AUGUST 2012 BAD FAITH CASES: COURT REJECTS BAD FAITH CLAIM BECAUSE UNIT OWNER WAS NOT AN INSURED UNDER DEVELOPMENT’S INSURANCE POLICY (Philadelphia County Common Pleas Court)

In Ruger v. Metro. Prop. & Cas. Ins. Co., a condominium unit owner sued its own insurance carrier (who was later dismissed) and the development’s carrier for breach of contract and bad faith. The case stemmed from smoke damage that the owner’s property incurred due to a fire in the basement of the adjoining unit. After filing insurance claims with both carriers, the owner was compensated for the cost of cleaning his apartment. However, the check that he received was $64.00 lower than the cost of restoration.
As a result, the owner filed the instant suit, which the development’s carrier responded to by filing a motion for summary judgment. The Court of Common Pleas granted the carrier’s motion and the unit owner appealed, prompting the issuance of the instant opinion.
The key issue facing the court was whether the unit owner was an insured or intended third-party beneficiary under the policy issued by the condominium’s insurance carrier. Examining the language of the policy itself, the court found that the unit owner was not insured. It reasoned that the condominium purchased the policy to satisfy its obligations under the condominium Declaration, not to benefit third-party unit owners.
As such, the unit owner’s bad faith claim was moot, as he was not a named insured under the policy issued to the condominium.
Date of Decision: July 2, 2012
Ruger v. Metro. Prop. & Cas. Ins. Co., No. 3906, 2012 Phila. Ct. Com. Pl. LEXIS 191, Philadelphia Court of Common Pleas (Pa. C.P. July 2, 2012) (Tereshko, J.)