AUGUST 2011 BAD FAITH CASES BAD FAITH CLAIM DISMISSED BECAUSE IT FAILED TO ALLEGE BAD FAITH CONDUCT AND THERE WAS NOT COVERAGE (WESTERN DISTRICT)

In Pfister v. State Farm Fire & Casualty Company, the court was faced with a bad faith claim by the insured and a motion to dismiss filed by the insurer.  The insured asserted that the carrier 1) failed “to conduct a complete and thorough investigation of the claim”; 2) failed to “objectively and fairly value [the insured’s] claim”; 3) relied upon an estimate compiled by its own consultant while ignoring an estimate provided by the insured; 4) “failed to negotiate the claim in good faith”; 5) failed to “respond to [the insured’s] additional written request to discuss resolution of the claim without litigation”; and 6) “failed to provide a reasonable factual explanation of the basis for [the insurer’s] refusal” to pay the full amount sought by the insured.

The court held that the insured’s first claim, regarding the carrier’s failure to investigate mold damage, was improper because the homeowner’s policy in question did not cover mold damage.  Moreover, the court ruled that the insured failed to adequately allege “who, what, where, when, and how the alleged bad faith conduct occurred.”

The insured also claimed that the carrier acted in bad faith by failing to respond to written correspondence requesting arbitration.  The court dismissed this allegation, ruling that, while the homeowner’s policy did allow a determination of loss by appraisal, this specific situation involved a dispute over the “scope of coverage” not “what constitutes a fair price,” making an appraisal unnecessary. 

Lastly, the court rejected the insured’s contention that the carrier failed to explain why it was denying coverage.  Specifically, the court ruled that the insured did not outline its efforts to seek an explanation from the carrier.

In conclusion, the court granted the insurer’s motion to dismiss and denied the insured relief on the basis of its bad faith allegations.

Date of Decision: August 18, 2011

PFISTER v. STATE FARM FIRE & CASUALTY COMPANY, 11cv0799, U.S. District Court for the Western District of Pennsylvania, 2011 U.S. Dist LEXIS 92556 (W.D. Pa. Aug 18, 2011) (Schwab, J.)