August 2006 Bad Faith Cases Bad Faith Claim Proceeds: Issue Of Fact On Withholding Then Paying UIM Claim; Contract Claim Where Only Nominal Damages & No Compensable Loss (Middle District)

In Javorski v. Nationwide Mutual Insurance Company, the United States District Court for the Middle District of Pennsylvania considered two motions filed by the parties:  the insured’s Motion for Remand alleging that the jurisdictional amount in controversy had not been met;  and the insurance carrier’s Motion to Dismiss Plaintiff’s breach of contract and bad faith claims.  After denying the remand, see “Procedural Issues” on this site, the Court denied Nationwide’s Motion to Dismiss the bad faith claim. In terms of the bad faith claim, the Court held that “some discovery is needed regarding Defendant’s handling of Plaintiff’s underinsured motorist claim” and that dismissal was not proper at this stage of the proceedings.” The Court noted the fact that Nationwide denied the underinsured motorist claim initially, but then reversed its position and paid out under the policy; demonstrating potentially questionable claims handling practices.  Finally, the Court rejected Nationwide’s argument that Plaintiff’s breach of contract claim should be dismissed because it paid Plaintiff $285,000 of the $300,000 available under the policy and that the only damages that Plaintiff could assert have already been paid.  The Court stated that “[t]he relaxed federal pleading standard and the fact that at least one Pennsylvania case has held that a cause of action exists even if no compensable loss can be shown because any breach gives rise to at least nominal damages.”
Date of Decision: August 2, 2006
Javorski v. Nationwide Mutual Insurance Company, United States District Court for the Middle District of Pennsylvania, No.: 3:06-CV-1071, 2006 U.S. Dist. LEXIS 53480 (M.D.Pa. Aug. 2, 2006) (Conaboy, J.)