policy coverage contractual dispute.” In adopting the Report and Recommendation, the District Court Judge set forth additional facts supporting the Magistrate Judge’s Report and Recommendation concerning the two properties being distinct, and adopted the Report and Recommendation in granting the insurer’s motion for summary judgment.

Dates of Decisions: February 6, 2017 (Report and Recommendation) and March 24, 2017 (District Court decision)

Porter v. Safeco Ins. Co., No. 15- 759, 2017 U.S. Dist. LEXIS 17142 (M.D. Pa. Feb. 6, 2017) (Carlson, J.)

Porter v. Safeco Ins. Co., No. 15- 759, 2017 U.S. Dist. LEXIS 43498 (M.D. Pa. March 24, 2017) (Mariani, J.)