Blog

September 28, 2017
Important PA Supreme Court Bad Faith Case
The Pennsylvania Supreme Court decision handed down today defines the elements of statutory bad faith. This is an extremely important case for any insurance company. To read the full blog post on today’s court decision, click here.Read More >>
May 17, 2017
May 2017 Bad Faith Cases: Fineman, Krekstein & Harris Obtains Dismissal Of Bad Faith Claim Where Compliant Fails To Allege Actionable Claim Of Improper Investigation (New Jersey Federal)
Fineman, Krekstein & Harris obtained dismissal of a bad faith claim against the insurer where the insured’s complaint did not set out sufficient facts to make a plausible claim for an inadequate investigation. The court observed that under the federal rules, courts carry out a three-tiered test to determine if a complaint can survive...Read More >>
May 16, 2017
May 2017 Bad Faith Cases: Motion To Stay Discovery In UIM Case Denied; Severance At Trial Granted With a Twist
In its leading work on keeping up with post-Koken motions to stay discovery and/or sever bad faith claims, the Tort Talk blog has an interesting post where the insured brings common law bad faith claims as well as statutory bad faith claims.Read More >>
May 15, 2017
May 2017 Bad Faith Cases: No Bad Faith Where Reasonable Basis To Deny Ultimately Covered Claim, and Governing Law Undeveloped At The Time Of Denial (New Jersey Appellate Division)
The appellate court addressed bad faith in this environmental contamination coverage case. The panel reiterated the law that “an insurance company may be liable to a policyholder for bad faith in the context of paying benefits under a policy. The scope of that duty is not to be equated with simple negligence. In the...Read More >>
May 12, 2017
May 2017 Bad Faith Cases: Material Misrepresentations In Application Make Policy Void AB Initio Even If Not Made in Bad Faith (Philadelphia Commerce Court)
In this Commerce Court case involving a declaratory judgment action concerning coverage for the horrific 2013 wall collapse on the Salvation Army store in Philadelphia, the court found the policy void ab initio “ecause the misrepresentations in this case are palpably and manifestly material to the insurance company’s decision to take on a risk.” This...Read More >>
May 11, 2017
May 2017 Bad Faith Cases: Delay Alone Is Not Synonymous With Bad Faith; Sworn Statement not Prohibited Simply Because of Prior Deposition In Underlying Case; Technical Regulatory Violations Not Bad Faith Per Se (Middle District)
A UIM claimant alleged bad faith based upon: “misstatement of … coverage limits, alleged delay in claims processing, insistence upon a sworn statement under oath …, persistence in collecting medical records and failure to comply with insurances regulations regarding periodic status notices to insureds as evidence of bad faith.” The insurer wanted summary judgment...Read More >>
May 10, 2017
May 2017 Bad Faith Cases: Deceptive Conduct After Policy Is Issued May Be Subject To Section 8371 Relief (Philadelphia Federal)
This case involves a dispute over the number of premium payments the insured was required to make. The insured thought it only had to make 6 payments each on two life insurance policies, and investment income would cover the rest. The income was insufficient and more premiums were sought. A number of misrepresentation theories...Read More >>
May 8, 2017
May 2017 Bad Faith Cases: No Evidence of Bad Faith When Insurer’s Acts Meet Policy Terms and Conditions (New Jersey Appellate Division)
In this New Jersey appellate case, after finding for the insurer on coverage, the court found no evidence of bad faith. An insured “’must establish the merits of his or her claim for benefits. If there is a valid question of coverage, i.e., the claim is “fairly debatable,” the insurer bears no liability for bad...Read More >>
May 3, 2017
May 2017 Bad Faith Cases: Court Explains How Bad Faith Must Be Pleaded (Philadelphia Federal)
In this case, the court outlines the general law concerning both statutory bad faith and contractual bad faith, and how to plead bad faith to survive a motion to dismiss. Some points of note on the legal overview: (1) The court states that statutory bad faith requires showing some motive of self-interest or ill...Read More >>
May 1, 2017
May 2017 Bad Faith Cases: “Severance and Stay Of Bad Faith Claims Has Been Called the ‘Prevailing Practice’ In Both the State and Federal Courts on New Jersey” (New Jersey Federal)
In addressing the common practice of severance and stay in New Jersey federal insurance cases involving breach of contract and breach of the implied covenant of good faith and faith dealing (and in this case breach of fiduciary duty as well), the court stated: This Court has the discretionary authority to sever and stay...Read More >>
April 25, 2017
April 2017 Bad Faith Cases: No Actionable Bad Faith Claim for Normal Litigation Conduct (Centre County Common Pleas)
We are happy to give a shout out to the excellent Tort Talk Blog in our 1300th post since 2006.  Today’s Tort Talk post gives a summary of how a Centre County trial judge handled statutory bad faith claims, where, among other things, the insured alleged wrongdoing in the insurer’s litigation conduct.Read More >>
April 21, 2017
April 2017 Bad Faith Cases: Birfurcation Of UIM Bad Faith and Breached Contract Claims Denied Where Insurer Unable to Demonstrate Prejudice (Philadelphia Federal)
The court denied an insurer’s motion to bifurcate, and stay, the plaintiff’s bad faith claim that was brought alongside a breach of contract claim. The plaintiff’s complaint alleged that he had been a passenger in a co-worker’s car when they were involved in automobile accident. The Plaintiff filed a UIM claim with his insurance...Read More >>
April 20, 2017
April 2017 Bad Faith Cases: A Complaint Alleging Bad Faith Must Contain Factual Allegations of Knowing or Reckless Conduct (New Jersey Federal)
In our post earlier today, we noted a Pennsylvania Federal Court dismissing bad faith claims for conclusory pleadings, without prejudice. Below is a New Jersey Federal Court doing the same. Plaintiffs are homeowners who purchased an insurance policy, which they alleged entitled them to coverage for property damage sustained by their home. After the...Read More >>
April 20, 2017
April 2017 Bad Faith Cases: Conclusory Allegations Do Not Give Rise To a Bad Faith Claim (Philadelphia Federal)
The court granted an insurer’s 12(b)(6) motion on a bad faith claim related to the handling of an insured’s motorcycle accident. The insured’s complaint contained nineteen separate general allegations of conduct that purportedly demonstrated the insurer’s bad faith in handling the insured’s claim. The allegations were broadly worded and included assertions, among others, that...Read More >>
April 19, 2017
April 2017 Bad Faith Cases: Consumer Protection Law Violations May Be Evidence in Bad Faith Cases (Middle District)
The insured brought a consumer protection law claim for allegedly abusive claims handling practices and denial of her insurance claim. The court observed that in the insurance context, Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) “applies only to conduct related to the sale of an insurance policy, not to the handling of...Read More >>
April 18, 2017
April 2017 Bad Faith Case: On Remand Trial Court Must Review Potential Bad Faith Claims For: (1) Denial of Coverage, (2) Independent Claims Handling Allegations, (3) Pleading Defenses In Bad Faith, and (4) Denial of Duty To Defend (Pennsylvania Superior Court)
In this case, among other things, the Superior Court stated the principle that statutory bad faith can exist independently of the insurer’s denying a benefit under the policy. The Court relied upon its earlier decisions in Condio (2006) and Nealy (1997). It did not address what effect, if any, that the Supreme Court’s 2007...Read More >>
April 12, 2017
April 2017 Bad Faith Cases: (1) Insurer Interprets Policy Correctly, So No Bad Faith; (2) No Bad Faith Where Insurer Agreed To Defend Only Covered Claims, Because Of Novel Argument That Usual Rule Did Not Apply To Title Insurance (Philadelphia Federal)
This dispute arises out of a Title Insurance Company’s initial refusal to defend its insured against a third party claim. The plaintiff in the underlying action proceeded pro se, and filed three different complaints before obtaining counsel. Based on the confusing and unclear language in the complaints, the insurer denied coverage. It was not...Read More >>
April 11, 2017
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,...Read More >>
April 10, 2017
April 2017 Bad Faith Cases: NFIA Preempts State Law Bad Faith Claims (New Jersey Federal)
The Court granted summary judgment to the insurer on a breach of good faith and fair dealing claim for attorney’s fees and costs and expenses, because the National Flood Insurance Act preempts state contract law, including bad faith claims. Date of Decision: March 31, 2017 Caivano v. Allstate Ins. Co., No. 15-5791, 2017 U.S....Read More >>
April 5, 2017
April 2017 Bad Faith Cases: Facts Showing An Insurer Acted Recklessly Or Knowingly Are Required To Withstand a Motion For Judgement on the Pleadings (Philadelphia Federal)
This bad faith claim arises out of an insurer’s refusal to participate in an appraisal of the insured’s property damage claim. The insurer paid for some of the loss, but refused the insured’s request for appraisal. The insurer asserted that because the request was made a year after the loss, it was not required...Read More >>
March 31, 2017
March 2017 Bad Faith Cases: No Bad Faith Where No Coverage Due (New Jersey Appellate Division)
This case involved a denial of coverage on the basis that the insured failed to get his car physically inspected after purchase. The court affirmed a grant of summary judgment on the coverage claim, and on the bad faith claim. As to the bad faith claim, an “insured who alleges bad faith by the...Read More >>
March 30, 2017
MARCH 2017 BAD FAITH CASES: DELAYS IN APPRAISAL PROCESS COULD CONSTITUTE BAD FAITH (Philadelphia Federal)
This case involved a significant homeowner loss that was ultimately subject to the policy’s appraisal process. Facing a one-year suit limitation, the insureds filed breach of contract and bad faith claims. The court dismissed the breach of contract claim because the appraisal process was binding, absent fraud, misconduct, corruption or other irregularity tainting the...Read More >>
March 29, 2017
MARCH 2017 BAD FAITH CASES: COMPLAINT ADEQUATE WHERE INSURED PLEADED THAT INSURER MADE UNREASONABLE SETTLEMENT OFFER, IGNORED SETTLEMENT DEMANDS, AND FAILED TO EXPLAIN LOW SETTLEMENT OFFER (Middle District)
In this uninsured motorist case, the insured asserted bad faith and pleaded, among other things, that the insurer provided an unreasonable settlement offer instead of paying benefits when it should have paid them, ignored correspondence and settlement demands/offers, and refused to provide justification of how it calculated its settlement offer. The insurer moved to...Read More >>
March 28, 2017
MARCH 2017 BAD FAITH CASES: COURT WOULD NOT BIFURCATE BAD FAITH CLAIMS FROM THE COVERAGE ACTION (Philadelphia Federal)
The insurer sought to bifurcate the insured’s bad faith claim from its coverage claim. The crux of the insurer’s argument was that the bad faith claims were dependent on a finding of breach of contract and that it would impose unnecessary discovery burdens for claims that might be resolved through a finding of no...Read More >>
March 27, 2017
MARCH 2017 BAD FAITH CASES: COURT DENIES CARRIER SUMMARY JUDGMENT ON VOIDING POLICY FOR FRAUD, AND DENIES BOTH PARTIES’ MOTIONS ON BAD FAITH CLAIM BECAUSE NUMEROUS ISSUES REMAINED OPEN FOR FACT-FINDERS, INCLUDING LITIGATION CONDUCT CLAIMS (Western District)
The insured, as an administrator of the estate of his son, filed suit against the insurer. His son was injured by a drunk driver, and later died of an accidental heroin overdose. The father alleged that the injuries suffered in the accident led his son into a downward spiral, eventually resulting in the son’s...Read More >>
March 24, 2017
MARCH 2017 BAD FAITH CASES: BAD FAITH CLAIM SUFFICIENT WHERE PLAINTIFF PLEADED SEVERE INJURY AND DAMAGES IN EXCESS OF $300,000 POLICY LIMIT, AND, AT MOST, INSURER OFFERED $7,500 NEARLY FOUR YEARS AFTER THE ACCIDENT (Philadelphia Federal)
The insured pleaded that he was severely injured in an automobile hit and run. He had multiple surgeries and was still disabled and completely unemployed four years after the incident, at the time of the complaint. He sought the $300,000 uninsured motorist policy limit. The insurer alleged it made a $7,500 offer approximately four...Read More >>
March 23, 2017
MARCH 2017 BAD FAITH CASES: FINEMAN, KREKSTEIN & HARRIS OBTAINS SIGNIFICANT VICTORY FOR INSURER IN DEFEATING UIM BAD FAITH CLAIM AT TRIAL IN PHILADELPHIA’S COMMERCE COURT (Philadelphia Commerce Program)
In a bad faith case that actually went to trial, in Philadelphia’s Commerce Court, Fineman, Krekstein & Harris won a finding in favor of the insurer in a hard fought case, involving a myriad of bad faith issues. The court issued a 37 page Findings of Fact and Conclusions of Law, vindicating the positions...Read More >>
March 22, 2017
MARCH 2017 BAD FAITH CASES: BAD FAITH CLAIMS ARE PREDICATED ON A DENIAL OF BENEFITS (Western District)
This dispute arose after an insurer denied underinsured motorist coverage to its insured. The Insured later sued for breach of contract and for violations of Pennsylvania’s Bad Faith Statute, 42 Pa. C.S. § 8371. The Court dismissed the breach of contract claim and held that because there was no coverage under the policy, the...Read More >>
March 21, 2017
MARCH 2017 BAD FAITH CASES: SPLIT IN RELEVANT CASE LAW IS NOT AN ABSOLUTE DEFENSE TO A BAD FAITH INTERPRETATION OF POLICY LANGUAGE CLAIM, AS REASONABLENESS REMAINS THE MEASURE (Philadelphia Federal)
The interesting part of this case involved the court’s subtle distinction when lack of clarity in the relevant case law on how to interpret the insurance policy language at issue provides a bad faith defense. The specific issue was application of an intentional act exclusion to a violent assault fact pattern, where the insured claimed he...Read More >>
March 20, 2017
MARCH 2017 BAD FAITH CLAIMS: COURT LEFT OPEN POSSIBILITY OF BAD FAITH CLAIM ON THEORY THAT INSURER DID NOT FOLLOW THE “MAKE WHOLE” RULE BEFORE SEEKING SUBROGATION (Western District)
The insured’s claim for coverage had three aspects: (1) claims that were covered and paid; (2) claims that were not covered; and (3) disputed coverage claims as to which no payment was yet made. Despite the fact that the insured and insurer were trying to iron out the third category, the insurer made clear...Read More >>
March 17, 2017
MARCH 2017 BAD FAITH CASES: SUMMARY JUDGMENT GRANTED TO INSURER WHERE ITS CLAIMS HANDLING DECISIONS AND CONDUCT WERE REASONABLE (Middle District)
The court described the insured’s UIM bad faith claim as follows: “ bad-faith claim is predicated largely on his contention that conducted a dilatory and meandering investigation into his claim, despite having had sufficient information to evaluate the claim and make a coverage decision, which argues was obvious given the...Read More >>
March 16, 2017
MARCH 2017 BAD FAITH CASES: TYING PAYMENT TO RELEASE OF BAD FAITH CLAIMS IS ONLY BAD FAITH IF THAT REQUEST IS PART OF INSURER’S REGULAR PRACTICE; REFUSAL TO EXTEND ONE-YEAR SUIT PERIOD WAS NOT BAD FAITH (Philadelphia Federal)
The homeowner’s policy at issue provided a one-year period in which to bring suit. Some repair work was identified and paid, but the repairs needed on other sections of the home would go beyond the one-year period. The insured attempted to negotiate an extension or tolling of the one-year period, pending the repairs. As the...Read More >>
March 15, 2017
OCTOBER 2016 BAD FAITH CASES: BAD FAITH CLAIM ADEQUATELY PLEADED, HOWEVER, UIPA VIOLATIONS CANNOT STATE A BAD FAITH CLAIM (Middle District)
The always excellent Tort Talk Blog has summarized Judge Brann’s recent opinion on adequately pleading a bad faith claim, and his finding that statutory bad faith law cannot be used as a vehicle to recover for violations of the Unfair Insurance Practices Act. (Better late than never) Photo by M. M. GinsbergRead More >>
March 15, 2017
MARCH 2017 BAD FAITH CASES: STATUTORY BAD FAITH CLAIMS CANNOT BE BROUGHT AGAINST ADJUSTERS; ISSUING PAYMENT CHECK PER POLICY LANGUAGE CANNOT BE BAD FAITH (Pennsylvania Superior Court)
This case involved coverage for a fire loss on a property where a father and daughter were named insureds. Suit was brought solely by the daughter and her husband, with the father, the insurer, and the claim adjuster named as defendants. The insurer’s loss payment check was issued to both the father and daughter....Read More >>
March 14, 2017
MARCH 2017 BAD FAITH CASES: INSUREDS ALLOWED DISCOVERY OF UNDWRITING MANUAL AND FILES, BUT NOT PERSONNEL FILES (Western District)
This case involves cross actions for declaratory judgments on a lawyer’s professional liability policy, and bad faith claims by the attorneys against the carrier. The attorneys moved to compel production of the insurer’s underwriting manual and the underwriting files, as well as the personnel files of three employees identified as having worked on the...Read More >>
March 13, 2017
MARCH 2017 BAD FAITH CASES: WHERE POLICY EXCLUSION PROPERLY APPLIED, REASONABLE BASIS TO DENY CLAIM EXISTS PER SE (Third Circuit, Pennsylvania)
The Third Circuit upheld the district court’s grant of summary judgment to the insurer on breach of contract and bad faith claims. It found a maintenance exclusion applicable to the burst pipe claims at issue. The court rejected the insured’s attempt to strain the meaning of words in the policy to achieve coverage. As...Read More >>
March 12, 2017
MARCH 2017 BAD FAITH CASES: BAD FAITH LAW NOT APPLICABLE TO CONDUCT RELATING TO SALE OF AN INSURANCE POLICY (Philadelphia Federal)
In this case, the court observed the distinction between applicable legal theories addressing conduct before and after an insurance policy is issued. The court observed that pre-sale conduct, if actionable, is subject to Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, not its Bad Faith Statute. Date of Decision: March 7, 2017 Romero v....Read More >>
March 10, 2017
MARCH 2017 BAD FAITH CASES: A DIFFERENCE BETWEEN THE INSURER’S AND INSURED’S LOSS VALUATION CANNOT BE A BASIS PER SE TO ESTABLISH BAD FAITH (Western District)
This case involves a dispute over repair estimates. The insured’s estimate was over $100,000 greater than the insurer’s, and the insurer based its payment to the insured on its own estimate, less depreciation. The insured alleged a bad faith claim on the basis that the insurer’s estimate bearing “no reasonable relationship to actual...Read More >>
March 8, 2017
MARCH 2017 BAD FAITH CASES: AMENDED BAD FAITH CLAIM ADEQUATE TO MEET TWOMBLY/IQBAL ON KNOWING OR RECKLESS DISREGARD (New Jersey Federal)
The court previously allowed the insured to amend its inadequately pleaded bad faith claim, based on a refusal to defend and indemnify it for settlement of a trademark infringement action, which the insured litigated unsuccessfully at trial and had up on appeal at the time of settlement. Under New Jersey law, the bad faith...Read More >>
March 7, 2017
MARCH 2017 BAD FAITH CASES: IN INSURANCE CHOICE OF LAW ANALYSIS, LOCATION OF INSURED IS MOST IMPORTANT FACTOR (Western District)
This insurance bad faith case involved: (1) a physical loss in West Virginia; (2) an Illinois insurer; (3) an insured with its principal place of business in Pennsylvania and place of incorporation in Delaware; and (4) an insurance policy with a New Jersey choice of law provision. The issue before the Court was which...Read More >>
March 6, 2017
MARCH 2017 BAD FAITH CASES: WHERE NO DUTY TO COVER PUNITIVE DAMAGES, THERE CAN BE NO BAD FAITH IN REFUSING TO COVER PUNITIVE DAMAGES (Philadelphia Commerce Court)
In this case, the insured was subject to a wrongful death judgment of over $2,000,000 in compensatory type damages and $5,000,000 in punitive damages. The umbrella insurer had reserved its rights to disclaim coverage for punitive damages, and persisted in that position through settlement, where it refused to contribute toward the punitive damages judgment....Read More >>
March 1, 2017
MARCH 2017 BAD FAITH CASES: NO FIDUCIARY DUTY OWED IN UIM CONTEXT; BAD FAITH CLAIMS WERE NOT SUPPORTED BY SUFFICIENT FACTUAL ALLEGATIONS (Middle District)
In this uninsured motorist case, the court struck all references in the insured’s complaint concerning breach of fiduciary duty. “Under Pennsylvania law, an insurer owes a duty of good faith and fair dealing toward their insureds. It is well-established, however, that there is no fiduciary duty owed to an insured in the context of...Read More >>
February 28, 2017
FEBRUARY 2017 BAD FAITH CASES: INSURER BAD FAITH AT ISSUE IN EVALUATING SETTLEMENT PAYMENT; ADVICE OF COUNSEL NOT AT ISSUE UNLESS ASSERTED (Middle District)
An insurer sued its appointed defense counsel in connection with counsel’s defense of a UIM claim. The insurer claimed that counsel failed to assure that the UIM arbitration panel was instructed on the limits of insurance ($2 million), and that the carrier was subjected to the risk of having to pay an excess arbitration...Read More >>
February 26, 2017
FEBRUARY 2017 BAD FAITH CASES: COURT DENIES SUMMARY JUDGMENT ON BAD FAITH CLAIM AS TO CARRIER’S ALLEGED FAILURE TO PROVIDE WRITTEN EXPLANATION OF COVERAGE DECISION; GRANTS SUMMARY JUDGMENT AFTER FINDING NO BAD FAITH ON CARRIER’S REASONABLE INTERPRETATION OF AMBIGUOUS POLICY LANGUAGE (Western District)
Judge Conti granted in part and denied the insurer’s summary judgment motion on the insured’s bad faith allegations. The insured’s claims rested on two arguments: (1) the insurer failed to provide a written explanation of its coverage decision relative to a machine used to generate radiation to treat patients with cancer; and (2) the...Read More >>
February 9, 2017
FEBRUARY 2017 BAD FAITH CASES: COURT WOULD NOT REMAND DECLARATORY JUDGMENT ACTION WHERE JOINED WITH BAD FAITH CLAIM; BAD FAITH CLAIM ADEQUATELY PLEADED TO SURVIVE MOTION TO DISMISS (Western District)
The district court refused to remand a declaratory judgment coverage action, principally because there was also a bad faith claim in the case. The court did look at some of the other Reifer factors before rendering its conclusion. Having maintained jurisdiction, the court refused to dismiss the bad faith claim at the pleading stage....Read More >>
February 7, 2017
FEBRUARY 2017 BAD FAITH CASES: CONCLUSORY ALLEGATIONS NOT ENTITLED TO PRESUMPTION OF TRUTH, AND FEW FACTUAL ALLEGATIONS DID NOT REACH LEVEL OF BAD FAITH (Philadelphia Federal)
Plaintiffs failed to plead an adequate bad faith complaint under Twombly/Iqbal, but were given leave to amend. Among the averments that did not meet muster were allegations that the insurer falsely represented that the loss which was not covered, and that the insurer’s representative knew this representation was false, fraudulent and misleading and made...Read More >>
February 6, 2017
FEBRUARY 2017 BAD FAITH CASES: INSURER CAN UNILATERALLY RESCIND POLICY ON BASIS OF MATERIAL MISREPRESENTATION IN APPLICATION (Philadelphia Federal)
This case involved an alleged material misrepresentation in a health insurance policy application. The court found that the insurer did not have to seek rescission via bringing suit in court, but could “unilaterally rescind” the policy, and take the risk that the insured would bring future claims against the insurer for breach or bad...Read More >>
February 3, 2017
FEBRUARY 2017 BAD FAITH CASES: NO BAD FAITH WHERE INSURER DID NOT SECRETLY CONCEDE COVERAGE, NOR RELY UPON A CLEAR ERROR IN ITS DENIAL LETTER (New Jersey Federal)
The New Jersey federal court had to apply the “reasonably debatable” standard to the bad faith denial claim in this matter. The insured had two theories of bad faith liability. The first was that the insurer’s adjuster sent an internal email conceding coverage. However, what the email actually stated was that while the damage...Read More >>
February 2, 2017
FEBRUARY 2017 BAD FAITH CASES: INSURER NOT REQUIRED TO REIMBURSE PRIVATE DEFENSE COUNSEL (New Jersey Appellate Division)
A default was taken against the insured, who hired his own counsel to defend the matter, without notice to the insurer. The court found this a breach of the insured’s duty. However, once put on notice of the suit and default, the insurer took prompt action to vacate the default and settle the matter....Read More >>
February 2, 2017
FEBRUARY 2017 BAD FAITH CASES: COURT PROVIDES GOOD OVERVIEW OF LAW ON DISMISSING BOILERPLATE BAD FAITH ALLEGATIONS (Western District)
In this case, the insured bad faith plaintiff pleads conclusory language taken from case law and the Unfair Insurance Practices Act, all of which failed to meet the Twombly/Iqbal pleading standards. The opinion provides a list of other cases as reference points of such failed pleadings. That being said, dismissal of the bad faith...Read More >>
February 1, 2017
FEBRUARY 2017 BAD FAITH CASES: USE OF UMBRELLA TRADE NAME DOES NOT DEMONSTRATE BAD FAITH (New Jersey Federal)
The insureds move to remand this New Jersey federal action back to Superior Court. The insureds argued at one point that the insurer defendants, “anticipating a lawsuit, acted in bad faith, using the name ‘Chubb Insurance’ in correspondence to mislead them into naming a defendant that is not a legal entity.” The court stated...Read More >>
January 27, 2017
JANUARY 2017 BAD FAITH CASES: THERE CAN BE NO BAD FAITH WHERE THERE IS NO COVERAGE DUE (Western District)
The court found “’there can be no bad-faith claim if the insurer was correct as a matter of law in denying coverage.’” It relied on the oft-cited 1999 Third Circuit opinion in Frog, Switch & Mfg. Co. v . Travelers. As the court had earlier found there was no viable...Read More >>
January 25, 2017
JANUARY 2017 BAD FAITH CASES: JUDGE MUNLEY GRANTS SUMMARY JUDGMENT TO CARRIER ON BAD FAITH CLAIMS AS TO ISSUES OF MULITPLE ADJUSTERS AND MULTIPLE ESTIMATES DURING CLAIMS PROCESS (Middle District)
Judge Munley granted the insurer’s summary judgment motion on bad faith. The insured’s claims rested on two arguments: (1) the insurer “assigned an inordinate number of representatives to her claim.”; amd (2) the insurer “refused to timely pay the full value of her loss. Rather, provided multiple estimates and payments over a seven-month...Read More >>
January 21, 2017
2017 BAD FAITH CASES: THIRD CIRCUIT AFFIRMS NO DUTY RUNNING TO INSURED’S AVERSARY (Third Circuit, Pennsylvania)
The Third Circuit upheld the trial court’s dismissal of a bad faith claim. Among other things, it agreed that the plaintiff was not an insured, and the policy plainly set forth a duty to defend and indemnify the insured, not the insured’s adversary. The court observed: “he duty to negotiate a settlement in good...Read More >>
January 21, 2017
JANUARY 2017 BAD FAITH CASES: COURT REFUSED TO DISMISS BAD FAITH CLAIM AT PLEADING STAGE ON THE BASIS OF COVERAGE AND LATE NOTICE ARGUMENTS (Western District)
This case involved claims arising out of construction work. The carrier argued it was not required to defend or indemnify on late notice grounds, as well as a defense that coverage was not due under the policy language. The insured brought breach of contract and bad faith claims, and the carrier moved to dismiss....Read More >>
January 17, 2017
JANUAY 2017 BAD FAITH CASES: INSURER’S LITIGATION CONDUCT CAN ONLY PROVIDE BASIS FOR BAD FAITH CLAIM WHERE CONDUCT IS EXTRAORDINARY OR EGREGIOUS – WHICH DID NOT OCCUR IN THIS CASE (Western District).
The court predicted, and held, that evidence of litigation conduct is admissible as evidence of bad faith only “in the rare cases involving extraordinary facts.” The insured was injured in a motor vehicle accident. There were underinsured policy limits of $500,000, which the insured demanded. The carrier rejected the policy limits demand, and the...Read More >>
January 16, 2017
JANUARY 2017 BAD FAITH CASES: UNSUCCESSFUL, BUT REASONABLE, LEGAL ARGUMENT CANNOT BE THE BASIS FOR A BAD FAITH CLAIM (Western District)
The insureds won a legal argument as to whether they were entitled to stacking. The insureds later argued that the court should find bad faith against the insurer, on the basis of the insureds’ legal argument prevailing on coverage. The bad faith claim failed, however, because the carrier’s position was reasonable, even though unsuccessful. “The crux of...Read More >>
January 9, 2017
JANAURY 2017 BAD FAITH CASES: A “LOW-BALL” OFFER TO SETTLE, WITHOUT MORE, IS INSUFFICIENT TO SHOW BAD FAITH (Philadelphia Federal)
This first-party Uninsured/Underinsured Motorist Coverage claim involved allegations that the insurer acted in bad faith by making a “low-ball” offer to settle the insured’s personal injury claims. The case arose out of a car accident where the insured was rear ended in a hit and run and incurred medical bills totaling $8,232.00. The Insurer...Read More >>
January 6, 2017
JANUARY 2017 BAD FAITH CASES: NO BAD FAITH ON RECORD SHOWING REASONABLE INVESTIGATION AND CLAIMS HANDLING; AND COURT OBSERVES THAT WHERE PARTY DOES NOT IDENTIFY AND PROVIDE SUPPORTING FACTS, JUDGES ARE NOT LIKE PIGS, HUNTING FOR TRUFFLES BURIED IN THE RECORD (Middle District)
The court granted summary judgment to the insurer in this bad faith case arising out of a fire at the insureds’ home. While the insurer provided a detailed factual recount from the record to makes its case, the court stated that the insureds “relied upon bare allegations and narrative argument that does little more...Read More >>
December 29, 2016
DECEMBER 2016 BAD FAITH CASES: ANOTHER EXAMPLE OF ERISA PRE-EMPTION (Philadelphia Federal)
Once more, a court found that ERISA pre-empted statutory bad faith claims. Date of Decision:  November 17, 2016 Erica A. Shore, P.C. v. Independence Blue Cross, No. 16-5224, 2016 U.S. Dist. LEXIS 160022 (E.D. Pa. Nov. 17, 2016) (McHugh, J.)    Read More >>
December 24, 2016
DECEMBER 2016 BAD FAITH CASES: COURT EXPLAINS BASIS FOR ERISA PRE-EMPTION (Philadelphia Federal)
The Court went over the Third Circuit’s case law history to explain why ERISA pre-empts section 8371 bad faith claims. Date of Decision: August 1, 2016 Haase v. Metro. Life Ins. Co., No. 15-2864, 2016 U.S. Dist. LEXIS 100113 (E.D. Pa. Aug. 1, 2016) (Robreno, J.)  Read More >>
December 23, 2016
DECEMBER 2016 BAD FAITH CASES: INSURER DID NOT ACT IN BAD FAITH BY SETTLING CLAIMS AGAINST INSURED, WHERE POLICY GAVE INSURER POWER TO SETTLE (Pennsylvania Superior Court) (Not Precedential)
The appellate court affirmed a decision that an insurer could not have acted in bad faith when settling claims against the insured, because the insurer had the authority to settle by the clear terms of the insurance policy. Date of Decision: November 17, 2016 Fandray v. Baum, No. 199 WDA 2016, 200 WDA 2016,...Read More >>
December 22, 2016
DECEMBER 2016 BAD FAITH CASES: COURT REFUSES TO BIFURCATE UIM CONTRACT AND BAD FAITH CLAIMS, OR STAY BAD FAITH DISCOVERY WHERE INSURED RESISTED THE STAY AND WAS WILLING TO RISK POTENTIAL PREJUDICE TO THE INSURED HIMSELF DURING CONSOLIDATED DISCOVERY (Philadelphia Federal)
The insurer sought to bifurcate the breach of contract and bad faith claims in this UIM case, and a stay of discovery on the bad faith claim. In its second bad faith opinion of the day, the court denied the motion as the factors concerning convenience to the parties, avoidance of prejudice, or efficiency...Read More >>
December 22, 2016
DECEMBER 2016 BAD FAITH CASES: COMPENSATORY DAMAGES ONLY RECOVERABLE FOR CONTRACTUAL BAD FAITH, NOT FOR STATUTORY BAD FAITH (Philadelphia Federal)
In this case, the insured improperly sought compensatory and consequential damages as part of his section 8371 claim. Such damages cannot be recovered under section 8371, but may be available for breach of the common law contractual duty of good faith and fair dealing. Thus, while striking the statutory claim for compensatory damages, the...Read More >>
December 21, 2016
DECEMBER 2016 BAD FAITH CASES: REVERSE BAD FAITH RELIEF AND STATUTORY INSURANCE FRAUD GRANTED ON SUMMARY JUDGMENT (Philadelphia Federal)
In this case, the record was uncontroverted that the insured stated in the application to his homeowner’s carrier that he did not use alternative heat sources. However, he later admitted to using kerosene heaters. The house burned down, and he made claims for coverage, which were denied. He brought suit for breach of contract....Read More >>
December 20, 2016
DECEMBER 2016 BAD FAITH CASES: NO BAD FAITH WHERE EVIDENCE FAILED TO SHOW LACK OF REASONABLE EVALUATION OR INVESTIGATION; NO PRIVATE ACTION UNDER UNFAIR CLAIMS SETTLEMENT PRACTICES ACT (New Jersey Federal)
In this Superstorm Sandy property damage case, the insured alleged bad faith, among other claims. The court found the insured could not overcome the “fairly debatable” standard, and make a case for an unreasonable denial that was reckless or intentional in nature. The insured only provided invoices, an itemized bill for the repair work...Read More >>
December 19, 2016
DECEMBER 2016 BAD FAITH CASES: ERISA PRE-EMPTS BAD FAITH CLAIMS INVOLVING BREACH OF ALLEGED SETTLEMENT AGREEMENT, REACHED TO RESOLVE PRIOR INSURANCE DISPUTE OVER PAYMENTS UNDER ERISA HEALTH PLAN (Philadelphia Federal)
In this ERISA health plan case, the insurer had offered to freeze premiums for a substantial period of time to settle an earlier dispute over payments under the plan; but then allegedly reneged. The insured brought suit under various state law theories, including bad faith. The action was removed to federal court and a...Read More >>
December 16, 2016
DECEMBER 2016 BAD FAITH CASES: VIOLATION OF UNFAIR CLAIMS SETTLEMENT PRACTICES REGULATIONS ALONE CANNOT FORM THE BASIS OF A BAD FAITH CLAIM (Philadelphia Federal)
In this homeowners’ case, the insured alleged breach of contract and bad faith. On the contract claim, the court focused on the contractual limitations period for bringing suit. The insured argued, among other things, that the insurer had a duty under the Unfair Claims Settlement Practices Regulations (UCSPR) to give notice of the suit...Read More >>
December 15, 2016
DECEMBER 2016 BAD FAITH CASES: CONTRACTUAL CHOICE OF VENUE PROVISION DOES NOT APPLY TO BAD FAITH CLAIMS (Superior Court of Pennsylvania) (Not Precedential)
In a 2 to 1 unpublished decision, the Superior Court ruled that a choice of venue provision did not apply to the insured’s bad faith claims. This was a UIM case. The majority found that bad faith claims are distinct from breach of contract/UIM claims, and therefore the insurance contract’s venue provisions did not...Read More >>
December 14, 2016
DECEMBER 2016 BAD FAITH CASES: NO BASIS TO GRANT RECONSIDERATION ON DISMISSAL OF INSURER’S BAD FAITH CLAIM (Middle District)
The insured’s son sustained injuries after being involved in an accident with an uninsured driver. He was driving a motor vehicle covered under the insured’s policy. The insured put the insurer on notice and advised that her son was injured in the accident, and made several claims including those for UM and First Party...Read More >>
November 22, 2016
NOVEMBER 2016 BAD FAITH CASES: NO BAD FAITH WHERE HIGHER UM/UIM LIMITS ALLEGEDLY NOT EXPRESSLY OFFERED AT THE TIME LIABILITY LIMITS WERE INCREASED (Third Circuit, New Jersey)
The insured alleged a breached the implied covenant of good faith and fair dealing in this UM/UIM context. There were 4 putative bases pleaded, all of which the Third Circuit rejected in affirming dismissal of this claim: failure to offer the insureds the option of higher available UM/UIM coverage limits when the insureds increased...Read More >>
November 16, 2016
NOVEMBER 2016 BAD FAITH CASES: MISREPRESENTATION ALONE CANNOT VOID POLICY WITHOUT PROOF OF INTENT AND MATERIALITY; ISSUE OF INSURER BAD FAITH IN CLAIMS HANDLING WAS FOR JURY (Philadelphia Federal)
This case involved accusations of bad faith running in both directions. The insurer sought to void numerous life insurance policies on the deceased insured, based on claims that the insured made material misrepresentations in his insurance applications (he had multiple life insurance policies). The insured’s estate brought claims of bad faith based on the...Read More >>
November 14, 2016
NOVEMBER 2016 BAD FAITH CASES: NO BAD FAITH FOR FILING DECLARATORY JUDGMENT ACTION; AND WHERE RECORD SHOWS GENUINE INVESTIGATION AND NOT PUTATIVE PREDISPOSITION TOWARD DENIAL (Third Circuit, Pennsylvania) (Not precedential)
This non-precedential Third Circuit opinion affirmed the trial court’s opinion granting summary judgment to the insurer on a statutory bad faith claim. (We will not repeat the facts, but instead link to our previous summary of the trial court opinion). In reciting the elements of bad faith, among other things, the appellate panel stated...Read More >>
November 11, 2016
ON VETERANS DAY, WITH GREAT RESPECT AND GRATITUDE TO ALL WHO HAVE SERVED OUR NATION HONORABLY
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November 11, 2016
NOVEMBER 2016 BAD FAITH CASES: BAD FAITH CLAIM TIME BARRED WHERE SUIT BROUGHT 4 YEARS AFTER INSURER CLEARLY PROVIDED AN END DATE TO MEDICAL BENEFITS (Middle District)
This first party injury case involved an insurer’s demanding independent medical examinations of the insured. The court found that the Motor Vehicle Financial Responsibility Law controlled, and that the insurer had to petition and show good cause for an IME. The insurance policies allowed for unlimited medical examinations, so long as they are reasonably...Read More >>
November 10, 2016
NOVEMBER 2016 BAD FAITH CASES: ALLOWING REINSURER TO IMPROPERLY HANDLE CLAIM EXPOSES INSURER TO BAD FAITH CLAIMS; REINSURER CANNOT BRING DIRECT CLAIMS AGAINST INSURED FOR REVERSE BAD FAITH OR INSURANCE FRAUD (Western District)
This factually complicated case involved reverse bad faith and 18 Pa.C.S. § 4117 insurance fraud claims by an insurer and reinsurer, and bad faith claims by the insured against its insurer. The court first ruled that a reinsurer could not void an insurance policy to which it was not a party, since it had...Read More >>
November 9, 2016
NOVEMBER 2016 BAD FAITH CASES: CLAIMS HANDLING CONDUCT IS SUBJECT OF BAD FAITH STATUTE, NOT CONSUMER PROTECTION LAW (Philadelphia Federal)
This federal district court was faced with virtually identical claims for the same conduct, one alleging violation of Pennsylvania’s Bad Faith Statute, and the other a violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL). Following Pennsylvania Supreme Court precedent, the court concluded that the bad faith statute was aimed at claims...Read More >>
November 8, 2016
NOVEMBER 2016 BAD FAITH CASES: STATUTORY BAD FAITH CLAIM CONSIDERED IN DETERMINING WHETHER DIVERSITY MINIMUM JURISDICTIONAL SUM MET (Philadelphia Federal)
The court deemed the $75,000 jurisdictional amount met, even though the insured was only seeking to collect a $28,000 judgment on the contract claim, because the insured also asserted a statutory bad faith claim. Date of Decision: September 28, 2016 Duncan v. Omni Insurance Company, CIVIL ACTION NO. 16-1489, 2016 U.S. Dist. LEXIS 133134...Read More >>
November 7, 2016
NOVEMBER 2016 BAD FAITH CASES: COURT WOULD NOT REMAND, EVEN WHERE ACTION WAS STARTED AS COMMON PLEAS ARBITRATION, WHERE COMPLAINT MADE CLEAR CLAIM COULD BE OVER $136,000 AND PUNITIVE DAMAGES WERE LEGITIMATELY CONSIDERED (Philadelphia Federal)
This bad faith and breach of contract case was removed to federal court by the insurer, and the insured sought remand. The case was originally filed as an arbitration matter in the Court of Common Pleas of Philadelphia, i.e., it was filed with the representation that the matter was worth less than $50,000. Moreover,...Read More >>
November 4, 2016
NOVEMBER 2016 BAD FAITH CASES: BAD FAITH STATUTE ONLY APPLIES TO INSURERS, NOT INSURANCE ADJUSTERS (Philadelphia Federal)
The court reiterated that Pennsylvania’s Bad Faith Statute only applies to insurance companies. Thus, insurance adjusters are not subject to the statute. Date of Decision: September 9, 2016 Corley v. National Indemnity Company, No. 2:16-cv-00584-MMB , 2016 U.S. Dist. LEXIS 122911 (E.D. Pa. Sept. 9, 2016) (Baylson, J.) Photo by M. M. GinsbergRead More >>
November 3, 2016
NOVEMBER 2016 BAD FAITH CASES: BAD FAITH IMPOSSIBLE WHERE INSURER COMPLIED WITH ALL COVERAGE TERMS (Pennsylvania Superior Court) (Not Precedential)
In a short unpublished opinion, the Superior Court affirmed a trial court’s finding of no bad faith. The dispute centered around replacement value vs. actual cash value, policy language capping damages, and policy exclusions. Both the trial and appellate courts found the policy unambiguous, that coverage was for actual cash value, and that other...Read More >>
November 2, 2016
NOVEMBER 2016 BAD FAITH CASES: FOR CHOICE OF LAW PURPOSES IN BAD FAITH CASE, PLACE OF LOSS IS INSURED’S BUSINESS LOCATION; INSURER’S TREATING SIMILAR CLAIMS DIFFERENTLY IS NOT A PER SE BASIS TO SHOW BAD FAITH (Middle District)
The insured failed to allege a plausible bad faith claim in this case. The insurer had defended the insured under a reservation of rights in two state actions. The insurer brought suit for declaratory relief in Pennsylvania on those two claims, seeking a ruling that it had no duty to defend or indemnify. It...Read More >>
November 1, 2016
NOVEMBER 2016 BAD FAITH CASES: COURT FINDS THAT (1) LOSSES QUALIFIED AS ACCIDENTAL OCCURRENCES AND WERE SUBJECT TO COVERAGE; AND (2) INSURED DID NOT ACT IN BAD FAITH IN SETTLING CLAIMS WITH CUSTOMERS WITHOUT INSURER’S CONSENT (New Jersey Superior Court Appellate Division)
The insured made animal health products, and filed a complaint seeking a declaratory judgment that its insurer was required to provide coverage for economic losses suffered by three of the insured’s customers. The customers raised chickens for human consumption, and alleged that the growth of the chickens were stunted due to the chickens ingesting...Read More >>
October 19, 2016
OCTOBER 2016 BAD FAITH CASES: BAD FAITH CLAIM SURVIVES WHERE BREACH OF CONTRACT CLAIM SURVIVES ON TITLE INSURANCE CLAIM (New Jersey Federal)
In this case, the court conducted a painstaking analysis at the motion to dismiss stage, on whether an exception to title insurance applied in connection with a defect in title. The court found that the claim was covered as pleaded, and thus allowed both a breach of contract and bad faith claim to proceed,...Read More >>
October 2, 2016
OCTOBER 2016 BAD FAITH CASES: COURT APPLIES PENNSYLVANIA SUPREME COURT DECISION IN TOY TO LIMIT SCOPE OF STATUTORY BAD FAITH CLAIMS, WHILE STILL FINDING A CLAIM HAD BEEN STATED (Middle District)
This is one of the seemingly rare cases since 2007 recognizing that the Pennsylvania Supreme Court’s decision in Toy V. Metropolitan Life exists and is controlling case law. This will be discussed in more detail below. In this case, the insured alleged he purchased a death and dismemberment policy that required no medical questions...Read More >>
October 2, 2016
OCTOBER 2016 BAD FAITH CASES: DISTRICT COURT UPHOLDS REPORT AND RECOMMENDATION ON FAILURE TO ADEQUATELY PLEAD BAD FAITH (Middle District)
In this case, the District Judge agreed with the Magistrate’s Report and Recommendation that the Complaint should be dismissed without prejudice because it “consists of little more than a paraphrase of the statute, coupled with a factual assertion that the defendant has breached the insurance policy in ways which are undefined, but allegedly willful...Read More >>
September 4, 2016
SEPTEMBER 2016 BAD FAITH CASES: MERE MISTAKES ARE NOT BAD FAITH (New Jersey Federal)
The federal district court observed that mere mistakes cannot be the basis for bad faith claims under New Jersey law. Opposing the insurer’s summary judgment motion, the insureds asserted 4 bases for bad faith. Of the four grounds asserted for bad faith, two were unsupported and on the other two, the plaintiffs themselves conceded...Read More >>
September 3, 2016
SEPTEMBER 2016 BAD FAITH CASES: SUPREME COURT TO RULE ON ELEMENTS OF STATUTORY BAD FAITH CLAIMS
The Pennsylvania Supreme Court had granted an appeal on the following issue: AND NOW, this 30th day of August, 2016, the Petition for Allowance of Appeal is GRANTED, LIMITED TO the issue set forth below. Allocatur is DENIED as to all remaining issues. The issue, as stated by petitioner, is: Whether this Court should...Read More >>
August 24, 2016
AUGUST 2016 BAD FAITH CASES: INSURER MUST ALWAYS SHOW INTENT IN VOIDING A POLICY BASED ON MATERIALLY FALSE STATEMENTS (Middle District)
The insurer brought a declaratory judgment claiming that there was no policy coverage under a fraud and concealment exclusion, based on an inaccurate statement made at an examination under oath. The insurer asserted that the exclusion applied irrespective of the insured’s state of mind in making a false statement, i.e., false statement = no...Read More >>
August 20, 2016
AUGUST 2016 BAD FAITH CASES: PLAINTIFF GIVEN CHANCE TO AMEND BAD FAITH CLAIM, IF COUNSEL CAN DO SO WHILE MEETING RULE 11 STANDARDS (New Jersey Federal)
In Product Source International, LLC v. Foremost Signature Insurance Co., the insured sought defense and indemnification for personal and advertising injury from a trademark infringement suit, and brought a bad faith claim. The insurer moved to dismiss. The court refused to dismiss the insured’s coverage claims, but did dismiss the bad faith claim without...Read More >>
August 16, 2016
AUGUST 2016 BAD FAITH CASES: INSUREDS’ ATTORNEY WHO CARRIED OUT CLAIM NEGOTIATION WITH CARRIER WAS A CENTRAL FACT WITNESS, AND WAS DISQUALIFIED BY THE COURT, AFTER THE COURT RAISED THE ISSUE SUA SPONTE (Philadelphia Federal)
In this UIM bad faith case, the insured’s counsel was also the sole person who communicated with the claims adjuster in attempting to negotiate the UIM claim. The parties were over $1,000,000 apart in settlement negotiations, and the insureds subsequently brought a breach of contract and bad faith action. The same counsel who negotiated...Read More >>
July 30, 2016
JULY 2016 BAD FAITH CASES: NO BAD FAITH BECAUSE OF EXCLUSION ON SOME CLAIMS, AND NO FACTS OF BAD CLAIMS HANDLING ON OTHERS (Middle District)
Myerski v. First Acceptance Ins. Co., involved the most common form of bad faith litigation, UM/UIM claims, as well as other claims. There was an issue in the case about whether the injured driver was excluded under his mother’s policy because he lived in the same house and/or used her car frequently. The record...Read More >>
July 25, 2016
JULY 2016 BAD FAITH CASES: A LOW BUT REASONABLE LOSS ESTIMATE CANNOT BE BAD FAITH (Western District)
In Gowton v. State Farm Fire & Casualty Company the insured’s sole allegation of bad faith was a conclusory averment that a refusal to pay in the amounts alleged due was bad faith. The complaint also averred at one point that the insurer relied on loss calculations that were unsupportable, without any explanation of...Read More >>
July 7, 2016
JULY 2016 BAD FAITH CASES: BAD FAITH CLAIM AGAINST INSURER CONCERNING CRIMINAL CLAIMS AGAINST INSURED FOR HAVING MADE AN INSURANCE CLAIM IS NOT TOLLED UNTIL VINDICATION UNLESS INSURER INSTIGATED CRIMINAL PROCEEDING (Superior Court of Pennsylvania) (not precedential)
In Fieldhouse v. Metropolitan Property and Casualty Insurance Company, the court provides an overview on when tolling applies to the bad faith statute of limitations where the issue involves criminal charges against an insured for a false insurance claim. The court points out that tolling applies if the insurer instigates the criminal proceeding, until the...Read More >>
July 5, 2016
JULY 2016 BAD FAITH CASES: REASONABLE INVESTIGATION ELIMINATES BASIS FOR BAD FAITH CLAIM, AS INSURED COULD NOT SHOW BY CLEAR AND CONVINCING EVIDENCE THAT INSURER HAD “NO GOOD REASON” TO DENY COVERAGE (Philadelphia Federal)
Dougherty v. Allstate Property & Casualty Company involved a claim for water damage from burst pipes. The insurer took the position that the insured failed to properly maintain his furnace, leading to freezing and the burst pipes. The insurer asserted a frozen pipe exclusion and a maintenance failure exclusion. The insured brought breach of...Read More >>
July 3, 2016
JULY 2016 BAD FAITH CASES: COURT RETAINED JURISDICTION OVER INSURER’S DECLARATORY JUDGMENT ACTION, REFUSING TO ABSTAIN UNDER SUMMY/REIFER (Western District)
In Westport Insurance Corp. v. Hippo, the insured defendant was subject to a professional malpractice action in state court. The insurer brought a declaratory judgment action in federal court, seeking a ruling of no duty to defend or indemnify the state court action. The insured then brought its own declaratory judgment and bad faith...Read More >>
July 2, 2016
JULY 2016 BAD FAITH CASES: NO BAD FAITH ON BASIS OF: (1) LACK OF COMMUNICATION OR INVESTIATION, (2) DIFFERENCE OF OPINION IN CALCULATING LOSS OR (3) PUTATIVE FAILURE TO ASSIGN LARGE LOSS ADJUSTER (Philadelphia Federal)
Whalen v. State Farm Fire & Casualty Co. involved a first party homeowners’ bad faith claim. The court dismissed that claim on summary judgment. The case involved a significant water damage loss due to a failed line going to an upstairs sink which went undetected for a substantial period while the insured was on...Read More >>
July 1, 2016
JULY 2016 BAD FAITH CASES: EVEN A PITHY COMPLAINT CAN STATE A PLAUSIBLE CLAIM WHERE INSURER ALLEGEDLY MADE NO OFFER IN RESPONSE TO ALLEGEDLY COVERED LOSSES (Middle District)
Turner v. State Farm Fire & Casualty Company was a first party fire loss case. The insurer moved to dismiss a bad faith count under Twombly/Iqbal, which the court denied. The court found the complaint, which was neither lengthy nor highly detailed, was still adequately pleaded. The insureds alleged the property was insured for...Read More >>
June 29, 2016
JUNE 2016 BAD FAITH CASES: COURT REFUSES TO DISMISS INSURER’S CLAIM FOR EQUITABLE RESCISSION OF POLICY; EQUITABLE RESCISSION ACTION DOES NOT REQUIRE PRIOR RETURN OF PREMIUMS (Philadelphia Federal)
In Aspen Specialty Insurance Company v. Hospitality Supportive Systems, LLC, an insurer sought equitable rescission of its policy. The insured moved to dismiss the rescission claims or for a move specific pleading of fraud under Rule 9. The motion was denied. The court observed the applicable standard: “an insurer must demonstrate that (1) the...Read More >>
June 28, 2016
JUNE 2016 BAD FAITH CASES: FAILURE TO ACCEDE TO SETTLEMENT DEMAND ALONE NOT BAD FAITH; ALLEGATION OF FAILURE TO REVIEW MEDICAL RECORDS DISMISSED AS CONCLUSORY (Philadelphia Federal)
In Camp v. New Jersey Manufacturers Insurance Company, the insurer refused to pay anything beyond the tortfeasor’s settlement of this UIM claim. The court dismissed the original bad faith claim for pleading only conclusory allegations, with leave to amend. The amended complaint added some detail, as set forth below, but the court still found...Read More >>
June 21, 2016
JUNE 2016 BAD FAITH CASES: COMMUNICATIONS BETWEEN IN-HOUSE COUNSEL OF (1) TPA AND (2) AUHTORIZED CLAIM REPRESENTATIVE WITH INSURER USING THEIR SERVICES IS PRIVILEGED (Middle District)
In Heller’s Gas v. International Insurance Company of Hannover, a breach of contract and bad faith case, the insured claimed that documents withheld or redacted did not fall within the attorney-client privilege, the work product doctrine, or reserve information. The insured argued that all but one document was either sent to or from employees...Read More >>
June 21, 2016
JUNE 2016 BAD FAITH CASES: UIM BAD FAITH CLAIM INADEQUATELY PLEADED AND DISMISSED WITH PREJUDICE (Philadelphia Federal)
In Kiss v. State Farm Insurance Company, the District addressed a UIM bad faith claim. The court found the pleadings inadequate under Twombly/Iqbal, and stated as follows: “In essence, plaintiff’s factual averments are that (1) plaintiffs are insured by defendant for underinsured motorist coverage; (2) the husband plaintiff was involved in a motor vehicle...Read More >>
June 19, 2016
JUNE 2016 BAD FAITH CASES: COURT RECOMMENDS ALLOWING INSURED TO REPLEAD ITS BAD FAITH CLAIM FOR UNREASONABLE POLICY INTERPRETATION, WHICH INTERPRETATION WAS LATER ABANDONED BY INSURER (Middle District)
In Long v. New Jersey Manufacturers Insurance Company, the insured brought a bad faith claim based upon the insurer’s allegedly unreasonable interpretation of the policy. The insurer did originally take the position complained of, limiting coverage to $100,000, but eventually dropped that position and came to agreement with the insured on there being greater...Read More >>
June 18, 2016
JUNE 2016 BAD FAITH CASES: REMOVAL TO FEDERAL COURT NOT BAD FAITH (Pennsylvania Superior Court – Not Precedential)
In Racioppi v. Progressive Insurance Company, the court rejected an argument the carrier’s initial removal to federal court constituted bad faith insurance conduct. The matter was remanded once the parties realized there was not complete diversity. The court observed this was a litigation tactic, not related to insurance coverage. Date of Decision: May 11,...Read More >>
June 16, 2016
BAD FAITH BLOG’S 10TH ANNIVERSARY
It has been 10 years since we began the Bad Faith Blog, which now includes over 1,200 posts.  Bad faith litigation has remained a constant in state and federal courts over that time, and is a regular part of the litigation landscape.  There have been bad faith claims that did not survive motion practice, and...Read More >>
June 12, 2016
JUNE 2016 BAD FAITH CASES: ALLEGED DISCOVERY VIOLATIONS CANNOT FORM BASIS OF BAD FAITH CLAIM (Third Circuit)
In Duda v. Standard Insurance Company, the Third Circuit reiterated the longstanding rule that statutory bad faith claims cannot be based on alleged discovery violations in the bad faith litigation. Date of Decision: May 10, 2016 Duda v. Std. Ins. Co., 2016 U.S. App. LEXIS 8602 (3d Cir. Pa. May 10, 2016) (McKee, Jordan,...Read More >>
June 6, 2016
JUNE 2015 BAD FAITH CASES: INSURED’S COMPLAINT LACKS SPECIFICITY AND IS DISMISSED WITHOUT PREJUDICE SUBJECT TO DISCOVERY BEING TAKEN (Philadelphia Federal)
In Canizares v. Hartford Insurance Company, the insured brought breach of contract and bad faith claims. The bad faith claim was dismissed without prejudice, as it failed to meet the Twombly/Iqbal standards of pleading a plausible claim, rather than simply asserting legal conclusions. The court observed that the insured’s “rudimentary allegations” all contained legal...Read More >>
May 20, 2016
MAY 2016 BAD FAITH CASES: COURT ADDRESSES BIFURCATION OF BAD FAITH CLAIM AND WIDE RANGE OF DISCOVERY ISSUES (Middle District)
In Morris v. USAA Casualty Insurance Company, a UIM case, the Court provided a compact opinion addressing a wide range of discovery issues, and a motion to bifurcate the breach of contract and bad faith claims.  The issues relating to the bad faith claim are summarized as follows: The motion to bifurcate was denied....Read More >>
May 18, 2016
MAY 2016 BAD FAITH CASES: NO BAD FAITH WHERE ALLEGATIONS IN COMPLAINT FALL OUTSIDE SCOPE OF COVERAGE; FAULTY WORK IS NOT AN OCCURRENCE (Philadelphia Federal)
In Lenick Construction, Inc. v. Selective Way Insurance Company, the insured brought breach of contract and bad faith claims against the insurer in connection with an underlying suit involving material construction defects and breaches of warranty. The insured, working as a subcontractor in the construction of a condominium project, was sued by the condominium...Read More >>
May 17, 2016
MAY 2016 BAD FAITH CASES: AN INSURER’S CORRECT INTERPRETATION OF AN INSURANCE POLICY IS A VALID DEFENSE AGAINST BAD FAITH
In Darwin National Assurance Company v. Luzerne County Transportation Authority, the Court held that an insurer who correctly denied benefits under an insurance policy did not act in bad faith. The insured was the former operations manager of the Luzerne County Transportation Authority and had been criminally charged with conspiring to defraud the PA...Read More >>
May 10, 2016
1200th POST —- MAY 2016 BAD FAITH CASES: PARTY INJURED BY INSURED HAS NO STANDING TO BRING BAD FAITH CLAIM AGAINST INSURER BASED ON ALLEGATIONS OF FAILURE TO SETTLE IN GOOD FAITH (Philadelphia Federal)
This is our 1200th post summarizing individual bad faith cases since beginning this blog 9 years and 11 months ago. The ongoing presence of bad faith litigation represented by just these available opinions reflects the persistence of bad faith claims as a regular presence in insurance coverage litigation. In Leboon v. Zurich American Insurance Company, the court stated that: “he duty...Read More >>
May 9, 2016
MAY 2016 BAD FAITH CASES: COURT FINDS FACTUAL ALLEGATIONS IN COMPLAINT CONCERNING NATURE OF BREACH OF CONTRACT MUST BE READ ALONG WITH OTHERWISE CONCLUSORY LEGAL ALLEGATIONS OF BAD FAITH IN RULING ON MOTION TO DISMISS (Middle District)
In Linko v. Nationwide Property & Casualty Insurance, the insured alleged he made monthly insurance payments towards insurance on a particular truck, and that he had insurance on the truck with the insurer.  The insurer denied this, stating it had no record of his purchasing insurance.  The insurer refused coverage when the truck was...Read More >>
May 8, 2016
MAY 2016 BAD FAITH CASES: NO PRIVATE RIGHT OF ACTION UNDER NEW JERSEY’S INSURANCE TRADE PRACTICES ACT OR UNFAIR CLAIMS SETTLEMENT PRACTICE ACT (New Jersey Federal)
In GEICO v. Korn, the court addressed what it called a muddled claim that appeared to be for bad faith.  The claim referenced both New Jersey’s Insurance Trade Practices Act and Unfair Claims Settlement Practices Act, neither of which allow for a private cause of action. The insured also pleaded that the insured had...Read More >>
April 26, 2016
APRIL 2016 BAD FAITH CASES: ERISA PRE-EMPTS STATUTORY BAD FAITH CLAIM WHERE INSURANCE AT ISSUE WAS AN ERISA PLAN (Philadelphia Federal)
In Van Arsdel v. Liberty Life Assurance Company of Boston, the court found that ERISA pre-empted the plaintiff’s state law bad faith claims, whether brought under Pennsylvania or Georgia law. The bad faith claim was related to the alleged denial of benefits under the disability policy at issue, which was an ERISA plan. The...Read More >>
April 22, 2016
APRIL 2016 BAD FAITH CASES: PLAINTIFF WAS NOT AN INSURED UNDER THE POLICY AND SO COULD NOT BRING A BAD FAITH CLAIM (Philadelphia Federal)
In International Management Consultants, Inc. v. Continental Casualty Insurance Company, the plaintiff was a general contractor doing work for a school district.  As part of the agreement between the contractor and the school district, the school district was required to purchase Builders Risk Insurance.  When the contractor suffered increased costs from the work of...Read More >>
April 19, 2016
APRIL 2016 BAD FAITH CASES: AN INSURER’S DELAY IN ISSUING A COVERAGE DECISION IS NOT, ON ITS OWN, SUFFICIENT TO SUPPORT A BAD FAITH CLAIM (New Jersey Federal)
In Puzzo v. Metropolitan life Insurance Co., the Court held that an insured could not amend his declaratory judgment complaint to include allegations of bad faith where he failed to allege he was entitled to coverage as a matter of law. The insured suffered serious brain injuries as a result of a car collision....Read More >>
April 6, 2016
APRIL 2016 BAD FAITH CASES: INSURED MET FEDERAL PLEADING STANDARDS IN ALLEGING BAD FAITH DELAY IN CLAIMS HANDLING, AND CONSIDERED VIOLATIONS OF STATE REGULATIONS AS WELL IN DECLINING MOTION TO DISMISS (Middle District, Magistrate’s Report and Recommendation)
In Ridolfi v. State Farm Mutual Automobile Insurance Company, the insured brought breach of contract and bad faith claims against its own insurer in connection with an automobile accident.  The insured pleaded that she had been trying to resolve the case with her insurer for over two and one half years.  She alleged that...Read More >>
April 5, 2016
APRIL 2016 BAD FAITH CASES: ESTATE CAN BRING BREACH OF FIDUCIARY DUTY, BREACH OF GOOD FAITH AND FAIR DEALING, AND STATUTORY BAD FAITH CLAIMS AGAINST INSURER FOR GIVING BAD ADVICE TO INSURED CONCERNING STATUS OF BENEFICIARY (Western District)
In MONY Life Insurance Company v. Snyder, there was a dispute over whether life insurance proceeds were to be paid to an ex-spouse or current spouse.  The insurer brought an interpleader action and paid the money into court, saying it had no stake in the outcome, while recognizing payment was due.  The current spouse,...Read More >>
April 5, 2016
APRIL 2016 BAD FAITH CASES: (1) PLAUSIBLE BAD FAITH CLAIM PLEADED BASED ON INSURER’S IME RESULTS, BUT (2) BAD FAITH CLAIM IS SEVERED AND STAYED (New Jersey Federal)
In Abiona v. Geico Indemnity Company, the insurer sought to dismiss the underinsured motorist bad faith claim, and if not dismissed, then to sever and stay the bad faith claims.  The claim was not dismissed, but the court did agree to sever and stay the bad faith claim. The insured alleged that the insurer...Read More >>
April 4, 2016
APRIL 2016 BAD FAITH CASES: THERE CAN BE NO BAD FAITH IN FAILING TO PROVIDE INFORMATION TO BENEFICIARY OR DENYING LIFE INSURANCE BENEFITS WHERE INSURED HAD LET POLICY LAPSE BY PREMIUM NON-PAYMENT (Middle District)
In Moll v. Pruco Life Insurance Company, the Court held that an insurer did not act in bad faith during the claims process or in denying payment on a life insurance policy, after determining that the policy had lapsed for non-payment. The insurer had issued a life insurance policy, pursuant to which the insured...Read More >>
April 4, 2016
APRIL 2016 BAD FAITH CASES: MVFRL DID NOT PRE-EMPT STATUTORY BAD FAITH CLAIMS BASED ON ABUSE OR MISUSE OF PEER REVIEW PROCESS (Middle District)
In Urena v. Allstate Insurance Company, the court addressed what portions of the undersinsured motorist plaintiff’s statutory Bad Faith claims were pre-empted by Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL). The basic rule is that “here both the Pennsylvania MVFRL and the Pennsylvania Bad Faith statutes are premised on the same conduct, i.e. an...Read More >>
April 3, 2016
APRIL 2016 BAD FAITH CASES: SEVERANCE AND STAY OF BAD FAITH CLAIM IN UIM CASE
The excellent Tort Talk Blog has continued in its leading coverage of post-Koken case law on how the Courts of Common Pleas address motions to sever or stay bad faith claims.  This is a link to another recent posting.Read More >>
April 1, 2016
APRIL 2016 BAD FAITH CASES: (1) NO CONSUMER FRAUD ACT CLAIM FOR DENIAL OF BENEFITS; (2) NEGLIGENCE CLAIM UNDER UNFAIR CLAIMS SETTLEMENT PRACTICES ACT NOT ASSIGNABLE OR ACTIONABLE; AND (3) NO BAD FAITH CLAIM WHERE QUESTION WHETHER PROPERTY DAMAGE FELL WITHIN POLICY PERIOD WAS FAIRLY DEBATABLE (New Jersey Federal)
In Nationwide Mutual Insurance Company v. Caris, the underlying facts involved the alleged fraudulent sale of a property with contamination.  The insureds entered a consent judgment and assigned their rights against the carrier to the buyers.  The buyers then brought various claims against the insurer, including bad faith claims. The court dismissed a New...Read More >>
March 31, 2016
MARCH 2016 BAD FAITH CASES: (1) BAD FAITH CLAIM FOR FAILURE TO COMMUNICATE SETTLEMENT DEMANDS WITHIN POLICY LIMITS REQUIRE SAME PROOF UNDER PENNSYLVANIA OR NEW JERSEY LAW; (2) POTENTIAL LOWER STANDARD FOR PUNITIVE DAMAGES IN PENNSYLVANIA NOT A BASIS TO DISMISS CLAIM; (3) ACTIONABLE CLAIM AGAINST AN INSURER’S MANAGING AGENT FOR CONTRIBUTION (New Jersey Federal)
In Allegheny Plant Services v. Carolina Casualty Insurance Company, the insured was subject to personal injury tort claims. The carrier provided defense counsel, and the case went to trial.  The jury verdict exceeded policy limits by nearly $700,000.  The insured brought suit against its insurer for failing to settle and/or inform the insured that...Read More >>
March 30, 2016
MARCH 2016 BAD FAITH CASES: LENGTHY INVESTIGATION ALONE INSUFFICIENT TO MAKE OUT BAD FAITH CASE; LATER LARGE JURY VERDICT ALONE COULD NOT SHOW BAD FAITH; TRIAL COURT HAS BROAD DISCRETION IN REJECTING EXPERT’S LEGAL CONCLUSIONS ON BAD FAITH (Third Circuit)
In Shaffer v. State Farm Mutual Automobile Insurance Company, the Third Circuit upheld the trial court’s summary judgment decision in this underinsured motorist case, affirming that “no reasonable fact finder could conclude that there is “clear and convincing” evidence that the insurer acted in bad faith”. In evaluating a bad faith claim the court observed...Read More >>
March 29, 2016
MARCH 2016 BAD FAITH CASES: WHERE EXCLUSION APPLIES AND THERE IS NO DUTY TO DEFEND THERE CAN BE NO BAD FAITH CLAIM (Superior Court of Pennsylvania, Non-Precedential)
In Peoplekeys, Inc. v. Westfield Insurance Company, the Superior Court affirmed the trial court’s decision, in which the trial court had concluded: “It is evident that the former employee’s counterclaim against Plaintiffs falls within an exclusion for coverage. Accordingly, Defendant had no duty to defend, and the counts for breach of contract and bad...Read More >>
March 29, 2016
MARCH 2016 BAD FAITH CASES: EXISTENCE OF FIDUCIARY DUTY BETWEEN SELLER AND BUYER OF INSURANCE REQUIRES FACT SENSITIVE INQUIRY (Superior Court of Pennsylvania)
In Dibish v. Ameriprise Financial, Inc., the Superior court rejected a blanket rule that there is no fiduciary relationship between a seller and buyer of insurance.  Rather, “the existence of a confidential relationship requires a fact-sensitive inquiry, which may not be rigidly disposed of as a matter of law.” Date of Decision: February 16,...Read More >>
March 28, 2016
MARCH 2016 BAD FAITH CASES: BAD FAITH CLAIM NOT SUBJECT TO REMAND IN LIGHT OF POTENTIAL PUNITIVE DAMAGES UNDER BAD FAITH STATUTE (Philadelphia Federal)
In West Chester University Foundation v. Metlife Insurance Company, the court had to decide a motion to remand after the case has been removed from the Court of Common Pleas of Chester County.  The court’s focus was on the potential punitive damages claim in the statutory Bad Faith count, as pushing the potential claim...Read More >>
March 28, 2016
MARCH 2016 BAD FAITH CASES: NO BAD FAITH IN CASE WHERE PROFESSIONAL LIABILITY INSURER COVERED SUMS IT ALLOCATED TO INSURANCE BAD FAITH CLAIMS AGAINST ITS INSURED – A LIABILITY INSURER – BUT DID NOT COVER SUMS ALLOCATED TO UNCOVERED BREACH OF CONTRACT AND PUNITIVE DAMAGE CLAIMS (Philadelphia Federal)
In United National Insurance Company v. Indian Harbor Insurance Company, the insured was itself an insurance company, which had been sued for bad faith (Insurer-1).  The insurer-defendant in this action had issued a professional liability policy (Professional Liability Insurer). Two of Insurer 1’s insured had been sued, and both of those matters ultimately resulted...Read More >>
March 27, 2016
MARCH 2016 BAD FAITH CASES: IN EASTERDAY V. FEDERAL MUTUAL, COURT REMANDS DECLARATORY JUDGMENT ACTION INVOLVING NOVEL ISSUE OF STATE LAW (Philadelphia Federal)
Easterday v. Federated Mutual Insurance Company involved a class action claim for a declaratory judgment concerning underinsured motorist, coverage, breach of contract and bad faith.  Applying the Third Circuit’s analysis in Reifer on when a district court should entertain a declaratory judgment action, the federal district court remanded the case to state court.  It...Read More >>
March 26, 2016
MARCH 2016 BAD FAITH CASES: COURT USES ADVISORY JURY IN PROCESS OF DECIDING POLICY RESCISSION CLAIM (Western District)
In H. J. Heinz Company v. Starr Surplus Lines Insurance Company, the court addressed the carrier’s rescission claim, and employed an advisory jury prior to reaching its conclusions.  Interestingly, the court agreed with the advisory jury that there had been some level of misrepresentation in the application process, but differed from the jury in...Read More >>
March 15, 2016
MARCH 2016 BAD FAITH CASES: NO STAY OF DISCOVERY ON BAD FAITH CLAIM; INSURED FAILED TO MAKE SUFFICIENT ARGUMENT AGAINST WORK-PRODUCT ASSERTION, BUT COURT DEFINES TIME AT WHICH REASONABLE ANTICIPATION OF LITIGATION AROSE FOR WORK PRODUCT TO APPLY (Philadelphia Federal)
In Wagner v. Allstate Insurance Company, an underinsured motorist case, the court (1) refused the insurer’s effort to stay the bad faith claim, but (2) rejected most of the insured’s discovery requests.  The issues were made less dramatic because the parties appeared to agree that the breach of contract and bad faith claims would...Read More >>
March 5, 2016
MARCH 2016 BAD FAITH CASES: NO BAD FAITH IN DELAYING PAYMENT OF MEDICAL BENEFITS UNDER MVFRL, WHERE NO NEGLIGENCE OR PREJUDICE IN INVESTIGATIVE PROCESS (Philadelphia Court of Common Pleas)
In Freedom Medical Supply v. Allstate Fire & Casualty Insurance Company, the court addressed alleged bad faith concerning medical payments under Pennsylvania’s Motor Vehicle Financial Responsibility Law. The court observed that a delay in paying such a benefit is “a relevant factor in determining whether bad faith has occurred”.  However, “a long period of...Read More >>
March 4, 2016
MARCH 2016 BAD FAITH CASES: SUMMARY JUDGMENT ON BAD FAITH WHERE: (1) INSURED HAD NO POLICIES IN EFFECT AT TIME OF INCIDENT AND (2) REMOVAL TO FEDERAL COURT NOT BAD FAITH AS INSURED CONFUSED INSURER DEFENDANTS WHICH LATER DESTROYED DIVERSITY (Philadelphia Court of Common Pleas)
In Racioppi v. Progressive Insurance Company, the case arose out of a collision that occurred when an automobile struck the insured as she was riding her bicycle. The driver’s insurer offered its liability policy limit of $15,000.00. However, as the insured’s damages exceeded this policy limit, the insured sought recovery through underinsured benefits of...Read More >>
March 2, 2016
MARCH 2016 BAD FAITH CASES: PHILADELPHIA COURT (1) APPLIES PENNSYLVANIA LAW TO STATUTORY BAD FAITH CLAIM AFTER CONDUCTING CHOICE OF LAW ANALYSIS; (2) FINDS GENUINE ISSUE OF MATERIAL FACT EXISTED AS TO WHETHER INSURER’S CLAIMS HANDLING OVER PAYMENTS OF DEFENSE COUNSEL FEES AMOUNTED TO BAD FAITH; (3) DISMISSES INSURED’S BREACH OF FIDUCIARY DUTY CLAIM AFTER FINDING IT WAS REDUNDANT OF BAD FAITH CLAIM (Philadelphia Commerce Court)
In IMS Health Inc. v. Zurich American Insurance Company, the insured brought action against its insurer.  Suit previously had been filed in Philadelphia’s federal district court against the insured for tortious interference with contract and unfair competition under Pennsylvania common law. The insured tendered the defense, and the insurer agreed to defend the Philadelphia...Read More >>
March 1, 2016
MARCH 2016 BAD FAITH CASES: ATTORNEYS FORMERLY REPRESENTING INSURER IN DECLARATORY JUDGMENT ACTION WERE NOT ALLOWED TO LATER REPRESENT INSUREDS AS DEFENSE COUNSEL IN CIVIL ACTION (New Jersey Appellate Division)
In Bukowiec v. Adamo, the case arose out of a one car accident resulting in a death and severe injury.  The car had been provided to the driver’s mother as a courtesy car by a dealer.  The insureds were successful in defeating a declaratory judgment against one of their potential insurers, i.e., the dealer’s...Read More >>
March 1, 2016
MARCH 2016 BAD FAITH CASES: FEDERAL DISTRICT COURT FINDS BAD FAITH CAN EXIST SOLELY BASED ON INVESTIGATION PRACTICES, INDEPENDENT OF WHETHER COVERAGE IS ACTUALLY DUE (Philadelphia Federal)
In Citi Gas Convenience v. Utica Mutual Insurance Company, the court found that there could be no bad faith claim based on a denial of coverage because the court found no coverage was due:  “Resolution of a coverage claim on the merits in favor of the insurer requires dismissal of a bad faith claim...Read More >>
February 29, 2016
FEBRUARY 2016 BAD FAITH CASES: COURT EXPLAINS RELATIONSHIP OF COMMON LAW BAD FAITH AND STATUTORY BAD FAITH, AND DISTINCTIONS CONCERNING PRE-CONTRACTUAL CONDUCT AND TYPES OF DAMAGES (Middle District)
In Porter v. Safeco Insurance Company, the court addressed a first party fire loss claim.  The insured claimed he paid for coverage for his building, at an excessive premium, and this was a single building for all practical purposes even though it had two addresses and had been separate structures years earlier.  After the...Read More >>
February 29, 2016
FEBRUARY 2016 BAD FAITH CASES: NO BAD FAITH WHERE INSURER MAKES PAYMENT TO PLAINTIFF’S BANK WHICH WAS LISTED AS THE NAMED INSURED IN THE POLICY (New Jersey Federal)
In Hossain v. American Security Insurance Company, the court rejected the notion that an insurance payment to the plaintiff’s bank was made in bad faith.  Under the relationship between the insured and the bank, the insured’s policy listed the bank as the named insured, and the insured as the borrower. “The insurance policy …...Read More >>
February 26, 2016
Search Function on Web Page Reminder
We have moved up the search box on the Pennsylvania and New Jersey Bad Faith Case Law Blog to the upper left hand corner of the web page, just beneath the calendar.  After ten years, we have over 1,100 posts and a vast library of information.  The search function is a valuable tool to locate topics, cases...Read More >>
February 25, 2016
FEBRUARY 2016 BAD FAITH CASES: NO BAD FAITH WHERE INSURER’S DENIAL OF COVERAGE WAS REASONABLE (Western District)
In Reginella Construction Company v. State Farm Fire & Casualty Company, the insured claimed the insurer acted in bad faith by failing to conduct a reasonable investigation, and by misinterpreting the policy terms.  The insurer responded by claiming that the case was really about the policy interpretation, and an incorrect but reasonable interpretation cannot...Read More >>
February 24, 2016
FEBRUARY 2016 BAD FAITH CASES: INSUREDS ADEQUATELY PLEADED BAD FAITH UNDER TWOMBLY/IQBAL STANDARDS (Philadelphia Federal)
In Kelly v. Progressive Advance Insurance Company, the insurer sought to dismiss plaintiffs’ bad faith claims under the Twombly/Iqbal pleading standards. The insureds were injured by a drunk driver and sought underinsured motorist coverage from their own carrier.  They alleged bad faith for improperly denying coverage, failure to make a reasonable settlement offer, failure...Read More >>
February 16, 2016
FEBRUARY 2016 BAD FAITH CASES: BAD FAITH CLAIM BASED ON DENIAL OF UIM BENEFITS FAILS WHERE WAIVER IS VALID, EVEN THOUGH INSURED HIMSELF DID NOT WRITE IN THE DATE OF HIS SIGNING (Third Circuit)
In Lieb v. Allstate Property and Casualty Insurance Company, the Third Circuit Court of Appeals determined that the insured’s waiver of underinsured motorist coverage was valid, and affirmed the dismissal of the claims for underinsured motorists benefits and bad faith. In May 2012, the insureds purchased an insurance policy on their car. As part...Read More >>
February 14, 2016
FEBRUARY 2016 BAD FAITH CASES: ERISA DID NOT PREEMPT BAD FAITH CLAIM, AND THUS REMOVAL WAS IMPROPER (Philadelphia Federal)
In Fitzsimmons v. Aetna, Inc., the federal court found that ERISA did not preempt the alleged bad faith claims, and thus removal was improper. Date of Decision:  January 7, 2016 Fitzsimmons v. Aetna, Inc., CIVIL ACTION NO. 15-3297, 2016 U.S. Dist. LEXIS 2115 (E.D. Pa. January 7, 2016) (Surrick, J.)Read More >>
February 14, 2016
FEBRUARY 2016 BAD FAITH CASES: BAD FAITH CLAIM BASED ON INSURER’S ALLEGED COOPERATION WITH POLICE INVESTIGATION OF INSURED BARRED BY STATUTE OF LIMITATIONS (Philadelphia Court of Common Pleas)
In Fieldhouse v. Metropolitan Property & Casualty Insurance Company, the Philadelphia Court of Common Pleas granted summary judgment on the insured’s bad faith claims, finding that the insured’s claim was barred by the applicable two-year limitations period. On January 24, 2013, the insured filed a Complaint, alleging that he was in a car accident...Read More >>
February 3, 2016
FEBRUARY 2016 BAD FAITH CASES: STATUTE OF LIMITATIONS CAN BE TRIGGERED BY DENIAL OF BENEFIT, OR FAILURE TO INVESTIGATE THE SAME CLAIM AFTER DENIAL, WHERE INSURER IS PROVIDED WITH NEW INFORMATION (Pennsylvania Superior Court)
In Rancosky v. Washington National Insurance Company, the Superior Court addressed a bad faith claim in the first party context, where the insured had purchased a “Cancer Policy”.  The Superior Court ruled that the bad faith claim fell within the two year statute of limitations period based upon poor investigative practices, even when the...Read More >>
January 29, 2016
JANUARY 2016 BAD FAITH CASES: BENEFICIARY’S CLAIMS FOR BAD FAITH AND PUNITIVE DAMAGES PREEMPTED BY ERISA (Third Circuit – Pennsylvania)
In Malishka v. MetLife, the insured brought suit against the insurer, claiming that the insurer improperly denied the insured’s life insurance benefits claim following her son’s death. The insured’s son was a member of a union, and was accordingly given the opportunity to purchase coverage under an employee welfare benefit plan governed by the...Read More >>
January 27, 2016
JANUARY 2016 BAD FAITH CASES: INSURED’S CLAIM FOR BAD FAITH DISMISSED WHEN COURT FINDS NO COVERAGE (Pennsylvania Superior Court) (Not Precedential)
In Rogers v. Allstate Property and Casualty Insurance Company, the Superior Court of Pennsylvania affirmed the dismissal of bad faith claims asserted against Allstate, after finding that the insured’s auto insurance comprehensive clause did not cover negligent or poor workmanship repairs by a third-party repair shop. The insured was involved in a collision, and...Read More >>
January 26, 2016
JANUARY 2016 BAD FAITH CASES: COURT AFFIRMS BAD FAITH JUDGMENT AGAINST INSURER THAT FAILED TO ATTEND ARBITRATION HEARING (Superior Court of Pennsylvania – not precedential)
In Mangan v. Safe Auto Insurance Company, the insured brought claims for breach of contract and bad faith refusal to pay a claim arising from a traffic accident that the insured’s vehicle was involved in. The insurer asserted that it was not required to cover the damage to the vehicle under the terms of...Read More >>
January 25, 2016
JANUARY 2016 BAD FAITH CASES: COURT ORDERS INSURER TO PRODUCE ALL RELEVANT DOCUMENTS PREPARED BEFORE LITIGATION WAS REASONABLY ANTICIPATED, REJECTED THE WORK PRODUCT ARGUMENT (Western District)
In Smith v. Progressive Specialty Insurance Company, the court wrote at length on the work-product doctrine, as applied to a claim handler’s file in a bad faith case. It ultimately ordered the insurer to produce all relevant documents from its claim file prepared before it could be reasonably anticipated that the claim would be litigated,...Read More >>
January 12, 2016
JANUARY 2016 BAD FAITH CASES: COURT REFUSES TO GRANT INSUREDS’ MOTION FOR RECONSIDERATION AFTER DETERMINING THAT INSURER DID NOT ACT IN BAD FAITH BY RELYING ON UNPERSUASIVE LEGAL POSITION (Middle District)
In Douglas v. Discover Property & Casualty Insurance Company, the court was asked to reconsider its recent decision granting summary judgment in favor of an insurer on a bad faith claim brought by insureds. The motion arose out of the parties’ cross motions for summary judgment, in which both parties sought judgment on the...Read More >>
January 11, 2016
JANUARY 2016 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM BASED ON THIRD CIRCUIT PRECEDENT AFTER CONDUCTING CHOICE-OF-LAW ANALYSIS TO APPLY PENNSYLVANIA LAW EVEN IN THE FACE OF A NORTH CAROLINA CHOICE OF LAW PROVISION (Western District)
In Alcantarilla v. State Farm Mutual Automobile Insurance Company, the insureds brought an action for breach of contract and bad faith arising out of a claim for underinsured motorist (“UIM”) coverage benefits filed by the insureds. The insureds had renewed their auto policy with the insurer while they were residents of North Carolina. The...Read More >>
January 8, 2016
JANUARY 2016 BAD FAITH CASES: COURT DENIES SUMMARY JUDGMENT ON INSURANCE FRAUD CLAIM AGAINST INSURED AFTER FINDING GENUINE ISSUES OF MATERIAL FACT EXIST REGARDING WHETHER INSURED MADE MATERIAL MISREPRESENTATIONS (Eastern District)
In Reese v. Allstate Vehicle & Property Insurance, the insured brought a breach of contract claim against the insurer based on a fire loss, and the insurer responded with a civil insurance fraud claim against the insured, as well as a third party complaint for civil insurance fraud against the insurer’s boyfriend, under 18...Read More >>
January 7, 2016
JANUARY 2016 BAD FAITH CASES: AGENT’S INVESTIGATION AND COMMUNICATIONS WERE ADEQUATE; INSURER’S FAILURE TO COMMUNICATE EVERY 45 DAYS PER UIPA WAS NEGLIGENCE AT MOST, NOT INTENTIONAL OR RECKLESS BAD FAITH (Philadelphia Federal)
In Smith v. State Farm Fire & Casualty Company, the insureds brought suit against their insurer for breach of contract and bad faith in dealings arising from the insurer’s partial denial of coverage of the insureds’ homeowner’s insurance policy claim. The insurer moved for summary judgment, and argued that the insureds failed to prove...Read More >>
January 6, 2016
JANUARY 2016 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM BASED ON MISSTATEMENT OF POLICY LIMITS AND UNREASONABLE DELAY AFTER FINDING THAT INSURED FAILED TO PROVIDE ADDITIONAL FACTUAL SUPPORT FOR ALLEGATIONS (Middle District)
In Ridolfi v. State Farm Mutual Automobile Insurance Company, the insured brought claims for bad faith and breach of duty of good faith and fair dealing. The insurer moved to dismiss, arguing that the insured’s allegations were conclusory and boilerplate assertions. The underlying claim arose out of a motor vehicle accident. The insured filed...Read More >>
January 5, 2016
JANUARY 2016 BAD FAITH CASES: PENNSYLVANIA COURT APPLYING NEW JERSEY LAW FINDS THAT BAD FAITH QUESTION COULD GO TO JURY, EVEN WITHOUT ADJUSTER’S TESTIMONY FOR SUMMARY JUDGMENT PURPOSES, IN THE ABSENCE OF ANY SETTLEMENT OFFER BY INSURED WHERE THERE SEEMED TO BE NO DEFENSE TO ONE COMPONENT OF INSURED’S DAMAGES CLAIMS (Philadelphia Federal)
In Stern v. AAA Mid-Atlantic Insurance Company, the Pennsylvania federal court applied New Jersey bad faith law to an Underinsured Motorist claim. The court applied the fairly debatable standard, which it quoted as: “To show a claim for bad faith, a plaintiff must show the absence of a reasonable basis for denying benefits of...Read More >>
January 4, 2016
JANUARY 2016 BAD FAITH CASES: NO BAD FAITH WHERE INSURER AND INSURED HAVE REASONABLE BACK AND FORTH NEGOTIATIONS OVER VALUE (Middle District)
In Williams v. Progressive Northern Insurance Coverage, the insured made a UIM claim.  The insurer increased its offer to the insured over time, after various stages of investigation; but the insured demanded policy limits and would not settle. Rather, the insured brought a bad faith claim, which the court ultimately rejected. The court observed...Read More >>
January 2, 2016
ALL THE BEST IN THE NEW YEAR
WE AT THE PENNSYLVANIA AND NEW JERSEY INSURANCE BAD FAITH CASE LAW BLOG WISH YOU ALL THE BEST IN 2016 Photo by M. M. Ginsberg  Read More >>
December 30, 2015
DECEMBER 2015 BAD FAITH CASES: MOTION TO AMEND AND ADD (1) UIPA ACTION DENIED AS FUTILE (2) BAD FAITH CLAIM DENIED AS UNTIMELY AND PREJUDICIAL
In United National Insurance Company v. Indian Harbor Insurance Company, the insured sought to amend its complaint to add claims under the Unfair Insurance Practices Act (“UIPA”) and the statutory Bad Faith Act.  The court denied amendment as to the UIPA claim as there is no private right of action under the UIPA, and...Read More >>
December 29, 2015
DECEMBER 2015 BAD FAITH CASES: WHERE NO COVERAGE DUE AND INSURER GAVE HIGHLY PLAUSIBLE EXPLANATION TO DENY COVERAGE, INSURED CANNOT MEET FAIRLY DEBATABLE STANDARD TO PROVE BAD FAITH (New Jersey Federal)
In One James Plaza Condominium Association v. RSUI Group, Inc., the court found coverage was excluded under a condominium association’s claims made policy, by a Specific Litigation Exclusionary Provision.  The issue was whether a second lawsuit against the insured’s board members was related to a prior litigation. In addressing whether there could be a...Read More >>
December 28, 2015
DECEMBER 2015 BAD FAITH CASES: (1) ISSUES OF DISPUTED FACT ON CLAIMS HANDLING AND COVERAGE SUPPORTED INSURER’S CASE THERE WAS NO BAD FAITH; (2) AN INSURER’S INVESTIGATION INTO WHETHER EXCLUSION APPLIES IS NOT BAD FAITH; AND (3) FILING A DECLARATORY JUDGMENT IS NOT THE EQUIVALENT OF DENYING COVERAGE (Middle District)
In Bodnar v. Amco Insurance Company, the insured sought reconsideration of the court’s decision granting the insurer summary judgment on bad faith.  The insured repeated a litany of facts in arguing that the court made credibility determinations, which were inappropriate on summary judgment. The court rejected, this argument, pointing out that the insured misconstrued...Read More >>
December 26, 2015
DECEMBER 2015 BAD FAITH CASES: RESERVE INFORMATION DISCOVERABLE IN BAD FAITH CASES (Western District)
In Smith v. Progressive Specialty Insurance Company, the court was asked to reconsider its recent discovery decision compelling production of reserve information. The insurer again tried to argue “that this was opinion work product which is entitled to near absolute protection from discovery while Plaintiff’s claim for underinsured motorist (“UIM”) benefits is still pending...Read More >>
December 23, 2015
DECEMBER 2015 BAD FAITH CASES: (1) INSURED CANNOT PLEAD ATTORNEYS’ FEES IN BREACH OF CONTRACT CLAIM STANDING ALONE; (2) NO SEPARATE ACTION FOR BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING; AND (3) BOILERPLATE ALLEGATIONS OF STATUTORY BAD FAITH ARE GOING TO BE DISMISSED, AT BEST WITHOUT PREJUDICE, WHERE NO SUPPORTING FACTS ARE ALLEGED (Philadelphia Federal)
In Soldrich v. State Farm Fire & Casualty Company, the court made three relevant holdings: An insured cannot include a claim for attorneys’ fees in its breach of contract count, standing alone, on the basis that attorneys’ fees may be awarded for violation of the bad faith statute. Such a claim can only be...Read More >>
December 23, 2015
DECEMBER 2015 BAD FAITH CASES: NO BAD FAITH WHERE NO COVERAGE DUE AND CLAIM WAS FULLY INVESTIGATED (New Jersey Federal)
In Stiso v. State Farm Fire & Casualty Company, a Hurricane Sandy case involving significant interior water damage, the court found coverage was excluded and then went on to address the insureds’ claims for (1) the breach of the implied covenant of good faith and fair dealing and (2) bad faith.  It stated that...Read More >>
December 11, 2015
DECEMBER 2015 BAD FAITH CASES: COURT DISMISSES INSUREDS’ CLASS-WIDE BAD FAITH CLAIMS WHILE ALLOWING INSUREDS’ INDIVIDUAL STATUTORY BAD FAITH CLAIMS TO PROCEED (Western District)
In Papurello v. State Farm Fire & Casualty Company, the insureds brought individual and class-wide claims for breach of contract and bad faith against an insurer for paying initial amounts under homeowners’ insurance policies determined by a two-step procedure, under which the insurer made a payment under the first step equal to the amount...Read More >>
December 3, 2015
DECEMBER 2015 BAD FAITH CASES: COURT DISMISSES INSUREDS’ CLASS-WIDE BAD FAITH CLAIMS WHILE ALLOWING INSUREDS’ INDIVIDUAL STATUTORY BAD FAITH CLAIMS TO PROCEED (Western District)
In Papurello v. State Farm Fire & Casualty Company, the insureds brought individual and class-wide claims for breach of contract and bad faith against an insurer for paying initial amounts under homeowners’ insurance policies determined by a two-step procedure, under which the insurer made a payment under the first step equal to the amount...Read More >>
November 30, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT GRANTS INSURER SUMMARY JUDGMENT AFTER FINDING THAT INSURER HAD REASONABLE BASIS FOR ITS CLAIM DECISIONS (Middle District)
In Militello v. Allstate Property & Casualty Insurance Company, the insured raised claims for breach of contract and bad faith, and alleged that “his property insurance company failed to accurately assess and pay a covered loss, and made false representations for the purpose of denying the full value of the claim.” The insurer moved...Read More >>
November 25, 2015
NOVEMBER 2015 BAD FAITH CASES: THERE CAN BE NO CLAIM FOR BAD FAITH WHERE NO INSURANCE POLICY WAS EVER ISSUED (Philadelphia Commerce Court)
In The Bank of New York Mellon v. Commonwealth Land Title Insurance, the putative insured brought claims for breach of contract and bad faith for denying coverage under a title insurance policy. A commitment letter in connection with a loan, to issue a policy of title insurance in connection with the sale of property,...Read More >>
November 23, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT AFFIRMS JUDGMENTS FOR EXCESS INSURER: (1) PLAIN LANGUAGE OF POLICY MADE CLEAR THAT NEITHER EXCESS NOR UMBRELLA COVERAGE APPLIED; (2) DEFENSE PROVISION OF POLICY WAS NEVER TRIGGERED; AND (3) DECISION NOT TO PAY FOR APPEAL BOND WAS NOT BAD FAITH (Third Circuit – Pennsylvania)
In Charter Oak Insurance Company v. Maglio Fresh Foods, the Court affirmed a 2013 summary judgment in favor of the excess and umbrella insurer, and a 2014 non-jury verdict on the remaining claims. Among other things, the appellate court found that the insured failed to show that the excess and umbrella insurer “acted in...Read More >>
November 19, 2015
NOVEMBER 2015 BAD FAITH CASES: INSUREDS’ COUNSEL COULD BE DEPOSED ON COMMUNICATIONS WITH INSURER’S ADJUSTER DURING PRE-SUIT CLAIMS HANDLING NEGOTIATIONS (Philadelphia Federal)
In Adeniyi-Jones v. State Farm Mutual Auto Insurance Company, the insureds brought an action against their insurer, alleging breach of contract as well as bad faith on the part of the insurer in negotiating regarding a claim for underinsured motorist benefits. The insurer moved to compel the deposition of counsel for the insureds, while...Read More >>
November 13, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT ORDERS INSURER TO PRODUCE (1) RESERVE INFORMATION (2) CLAIMS FILES FOR IN CAMERA REVIEW AND (3) PROPRIETARY INFORMATION SUBJECT TO CONFIDENTIALITY ORDER (Western District)
In Smith v. Progressive Specialty Insurance Company, the court granted in part the insured’s motion to compel discovery after finding that redacted information provided by the insurer was discoverable and relevant to the determination of whether the insurer acted in bad faith. The insured originally filed a complaint against her automobile insurer, alleging state...Read More >>
November 12, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT (1) SEVERS BAD FAITH CLAIM FROM BREACH OF CONTRACT CLAIM, AND (2) STAYS BAD FAITH CLAIM PENDING RESOLUTION OF BREACH OF CONTRACT CLAIM (New Jersey Federal)
In Bridgewater Wholesalers, Inc. v. Pennsylvania Lumbermens Mutual Insurance Company, a recent Hurricane Sandy coverage case, the Court granted the insurer’s motion to sever the insured’s bad faith claim and stay that claim pending the resolution of the insured’s breach of contract claim. The case arose out of an alleged breach of insurance contract...Read More >>
November 12, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT WOULD NOT ASSUME INSURER WAS WITHHOLDING DOCUMENTS, AND WOULD NOT REQUIRE DISCLOSURE OF UNRELATED MATTERS REDACTED FROM CLAIM FILE PRODUCTION (Philadelphia Federal)
In Quinn v. State Farm Fire & Casualty Company, the insured brought breach of contract and bad faith claims based on a fire loss.  The insurer provided redacted documents from its claim files in discovery, and the insured moved to strike the redactions.  The insurer did not keep hard copies of documents, but only...Read More >>
November 11, 2015
NOVEMBER 2015 BAD FAITH CASES: NO FIRST PARTY BAD FAITH CLAIM POSSIBLE WHERE NO COVERAGE DUE; DAMAGE WAS EXCLUDED WHETHER CAUSED BY FLOOD WATER OR SUBSTANCES IN FLOOD WATER (New Jersey Appellate Division)
In Riccio v. Allstate Insurance Company, the Court found that the insureds’ bad faith claims were precluded because their claim of loss was properly denied by the insurer. The insureds originally filed a claim with the insurer after their home suffered damage from Hurricane Sandy. After the insurer rejected the claim pursuant to a...Read More >>
November 10, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT DISMISSES INSURED’S BAD FAITH CLAIM AFTER INSURER SHOWS REASONABLE BASIS FOR (1) REQUESTING INDEPENDENT MEDICAL EXAMINATION, (2) REFUSING TO PROCEED TO ARBITRATION WITHOUT AN EXAMINATION, AND (3) DENYING INSURED’S CLAIM (Third Circuit)
In Feingold v. State Farm Mutual Automobile Insurance Company, the insured brought breach of contract and bad faith counts in a suit brought approximately thirteen years after a vehicular accident. In August 1998, the insured was involved in a motor vehicle accident and filed a personal injury protection claim with his insured. Over the...Read More >>
November 6, 2015
NOVEMBER 2015 BAD FAITH CASES: INSURANCE FRAUD CLAIMS BARRED BY STATUTE OF LIMITATIONS; LIMITS ON EXPERT TESTIMONY AS TO ULTIMATE ISSUE OF BAD FAITH (Philadelphia Federal)
In Schatzberg v. State Farm Mutual Automobile Insurance Company, the insurer brought a statutory insurance fraud claim against a medical provider, under 18 Pa.C.S. § 4117, among other fraud based claims.  This claim has a two year statute of limitations. The court found that the insurer was on notice of the alleged fraudulent billing...Read More >>
November 5, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT GRANTS INSURER SUMMARY JUDGMENT AFTER FINDING THAT (1) INSURER CONDUCTED REASONABLE INVESTIGATION AND (2) ANY DELAYS IN CLAIM INVESTIGATION WERE NOT SOLELY ATTRIBUTABLE TO INSURER (Philadelphia Federal)
In Tran v. Seneca Insurance Company, a case defended by Jay Barry Harris and Christina Capobianco of Fineman, Krekstein & Harris, the insured alleged that the insurer denied coverage in breach of contract and in bad faith. In support of her bad faith claim, the insured argued that the insurer used “unfair investigation techniques”...Read More >>
November 4, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT DECLINES TO EXERCISE JURISDICTION OVER COVERAGE DISPUTE, AND REMANDS BECAUSE NATURE OF INSURED’S STATE CLAIMS OUTWEIGHED PRESUMPTION OF JURISDICTION (Philadelphia Federal)
In Rarick v. Federated Service Insurance Company, the court declined to exercise its discretionary DJA jurisdiction over a suit filed by an insured against an insurer after applying the “heart of the matter” test to the insured’s claims for declaratory relief, breach of contract, and bad faith, and ultimately found that...Read More >>
November 3, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT SUA SPONTE FOR INSURER ON INSURED’S BAD FAITH COUNTERCLAIMS AFTER FINDING INSURER HAD NO DUTY TO DEFEND OR INDEMNIFY (Philadelphia Federal)
In Everest Indemnity Insurance Company v. Valley Forge, Incorporated, the court considered cross-motions for summary judgment filed by an insurer and insured regarding a duty to defend issue. In the underlying action, the insured, a Pennsylvania corporation that “operates a facility for the receipt and processing of a variety of materials, including concrete, asphalt,...Read More >>
November 1, 2015
NOVEMBER 2015 BAD FAITH CASES: COURT REFUSES TO DISMISS INSURED’S BAD FAITH CLAIM ON BASIS OF CLAIMS HANDLING ALLEGATIONS (Middle District)
In Yatsonsky v. State Farm Fire and Casualty Company, the complaint alleged breach of contract and statutory bad faith under Pennsylvania law relating to the insurer’s handling of the insured’s claim under a homeowners insurance policy. The insured’s claim arose after a pipe burst inside the insured’s home, causing extensive damage. The insured alleged...Read More >>
October 30, 2015
OCTOBER 2015 BAD FAITH CASES: COURT DOES NOT DISMISS CLAIMS FOR ATTORNEY’S FEES IN BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING CLAIM AS POTENTIALLY BEING A FORM OF CONSEQUENTIAL DAMAGES (New Jersey Federal)
In Breitman v. National Surety Corporation, the court was faced with the question of whether an insured could request attorney’s fees as part of consequential damages to a claim of bad faith. The case arose out of a Hurricane Sandy coverage dispute in which the insurer originally denied the insured’s claim for loss and...Read More >>
October 22, 2015
OCTOBER 2015 BAD FAITH CASES: COURT GRANTS INSURER’S MOTION FOR SUMMARY JUDGMENT ON BAD FAITH CLAIMS AFTER FINDING THAT CLAIMS WERE TIME-BARRED AND WITHOUT MERIT (Philadelphia Federal)
In Blackwell v. Allstate Insurance Company, the Court dismissed the insured’s bad faith claim as time barred after the insured failed to establish an exception to the statute of limitations applied, independent of the whether the bad faith claim was without merit. The insured’s complaint alleged that in March 2011, his home suffered water...Read More >>
October 21, 2015
OCTOBER 2015 BAD FAITH CASES: STATUTE OF LIMITATIONS DID NOT BEGIN TO RUN AT THE TIME OF THE INSURER’S ALLEGED DECLINATION LETTER, BECAUSE THE LANGUAGE IN THAT LETTER WAS AMBIGUOUS ON DENIAL (New Jersey Federal)
In Liguori v. Certain Underwriters at Lloyds London, the court held that the statute of limitations had not run on the insured’s claim for breach of the implied covenant of good faith and fair dealing, because the insurer’s declination letter was ambiguous as to whether or not the claim would be covered. Date of...Read More >>
October 20, 2015
OCTOBER 2015 BAD FAITH CASES: UNFAIR INSURANCE PRACTICES ACT CANNOT BE BASIS FOR PRIVATE CAUSE OF ACTION (Philadelphia Federal)
In Assurity Life Insurance Company v. Nicholas, the insured raised various counterclaims.  There was no bad faith count as such, but a count was pleaded for violation of the Unfair Insurance Practices Act.  The insurer moved to dismiss the court. The court observed the well-recognized position that: “The UIPA expressly provides that enforcement of...Read More >>
October 19, 2015
OCTOBER 2015 BAD FAITH CASES: “BARE BONES” PLEADING DISMISSED WITHOUT PREJUDICE, AND WITH LEAVE TO AMEND IN 20 DAYS (Philadelphia Federal)
In Mills v. Allstate Insurance Company, the insured homeowner brought breach of contract and bad faith counts based on smoke and soot damage, after the insurer denied his claims.  In the bad faith count,  the insured averred the following facts constituted bad faith: sending a letter stating the claim was not covered even though...Read More >>
October 16, 2015
OCTOBER 2015 BAD FAITH CASES: COURT REFERENCES UNFAIR INSURANCE PRACTICES ACT AS JUSTIFICATION FOR INSURER NOT HAVING INTERFERED WITH CONTRACTUAL RELATIONS BETWEEN INSURER AND THIRD PARTY (Philadelphia Federal)
In Charbonneau v. Chartis Property Casualty Company, the Court had previously dismissed bad faith claims directly against the insurer, brought by an assignee of the insured.  After a non-jury trial, the court addressed the assignee’s claims against the insurer for alleged intentional interference with contract between the assignee and the insured.  In finding that...Read More >>
October 15, 2015
OCTOBER 2015 BAD FAITH CASES: IF TERLETSKY STANDARDS COULD BE MET, BAD FAITH CLAIMS CAN BE PURSUED FOR: (1) WITHHOLDING PAYMENTS, EVEN WHEN PARTIAL PAYMENTS ARE MADE; (2) FAILURE TO INVESTIGATE; AND (3) ABSENCE OF REASONABLE EXPLANATION. A COURT MAY CONSIDER UIPA VIOLATIONS, AND INSURED NEED NOT PROVE ILL-WILL (Philadelphia Federal)
In Scott v. Foremost Insurance Company, Judge Baylson was called upon again to address statutory bad faith claims in the claims handling process. The insureds complaint alleged that their homes suffered damages from an electrical surge.  Their public adjuster estimated damages well in excess of $300,000 to the home and appliances, which the insureds...Read More >>
October 14, 2015
OCTOBER 2015 BAD FAITH CASES: INSURER’S ALLEGED FAILURE TO INVESTIGATE INSURED’S MENTAL COMPETENCY AT THE TIME HE ALTERED POLICY BENEFITS COULD BE BASIS FOR A BAD FAITH CLAIM (Western District)
In Hess v. Nationwide Life Insurance Company, the beneficiary of a life insurance policy pleaded that the insurer failed to pay full policy proceeds.  The insured’s husband had submitted a document to the insurer that reduced the benefit, but she argued that he was mentally incompetent when he did so, and thus the reduction...Read More >>
October 13, 2015
OCTOBER 2015 BAD FAITH CASES: ASSUMING THAT SUBJECTIVE BAD FAITH IS THE STANDARD OF REASONABLENESS, THE INSURER’S INTERPRETATION OF GOVERNING CASE LAW DURING LITIGATION WAS REASONABLE, EVEN IF WRONG (Middle District)
In Douglas v. Discover Property & Casualty Insurance Company, Judge Mariani again identified the issue that there is a split in authority on whether an objectively reasonable basis to deny coverage can per se defeat the first prong of a plaintiff’s statutory bad faith claim, and preclude such a claim from going forward on...Read More >>
October 13, 2015
OCTOBER 2015 BAD FAITH CASES: THIRD CIRCUIT EXPRESSLY WITHHOLDS RULING ON WHETHER PEER REVIEW DOCTORS WHO OWE NO DUTY TO A PATIENT, MAY BE AIDERS AND ABETTORS TO AN INSURANCE BAD FAITH CLAIM (Third Circuit, New Jersey)
In Skelcy v. United Health Group, Inc., the insured had sought to continue medication and a program of therapy which his doctors had successfully used and continued to recommend.  The insurer had agreed to the original use, but denied the later claim to use the drug at issue.  There was an appeal, and the...Read More >>
October 12, 2015
OCTOBER 2015 BAD FAITH CASES: INSURER DID NOT ACT IN BAD FAITH BY EXHAUSTING POLICY LIMITS IN SETTLING SOME, BUT NOT ALL CLAIMS, WHERE SETTLEMENT AVOIDED MILLIONS OF DOLLARS IN EXPOSURE TO INSURED, AND INSURED WAS FULLY APPRISED THAT REMAINING CLAIM WOULD NOT BE COVERED (New Jersey Appellate Division)
In Doitch v. Khatri, a third-party action for insurance coverage, the insureds filed a breach of contract and fiduciary duty complaint against an insurer refusing to settle a claim on behalf of the insureds. Summary judgment was granted to the insurer, and the insureds appealed. The underlying claims arose from a fire damaging the...Read More >>
October 11, 2015
Some Fall Photos before the Coming Press of Postings
  Photos by M. M. GinsbergRead More >>
October 8, 2015
OCTOBER 2015 BAD FAITH CASES: COURT DOES RIGOROUS CLAIMS HANDLING ANALYSIS AND FINDS NO BAD FAITH WHERE ISSUE INVOLVED DIFFICULT DETERMINATION AS TO INJURED PARTY’S “EMPLOYMENT” STATUS WITH THE INSURED FOR COVERAGE PURPOSES (Middle District)
In Bodnar v. Nationwide Mutual Insurance Company, the insured had a commercial general liability policy. While the insured and a man he hired were digging a trench, the trench collapsed, killing the man. The deceased’s wife for herself and her husband’s estate brought tort claims against the insured, the insurer defended under a reservation...Read More >>
October 8, 2015
OCTOBER 2015 BAD FAITH CASES: SEVERANCE OF BAD FAITH CLAIM GRANTED, DISCOVERY NOT STAYED (Court of Common Pleas, Monroe County)
The excellent Tort Talk Blog has posted an entry in the on-going address of post-Koken practice on severance and stays in UIM Bad Faith cases.Read More >>
October 1, 2015
OCTOBER 2015 BAD FAITH CASES: COURT PRECLUDES TRIAL EVIDENCE ON CAUSATION AND DAMAGES WHERE INSUREDS FAILED TO MAKE ADEQUATE RULE 26 DISCLOSURES AND DISCOVERY RESPONSES ON SPECIFIC CLAIM, AND DEFENDANT INSURER WOULD BE PREJUDICED (Middle District)
In Sabol v. Allstate Property & Casualty Insurance Company, the insurance carrier brought a motion in limine to preclude evidence of causation and damages, in this breach of contract and bad faith case, because the plaintiff insureds failed to identify evidence of damage or causation in their initial Rule 26 disclosures or in discovery....Read More >>
September 30, 2015
SEPTEMBER 2015 BAD FAITH CASES: BOILERPLATE ALLEGATION OF BAD FAITH DID NOT MEET PENNSYLVANIA STANDARD REQUIRING PLAINTIFF TO PLEAD MATERIAL FACTS (Philadelphia Common Pleas)
In Feingold v. State Farm Insurance Company, the complaint alleged various conspiracy claims against the insurer and others, to deprive monetary awards to UIM claimants. As to the bad faith allegations, the court found the plaintiffs merely averred that the insurer did not make a good faith effort to resolve or pay a UIM...Read More >>
September 28, 2015
SEPTEMBER 2015 BAD FAITH CLAIMS: SETTLING AN APPARENTLY SIMILAR BUT IN FACT DISTINCT CLAIM, WHILE REFUSING TO DEFEND AND INDEMNIFY, IS NOT THE BASIS FOR A BAD FAITH CLAIM (Western District)
In Zhuang v. Hanover Insurance Company, the court addressed legal malpractice insurance coverage and a bad faith claim by the injured party against the defendant-lawyer’s insurer.  The lawyer had recommended an investment in a business owned by the lawyer, in which the plaintiff, among others, had invested.  The investment failed and the plaintiff brought...Read More >>
September 24, 2015
SEPTEMBER 2015 BAD FAITH CASES: SUMMARY JUDGMENT DENIED ON ARGUMENT INSURED FAILED TO MEET PREDICATES OF “SUIT AGAINST US PROVISION” WHERE INSURED REFUSED TO APPEAR IN PERSON FOR EXAMINATION UNDER OATH BUT AGREED TO APPEAR BY VIDEO CONFERENCE (Middle District)
In Royce v. Erie Insurance Exchange, the insured brought breach of contract and bad faith claims against an insurer for the insurer’s purported failure to fairly evaluate the insured’s claim and to promptly offer payment of the claim. The insurer sought summary judgment on the basis that the policy included a “suit against us”...Read More >>
September 15, 2015
SEPTEMBER 2015 BAD FAITH CASES: WHERE INSURER’S MOTION TO DISMISS A BAD FAITH CLAIM DEPENDED SOLELY ON THE ARGUMENT THERE WAS NO COVERAGE, A PLAUSIBLY PLEADED COVERAGE CLAIM DEFEATED THE MOTION TO DISMISS BOTH THE CONTRACT AND BAD FAITH CLAIMS (Western District)
In Wehrenberg v. Metropolitan Property and Casualty Insurance Company, the insured brought breach of contract and bad faith claims against an insurer refusing to provide coverage for alleged vandalism to a house owned by the insured. The insured had previously leased the insured property to a lessee in October 2011 for five years starting...Read More >>
September 11, 2015
SEPTEMBER 2015 BAD FAITH CASES: COURT (1) FINDS CLAIM FOR BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING SUBSUMED IN COUNT FOR BAD FAITH; AND (2) DISMISSES DEMANDS FOR PUNITIVE DAMAGES AND ATTORNEY’S FEES IN FIRST PARTY BREACH OF CONTRACT/BAD FAITH CASE (New Jersey Federal)
In Gilliam v. Liberty Mutual Fire Insurance Company, the insureds brought claims for breach of contract, breach of the covenant of good faith and fair dealing, and bad faith denial of insurance benefits after the insureds’ home suffered damage caused by Hurricane Sandy. The insureds alleged that the insurer “improperly adjusted the claims” and...Read More >>
September 10, 2015
SEPTEMBER 2015 BAD FAITH CASES: IN ADDRESSING MOTION TO COMPEL COURT: (1) FINDS COMMUNICATIONS WITH ATTORNEYS PRIVILEGED; (2) WORK PRODUCT DOCTRINE DID NOT APPLY PRIOR TO DATE LITIGATION THREATENED; AND (3) RESERVES DISCOVERABLE IN BAD FAITH CASES (Middle District)
In Cicon v. State Farm Mutual Automobile Insurance Company, the insured brought an uninsured motorist bad faith claim against an insurer refusing to pay policy limits.  In discovery, the insurer had produced a privilege log claiming attorney client privilege and work product protection; and further asserting reserves are not discoverable. The court first observed...Read More >>
September 7, 2015
SEPTEMBER 2015 BAD FAITH CASES: COURT (1) FINDS CLAIM FOR BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING SUBSUMED IN COUNT FOR BAD FAITH; AND (2) DISMISSES DEMANDS FOR PUNITIVE DAMAGES AND ATTORNEY’S FEES IN FIRST PARTY BREACH OF CONTRACT/BAD FAITH CASE (New Jersey Federal)
In Torres v. Liberty Mutual Fire Insurance Company, the insureds brought claims for breach of contract, breach of the covenant of good faith and fair dealing, and bad faith denial of insurance benefits after the insureds’ home suffered damage caused by Hurricane Sandy. The insureds alleged that the insurer “improperly denied at least a...Read More >>
August 28, 2015
AUGUST 2015 BAD FAITH CASES: (1) INTERPRETING SEMANTIC DIFFERENCES BETWEEN INSURER’S STATED BASIS FOR DENIAL COMPARED TO POLICY LANGUAGE LEFT TO JURY; (2) POST-LOST FRAUD CLAIM AS BASIS FOR RESCISSION ALSO LEFT TO JURY (Middle District)
In Rizk v. State Farm Fire & Casualty, the homeowner was out of town for a few months, and left a friend to set the thermostat so his pipes would not freeze.  Bathroom pipes did freeze, resulting in flooding.  The insured made a claim and the insurer “would not commit to coverage until it...Read More >>
August 27, 2015
AUGUST 2015 BAD FAITH CASES: POLICY RESCISSION NOT A BASIS TO AVOID PAYMENT TO INNOCENT THIRD PARTY UNDER AUTOMOBILE INSURANCE LAW WHERE INSURED SELECTS MINIMUM BODILY INJURY COVERAGE (New Jersey Supreme Court)
In Citizens United Reciprocal Exchange v. Perez, New Jersey’s Supreme Court found that even where an insurer could void an auto policy for fraud, if the insured had selected the $10,000 minimum coverage for bodily injury, an innocent third party could still recover that sum from the insurer. Under New Jersey law, “a material...Read More >>
August 26, 2015
AUGUST 2015 BAD FAITH CASES: ON DISCOVERY MOTIONS, COURT: (1) QUASHES DEPOSITION OF FORMER CEO; (2) QUASHES DISCOVERY OF OTHER CASES; (3) ALLOWS DISCOVERY OF SI UNIT/LOW IMPACT UNIT RELATING TO SPECIFIC CASE AT HAND; (4) ALLOWS DISCOVERY OF RESERVES (Middle District)
Morris v. USAA Casualty Insurance Company involved discovery disputes in a UIM breach of contract and bad faith case.  The court denied a motion to quash the deposition of the insurer’s designated representative on the basis that the deposition notice was vague and overbroad; but did quash the deposition of the insurer’s former president...Read More >>
August 26, 2015
AUGUST 2015 BAD FAITH CASE: DENIAL OF COVERAGE FAIRLY DEBATABLE WHERE RECORD NOT CLEAR IF THE LOSS OCCURRED IN THE POLICY PERIOD OR AS TO WHAT CAUSED THE LOSS (New Jersey Federal)
In JPC Merger v. Alterra American Insurance Company, the insured was in the precast concrete business, and alleged that a number of its large metal rigging chains and steel plates went missing.  The insured made a claim, and the insurer took the position that either the loss occurred outside the policy period, or that...Read More >>
August 25, 2015
AUGUST 2015 BAD FAITH CASES: DELAY IN PAYMENT OF CLAIM IS NOT A PER SE BASIS TO FIND BAD FAITH; INSURER HAS A RIGHT TO INVESTIGATE CLAIMS (Philadelphia Federal)
In Great Lakes Reinsurance v. Stephens Gardens, the court addressed allegations of delayed payment, and specific denials of coverage, in granting the insurer’s motion for partial summary judgment. The insured was in the business of selling aquatic flora and fauna, as well as aquatic designs.  There was a fire that destroyed certain real and...Read More >>
August 24, 2015
AUGUST 2015 BAD FAITH CASES: COURT FINDS THAT SUBSTANTIVE LAWS OF NEW YORK APPLY BASED ON CHOICE OF FORUM CLAUSE IN POLICY, EVEN THOUGH NEW YORK, UNLIKE PENNSYLVANIA (1) DOES NOT RECOGNIZE ACTION FOR BAD FAITH DENIAL OF INSURANCE CLAIMS AND (2) DOES NOT REQUIRE INSURED HAVE SCIENTIR FOR INSURER TO SEEK RESCISSION (Western District)
In H.J. Heinz Co. v. Starr Surplus Lines Ins. Co., the insured and the insurer sought a declaration from the Court as to the insurer’s obligations under a policy issued to the insured, and the insurer moved for the policy to be rescinded. The issue before the Court was whether the substantive laws of...Read More >>
August 21, 2015
AUGUST 2015 BAD FAITH CASES: BAD FAITH ACTION REMANDED WHERE RELIEF SOUGHT WAS LESS THAN $75,000 AND PLAINTIFF STIPULATED TO LIMITING DAMAGES (Philadelphia Federal)
In Jacobs v. Globe Life & Accident Insurance Company, the insured brought breach of contract and bad faith claims in the Court of Common Pleas of Philadelphia.  Defendant insurer removed the case and the insured moved to remand. The relevant complaint demanded judgment “in an amount in excess of $50,000.00, but not in excess...Read More >>
August 20, 2015
AUGUST 2015 BAD FAITH CASES: COURT (1) DENIES INSURER’S MOTION FOR RECONSIDERATION ON CONTRACTUAL AND STATUTORY BAD FAITH ISSUES; AND (2) DENIES MOTION FOR CERTIFICATION OF INTERLOCUTORY APPEAL ON NEGLIGENCE STANDARD IN CONTRACTUAL BAD FAITH CASES (Western District)
In McMahon v. Medical Protective Company, as discussed at length in our prior blog posting the Court previously had held that that under Pennsylvania law, a contractually based bad faith claim may be supported by evidence that an insurer made a misrepresentation to the insured or failed to communicate with the insured, if the...Read More >>
August 19, 2015
AUGUST 2015 BAD FAITH CASES: THIRD CIRCUIT UPHOLDS APPLICATION OF TWO YEAR STATUTE OF LIMITATIONS RUNNING FROM TIME OF DENIAL OF BENEFITS TO BAR BAD FAITH CLAIM (Third Circuit)
In Leporace v. New York Life & Annuity, the Third Circuit upheld the District Court’s opinion that the two year bad faith statute of limitations had run from the time of benefits being denied; and affirmed dismissal of that claim.  It further affirmed the applicability of the four year contractual statute of limitations in...Read More >>
August 19, 2015
AUGUST 2015 BAD FAITH CASES: IN FIRST PARTY ACTION, UNDER NEW JERSEY LAW, ATTORNEY’S FEES ONLY RECOVERABLE FOR BAD FAITH, NOT FOR SIMPLE BREACH OF CONTRACT (New Jersey Federal)
In 213-15 76th Street Condominium Association v. Scottsdale Insurance Company, the insured sought attorney’s fees for a first party claim against its insurer.  Attorneys’ fees are only permitted in such circumstances, if the insured pleads a claim for bad faith.  However, where the claim is only for breach of the insurance contract, attorney’s fee...Read More >>
August 18, 2015
AUGUST 2015 BAD FAITH CASES: NEW JERSEY SUPREME COURT FINDS INJURED PARTIES DO NOT BECOME THIRD PARTY BENEFICIARIES TO INSURANCE CONTRACTS SIMPLY BECAUSE THEY WERE INJURED BY AN INSURED, IN THE ABSENCE EXPRESS INTENT TO MAKE THOSE INJURED PERSONS PARTIES TO THE INSURANCE CONTRACT PRIOR TO THE INJURY (New Jersey Supreme Court)
In Ross v. Lowitz, New Jersey’s Supreme Court reaffirmed the rule that an injured party has no direct rights against a tortfeasor’s insurer, absent an assignment or standing as an express third party beneficiary. In that case, the plaintiffs suffered damages from their neighbor’s oil tank leak.  They sought to bring claims directly against...Read More >>
August 17, 2015
SUPERIOR COURT FINDS INSURERS CAN BE LIABLE IN NEGLIGENCE FOR ACTS OF AGENTS AND CONTRACTORS UNDER RESTATEMENT 323 AND 324A FOR ASSUMING DUTIES NOT OTHERWISE FOUND IN CONTRACT (Superior Court of Pennsylvania – not precedential)
Last year, in Bruno v. Erie Insurance Company, Pennsylvania’s Supreme Court upheld the potential for negligence claims against an insurer, separate from the insurance contract, for the acts of its adjustor and engineering expert which occurred during the claims handling process. The insurer had a contractual duty to investigate and pay for certain mold...Read More >>
August 13, 2015
AUGUST 2015 BAD FAITH CASES: COURT (1) DENIES INSURER’S MOTION TO DISMISS NJCFA CLAIM AFTER INSUREDS PROVED INSTANCES OF BAD FAITH; (2) FINDS INSUREDS’ CLAIM FOR PUNITIVE DAMAGES INSUFFICIENT; AND (3) HOLDS THAT INSUREDS MAY BE ENTITLED TO ATTORNEYS’ FEES UNDER THE NJCFA ONLY (New Jersey Federal)
In Ryan v. Liberty Mutual Insurance Company, the Court denied the insurer’s motion to dismiss a claim brought by its insureds under the New Jersey Consumer Fraud Act (“NJCFA”), dismissed the insureds’ claim for punitive damages, and denied the insurer’s motion to dismiss the insureds’ claim for attorneys’ fees. The dispute arose after the...Read More >>
August 12, 2015
AUGUST 2015 BAD FAITH CASES: COURT FINDS INSURED WIFE HAS STANDING TO BRING FIRST PARTY BAD FAITH CLAIM BASED UPON INSURER’S HANDLING OF INSURED HUSBAND’S MEDICAL BILL COVERAGE (Philadelphia Federal)
In McGuckin v. Allstate Fire and Casualty Insurance Company, the Court denied the insurer’s motion to dismiss breach of contract and bad faith claims brought by an insured’s wife, based upon the insured husband’s involved in an automobile accident. In the underlying action, the insured husband alleged that he met with an agent of...Read More >>
August 3, 2015
AUGUST 2015 BAD FAITH CASES: COURT FINDS INSUREDS COULD NOT MAINTAIN A CLAIM FOR STATUTORY BAD FAITH WHERE INSURER’S BASIS OF DENIAL OF UNINSURED MOTORIST COVERAGE WAS CORRECT (Western District)
In Cahall v. Ohio Casualty Insurance Company, the Court granted the insurer’s motion for summary judgment and denied the insured’s motion for summary judgment based on a waiver of underinsured motorist (UIM) benefits. In the underlying action, one of the insureds was involved in a motor vehicle collision with another driver. After settling with...Read More >>
July 31, 2015
JULY 2015 BAD FAITH CASES: INSURED SUED IN PRIVATE ACTION BY CARRIER UNDER NEW JERSEY’S INSURANCE FRAUD PROTECTION ACT MAY DEMAND A JURY TRIAL (New Jersey Supreme Court)
In Allstate New Jersey Insurance Co. v. Lajara, New Jersey’s Supreme Court ruled that an insured-defendant, subject to private claims for compensatory and punitive damages under the Insurance Fraud Prevention Act, is entitled to a jury trial. Date of Decision: Allstate New Jersey Insurance Co. v. Lajara, September Term 2013, 073511, 2015 N.J. LEXIS...Read More >>
July 30, 2015
JULY 2015 BAD FAITH CASES: PA FEDERAL COURT, APPLYING NEW JERSEY LAW, FINDS HANDLING OF PROPERTY DAMAGE CLAIM “FAIRLY DEBATABLE” AS TO THE SUM DEMANDED, REFUSAL TO ENTER APPRAISAL PROCESS, AND TIMING OF ASKING FOR EXPERT REPORT AFTER SUIT INITIATED (Philadelphia Federal)
In Beyer v. State Farm Fire & Casualty Company, a Pennsylvania federal court was called upon to apply New Jersey law to a first party property damage claim. Under New Jersey law, bad faith cannot be established if the insurer’s position was “fairly debatable”. In practice this means that if the facts are sufficiently...Read More >>
July 29, 2015
JULY 2015 BAD FAITH CASES: COURT FINDS INSURER DID NOT ACT IN BAD FAITH BY TERMINATING COVERAGE AFTER INSURED FAILED TO PAY MONTHLY DEDUCTION AND PAY RESTITUTION (Middle District)
In Morris v. American National Insurance Group, the District Court adopted the Report and Recommendation of the Magistrate Judge, finding that the insurer did not act in bad faith when it terminated coverage after the insured failed to pay the monthly deduction and failed to make restitution within the allowable grace period. After the...Read More >>
July 28, 2015
JULY 2015 BAD FAITH CASES: (1) INSURANCE BAD FAITH STATUTE DOES NOT APPLY TO SURETIES; (2) PRINCIPLES ALLOWING AWARD OF ATTORNEY’S FEES FOR BAD FAITH CONDUCT IN BRINGING/DEFENDING/PURSUING LITIGATION CANNOT BE USED TO END RUN THE INSURANCE BAD FAITH STATUTE (Philadelphia Federal)
In Board of Trustees, Roofers Union Local 30 v. Liberty Mutual Insurance Company the court reiterated, with thorough citation of authority, that Pennsylvania’s insurance bad faith statute does not apply to sureties. The court also made clear that a plaintiff cannot use the argument that it is entitled to attorney’s fees under a bad...Read More >>
July 24, 2015
PENNSYLVANIA SUPREME COURT ADOPTS FAIR AND REASONABLE STANDARD FOR INSURED’S UNILATERALLY SETTLING CLAIMS WHERE: (1) THE INSURER REFUSES TO SETTLE, (2) THE INSURER HAS ISSUED A RESERVATION OF RIGHTS LETTER ON CLAIMS AT ISSUE, AND (3) COVERAGE IS ULTIMATELY DUE (Pennsylvania Supreme Court)
In Babcock & Wilcox Co. v. American Nuclear Insurers, Pennsylvania’s Supreme Court had to determine under what circumstances an insured being defended under a reservation of rights could settle with a claimant, absent the insurer’s agreement, and later recover the settlement proceeds from the insurer. The Supreme Court ruled that: (1) where an insurer...Read More >>
July 21, 2015
JULY 2015 BAD FAITH CASES: INJURED PLAINTIFF CANNOT BRING BAD FAITH CLAIM AGAINST THE DEFENDANT’S INSURER WITHOUT AN ASSIGNMENT FROM THE DEFENDANT-INSURED (Philadelphia Federal)
In Westport Insurance Corporation v. Mylonas, the insurer brought a declaratory judgment action its insured, and an underlying plaintiff with a judgment against the insured, seeking to limit coverage to an amount less than the judgment.  The plaintiff brought a bad faith counterclaim against the insurer, alleging that it had unreasonably eroded the policy...Read More >>
July 14, 2015
JULY 2015 BAD FAITH CASES: FIRST PARTY BAD FAITH PLAINTIFF FAILED TO PLEAD FACTS MEETING STANDARDS FOR A PLAUSIBLE CAUSE OF ACTION; AND INSTEAD PLEADED FACTS THAT MADE THE INSURER’S CONDUCT REASONABLY DEBATABLE, RENDERING ANY EFFORT TO ADD A BAD FAITH CLAIM FUTILE (New Jersey Federal)
In Mitra v. Principal Ins. Co., the insured sought to amend his complaint against his disability insurer, to add a claim for breach of the implied covenant of good faith and fair dealing.  The insurer opposed on a number of grounds, including failing to plead a plausible claim and legal futility. The insured alleged...Read More >>
July 13, 2015
JULY 2015 BAD FAITH CASES: COURT SEVERS AND STAYS FIRST PARTY BAD FAITH CLAIM (New Jersey Federal)
In Beachfront North Condominium Association v. Lexington Insurance Company, the New Jersey federal court granted the insurer’s motion to sever the breach of contract and bad faith actions, and to stay the bad faith claim.  The case involved a first party claim by a condominium association for Hurricane Sandy-related wind damage on its properties....Read More >>
July 10, 2015
JULY 2015 BAD FAITH CASES: SUPERIOR COURT FINDS (1) INSUREDS WAIVED APPELLATE REVIEW OF BAD FAITH CLAIMS BASED UPON DEFICIENCIES WITHIN INSUREDS’ Pa.R.A.P. 1925(b) STATEMENT; (2) INSUREDS’ BAD FAITH CLAIMS ARE TIME-BARRED IN ANY EVENT (Superior Court of Pennsylvania, Non-Precedential)
In Mountainside Holdings, LLC v. American Dynasty Surplus Lines Ins. Co., the defendant insurers were excess directors and officers liability insurance carriers at the tertiary level, with primary coverage and the first layer of excess coverage providing $10,000,000 in coverage.  The insureds raised bad faith and breach of contract claims against the insurers. The...Read More >>
July 9, 2015
JULY 2015 BAD FAITH CASES: (1) COURT DISMISSES BREACH OF IMPLIED DUTY OF GOOD FAITH AND FAIR DEALING CLAIM BECAUSE (i) IT CANNOT BE PLEADED SEPARATELY FROM A BREACH OF CONTRACT CLAIM AND (ii) BECAUSE THE ALLEGATIONS SUPPORTING THAT CLAIM WERE IDENTICAL TO THOSE SUPPORTING THE STATUTORY BAD FAITH CLAIM; AND (2) COURT ENTERS JUDGMENT FOR INSURER ON BAD FAITH CLAIM AFTER FINDING THAT INSURED, AS ASSIGNEE, RELEASED INSURER FROM ANY CLAIMS (Eastern District)
In Charbonneau v. Chartis Property Casualty Company, the court dismissed an assignee’s claims for breach of implied duty of good faith and fair dealing because it could not be pleaded separate from the breach of contract claim, and because it duplicated the statutory bad faith claim; and then dismissed the statutory bad faith claim...Read More >>
July 8, 2015
SUPERIOR COURT EN BANC PANEL RULES THAT STATUTE OF LIMITATIONS STARTS TO RUN FOR INSURER ON BRINGING DECLARATORY JUDGMENT ACTION WHEN IT HAD A SUFFICIENT FACTUAL BASIS TO SUPPORT ITS CONTENTIONS THAT NO DEFENSE OR INDEMNITY WERE DUE (Superior Court of Pennsylvania)
In Selective Way Insurance Company v. Hospitality Group Services, Inc., an en banc Superior Court panel set forth the law as to when the 4 year statute of limitations on insurance declaratory judgment actions begins to run.  The basic principle is that “the statute of limitations for a declaratory judgment action brought by an...Read More >>
July 8, 2015
JULY 2015 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM BASED ON FAILURE TO PLEAD ANYTHING MORE THAN CONCLUSORY ALLEGATIONS (Middle District)
In Rissinger v. State Farm Ins. Co., the court granted an insurer’s motion to dismiss a bad faith claim brought by its insureds after it was found that the insureds’ averments failed to rise above the level of conclusory allegations. The insureds originally filed a claim for coverage under a homeowners’ policy issued by...Read More >>
July 7, 2015
JULY 2015 BAD FAITH CASES: SECTION 8371 BAD FAITH CLAIM NOT PREEMPTED BY PENNSYLVANIA’S MOTOR VEHICLE FINANCIAL RESPONSIBILITY LAW (Middle District)
In Odgers v. Progressive Northern Insurance Company, the court denied the insurer’s motion to dismiss Plaintiff’s statutory bad faith claim on the basis that Pennsylvania’s Motor Vehicle Financial Responsibility Law (“MVFRL”) preempted the § 8371 claim. An insured ran over Plaintiff with his car as she walked within a pedestrian crosswalk. After the insured...Read More >>
July 6, 2015
JULY 2015 BAD FAITH CASES: COURT DENIES MOTION TO COMPEL PRODUCTION OF CLAIMS NOTES UNDER ATTORNEY CLIENT PRIVILEGE AND/OR WORK PRODUCT DOCTRINE (Middle District)
In Berry v. Ohio Casualty Insurance Company, the court addressed a dispute over whether certain notes in the claims files were protected from production. The court had received the unredacted notes for in camera review, prior to ruling. This was a UIM case where the tortfeasor’s insurer paid its full policy limits, and the...Read More >>
July 1, 2015
JULY 2015 BAD FAITH CASES: COURT PERMITS BAD FAITH CLAIM TO PROCEED BECAUSE COMPLAINT PROVIDED SUFFICIENT FACTUAL ALLEGATIONS, AND INSURER’S ARGUMENTS WENT BEYOND THE BOUNDS OF WHAT THE COURT WOULD ADDRESS AT THE PLEADING STAGE (Western District)
In Montgomery v. Allstate Property and Casualty Insurance Company, the court denied the insurer’s motion to dismiss the insureds’ bad faith claim based on averments set forth by the insureds that rose above conclusory allegations. The insureds claimed that their mobile home and its contents were destroyed by fire. The insureds further attested that...Read More >>
June 29, 2015
MOTION TO SEVER BAD FAITH CLAIM IN UIM CASE DENIED (Philadelphia Common Pleas)
The excellent Tort Talk blog today posted a summary and link to a Philadelphia Court of Common Pleas’ decision, denying a motion to sever a bad faith claim from the insured’s UIM breach of contract claim.Read More >>
June 26, 2015
JUNE 2015 BAD FAITH CASES: (1) COURT PERMITS CLAIMS TO PROCEED ON ALLEGATIONS THAT INSURER REFUSED TO CONTINUE DAMAGE APPRAISAL PROCESS UNLESS INSURED WITHDREW PENDING BAD FAITH CLAIMS; (2) COURT WOULD NOT CONSIDER INSURER’S FACTUAL ARGUMENTS ON MOTIVE TO ASSESS INSURED’S BAD FAITH IN SEEKING AMENDMENT, AT THE MOTION TO AMEND STAGE (Middle District)
In Militello v. Allstate Property and Casualty Insurance Company, the court granted the insured’s motion for leave to file a second amended complaint to add an additional claim for bad faith based upon: (1) an alleged refusal to conduct the appraisal process unless the pending bad faith claim was dropped; and (2) that bad...Read More >>
June 25, 2015
JUNE 2015 BAD FAITH CASES: FIRST PARTY BAD FAITH CLAIM FAILS AS A MATTER OF LAW WHEN AN INSURER IS GRANTED SUMMARY JUDGMENT ON THE BREACH OF CONTRACT CLAIM (New Jersey Federal)
In 151 E. Leaming Ave Condo Ass’n v. QBE Specialty Ins. Co., the insured’s bad faith claim failed as a matter of law because the Court had already entered summary judgment in favor of the insurer as to the insured’s breach of contract claim. The underlying suit arose after the insured’s property was damaged...Read More >>
June 24, 2015
JUNE 2015 BAD FAITH CASES: COURT (1) FINDS RESERVES CAN BE ADMITTED INTO EVIDENCE; (2) SETS THE TIME PERIOD TO CONSIDER EVIDENCE OF BAD FAITH FROM ACTUAL NOTICE OF THE CLAIM UNTIL THE CLAIM WAS RESOLVED; (3) FINDS EVIDENCE OF OTHER CASES NOT ADMISSIBLE; AND (4) FINDS EXPERT TESTIMONY ON CLAIMS HANDLING ADMISSIBLE ON BAD FAITH (Middle District)
In Clemens v. New York Central Mutual Fire Insurance Company, the court addressed numerous motions in limine, in a supplemental underinsured motorist action.  The motions directly addressing the bad faith claim are summarized below. Reserves The court rejected the insurer’s argument that evidence of reserves be barred from evidence.  The court cited case law...Read More >>
June 23, 2015
2015 BAD FAITH CASES: INSURED ADEQUATELY PLEADED BAD FAITH CLAIM BASED ON DELAYS IN THE CLAIMS HANDLING PROCESS (Middle District)
In Baker v. State Farm Mutual Automobile Insurance Company, the Court denied the insurer’s motion to dismiss an insured’s bad faith claim based on the delay in handling an underinsured motorist claim. The insured was involved in a motor vehicle accident caused by the other driver, and allegedly suffered serious injuries. The insured’s husband...Read More >>
June 22, 2015
JUNE 2015 BAD FAITH CASES: CHOICE OF FORUM PROVISION ENFORCEABLE AS TO EITHER COURT LISTED IN THE ALTERNATIVE; AND IT DID NOT PROVIDE THE INSURED WITH ABSOLUTE RIGHT TO CHOOSE AMONG THE LISTED JURISDICTIONS (Western District)
In Smith v. Progressive Specialty Insurance Company, the insured’s motion to remand breach of contract and bad faith UIM claims was denied.  The motion focused on the policy’s forum selection clause. The policy stated that coverage claims must be brought in the state court county of residence or in the U.S. District Court serving...Read More >>
June 19, 2015
JUNE 2015 BAD FAITH CASES: NO VIABLE ACTION FOR EMOTIONAL DISTRESS UNDER BAD FAITH LAW; ECONOMIC LOSS DOCTRINE BARS UNFAIR TRADE PRACTICES CLAIM (Philadelphia Federal)
In Gold v. State Farm Mutual Insurance Company the court struck the insured’s bad faith claims for emotional distress, stating that insurance bad faith causes of action do not encompass emotional distress. The court also applied the economic loss doctrine to dismiss the insured’s Unfair Trade Practices and Consumer Protection Law claims. Date of...Read More >>
June 18, 2015
JUNE 2015 BAD FAITH CASES: COURT DISMISSES CLAIM FOR BAD FAITH BREACH OF A SURETY BOND BECAUSE NO SUCH CAUSE OF ACTION IS RECOGNIZED IN NEW JERSEY (New Jersey Federal)
In U.S. Sewer & Drain, Inc. v. Earle Asphalt Company, the Court dismissed a claim for bad faith breach of a surety bond after the Court found that no such cause of action is recognized in New Jersey. The case arose out of a public construction contract to widen and improve a section of...Read More >>
June 17, 2015
JUNE 2015 BAD FAITH CASES: COURT PERMITS DEPOSITION OF CLAIMS HANDLER IN UIM CASE WHERE NO STATUTORY BAD FAITH CLAIM EXPRESSLY ASSERTED (Middle District)
In Rau v. Allstate Fire and Casualty Insurance Company, the Court found that the insured’s claim for breach of the common law duty of good faith and fair dealing was adequately pleaded within a breach of contract/UIM claim, and permitted the deposition of the insurer’s claims adjuster to proceed, within limits. The insured wanted...Read More >>
June 16, 2015
2015 BAD FAITH CASES: THIRD CIRCUIT FINDS (1) INSURER HAS NO DUTY TO CONSIDER POTENTIAL FOR PUNITIVE DAMAGES WHEN NEGOTIATING SETTLEMENT OF UNDERLYING CASE; (2) PUNITIVE DAMAGES AGAINST INSURED MAY NOT BE CONSIDERED IN EVALUATING BAD FAITH CLAIMS AGAINST INSURER; BUT (3) CONTRACTUAL BAD FAITH CLAIM MAY PROCEED ON THEORY OF ENTITLEMENT TO NOMINAL DAMAGES; AND (4) STATUTORY BAD FAITH CLAIM MAY PROCEED EVEN IF NO COMPENSATORY DAMAGES DUE ON BREACH OF INSURANCE CONTRACT CLAIM (Third Circuit)
In Wolfe v. Allstate Property & Casualty Insurance Company, the Third Circuit was presented with the question of “whether punitive damages awarded against an insured in a personal injury suit are recoverable in a later breach of contract or bad faith suit against the insurer.” The Court predicted that Pennsylvania’s Supreme Court would rule...Read More >>
June 16, 2015
JUNE 2015 BAD FAITH CASES: FIRST PARTY CONTRACTUAL BAD FAITH CLAIM ADEQUATELY PLEADED UNDER NEW JERSEY LAW; PENNSYLVANIA STATUTORY BAD FAITH CLAIM DISMISSED AFTER CONFLICT OF LAW ANALYSIS (New Jersey Federal)
In Bridgewater Wholesalers, Inc. v. Pennsylvania Lumbermens Mutual Insurance Company, the Court denied a motion to dismiss an insured’s bad faith claim under New Jersey law.  However, after conducting a conflict of law analysis, it did dismiss plaintiff’s claims for relief under Pennsylvania’s bad faith statute. In this case, the insured was a commercial...Read More >>
June 15, 2015
JUNE 2015 BAD FAITH CASES: BAD FAITH CLAIM DISMISSED WITHOUT PREJUDICE FOR FAILING TO PLEAD PLAUSIBLE ACTION (Philadelphia Federal)
In Pasqualino v. State Farm Mutual Automobile Insurance Company, the insured brought claims for breach of contract and bad faith against its insurer. The insurer had issued a policy in which the insured was provided with uninsured motorist coverage. The insured was involved in a motor vehicle collision with an uninsured motorist, and the...Read More >>
June 13, 2015
JUNE 2015 BAD FAITH CASES: ALTHOUGH NO BAD FAITH ASSERTED, JUDGE NEALON PROVIDES EXCELLENT OVERVIEW OF BAD FAITH DISCOVERY LAW AS BASELINE FOR HIS RULINGS (Lackawanna Common Pleas)
In Sharp v. Travelers Personal Security Insurance Co., although no bad faith claim was filed, the court used comparisons to discovery in insurance bad faith cases repeatedly throughout this detailed opinion. On the issue of reserves, the court cited numerous opinions, pro and con, on the proposition that “insurance reserves are discoverable in bad...Read More >>
June 12, 2015
JUNE 2015 BAD FAITH CASES: WHERE INSURED’S BROKER WAS A NON-DIVERSE CO-DEFENDANT, AND AN ACTIONABLE BREACH OF CONTRACT CLAIM BASED ON ERRORS IN THE INSURANCE APPLICATION PROCESS WAS PLEADED AGAINST THE BROKER, THE CASE WAS REMANDED FOR LACK OF DIVERSITY JURISDICTION (Western District)
In Hines v. Mutual of Omaha Insurance Company, the Court remanded a bad faith claim after finding a no subject matter jurisdiction. In the underlying complaint, the insured claimed he honestly answered all of the questions on the insurance application, and that his agent/broker was involved in the process. The insured was denied coverage for...Read More >>
June 11, 2015
JUNE 2015 BAD FAITH CASES: (1) ATTORNEY CLIENT PRIVILEGE AND WORK PRODUCT DOCTRINE PROTECT AGAINST PRODUCTION OF CLAIMS FILES; (2) COURT WILL NOT PRESUME COUNSEL IS MISREPRESENTING NATURE OF REDACTED MATERIALS AS BASIS TO CONDUCT IN CAMERA INSPECTION; (3) COURT RELIES ON PRIVILEGE LOG IN MAKING RULINGS; (4) RESERVES NOT DISCOVERABLE AS INSURED FAILED TO SHOW GOOD CAUSE FOR PRODUCTION; (5) PRESENCE OF BAD FAITH CLAIM ALONE CANNOT AUTOMATICALLY REQUIRE PRODUCTION OF ATTORNEY MATERIALS (Middle District)
In Lane v. State Farm Mutual Automobile Insurance Company, the court provided a detailed discussion of the work product doctrine, in the context of a UM-bad faith claim against the insurer.  The court addressed three sets of materials on the insured’s motion to compel: (1) whether the mental impressions of insurers employees recorded after...Read More >>
June 10, 2015
JUNE 2015 BAD FAITH CASES: UNDER “FAIRLY DEBATABLE” STANDARD, INSURER DENIED SUMMARY JUDGMENT, EVEN WHERE INSURED HAD NOT FORMALLY MOVED FOR SUMMARY JUDGMENT ON REASONABLENESS/COVERAGE (New Jersey Federal)
In Hawkins v. Globe Life Insurance Company, the Court denied an insurer’s motion for summary judgment on an insured’s bad faith claim. In late August 2011, the insured applied for a second policy of insurance on the life of her nineteen year-old son, who was murdered after the insurer received the insured’s enrollment form...Read More >>
June 9, 2015
JUNE 2015 BAD FAITH CASES: COURT FOUND NO ACTION FOR BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING THAT WAS SEPARATE FROM THE BAD FAITH CLAIM ALSO ASSERTED (New Jersey Federal)
In Senft v. Fireman’s Fund Insurance Company, the Court granted in part and denied in part an insurer’s motion to dismiss claims brought by its insureds based on denial of coverage, after the insureds’ home suffered damages as a result of Hurricane Sandy. The insureds had previously purchased a “Prestige Home Premier Policy” on...Read More >>
June 8, 2015
JUNE 2015 BAD FAITH CASES: NO BAD FAITH CLAIM SUSTAINABLE WHERE NO BREACH OF INSURANCE CONTRACT; INSURER HAD NO OBLIGATION UNDER ITS POLICY TO PAY BENEFITS AS ANOTHER POLICY HAD HIGHER PRIORITY (Western District)
In Bailey v. State Farm Mutual Automobile Insurance Company, the Court dismissed an insured’s bad faith complaint with prejudice based on a claim for extraordinary medical benefits under his mother’s insurance policy. In November, 2012, the insured was “critically and permanently injured in a motor vehicle collision while he was an occupant of a...Read More >>
June 5, 2015
JUNE 2015 BAD FAITH CASES: BAD FAITH UIM CASE PROPERLY PLEADED WHERE INSURED DETAILED HISTORY OF COOPERATION WITH INSURER, AND INSURER REFUSED TO PAY POLICY LIMITS (Western District)
In Vankirk v. State Farm Mutual Automobile Insurance Company, the Court found that the insurer was not entitled to Rule 12(b)(6) dismissal of the insured’s bad faith claim. The case arose out of a car accident in which the insured was struck by another motorist insured by the same carrier. During litigation against the...Read More >>
June 4, 2015
JUNE 2015 BAD FAITH CASES: MOTOR VEHICLE FINANCIAL RESPONSIBILITY LAW ONLY PRE-EMPTS BAD FAITH STATUTE IN LIMITED AREAS, AND ALLEGATIONS OF BIASED PEER REVIEW IN MEDICAL REPORTS IS NOT PREEMPTED (Philadelphia Federal)
In Gibson v. Progressive Specialty Insurance Company, the Court found that an insured stated a  bad faith claim by alleging that his insurer used a biased peer review organization (“PRO”) in denying him coverage. The insured obtained an automobile insurance policy from his insurer, for $100,000 in primary coverage and $1,000,000 in excess coverage....Read More >>
June 3, 2015
JUNE 2015 BAD FAITH CASES: UNDISCLOSED PUTATIVE CONFLICT WITH DOCTOR PERFORMING IME NOT BASIS FOR BAD FAITH; INSURER CAN RELY ON IME WHERE NO EVIDENCE PUT FORWARD THAT IT WAS FLAWED (Middle District)
In Neal v. State Farm Mutual Automobile Insurance Company, the Court granted the insurer’s motion for summary judgment and held that the insurer did not act in bad faith after denying benefits to the insured based on an independent medical examination (“IME”) that showed the insured had reached “pre-injury” status. In the underlying action,...Read More >>
June 2, 2015
JUNE 2015 BAD FAITH CASES: NO VIOLATION OF NEW JERSEY’S INSURANCE FRAUD PREVENTION ACT WHERE INSURER COULD NOT PROVE INDIVIDUALS’ FRAUDULENT INTENT (New Jersey Appellate Division)
In Allstate Insurance Company v. Northfield Medical Center, P.C., the court found that a business partnership between a chiropractor and a doctor, that submitted claims to the insurer, was not intentionally structured to violate the Insurance Fraud Prevention Act. Thus, it overturned a nearly $4 million judgment for the insurer. The case arose out...Read More >>
June 1, 2015
JUNE 2015 BAD FAITH CASES: SUPERIOR COURT VACATES JUDGMENT ON BAD FAITH CLAIM AFTER CLOSE FACTUAL ANALYSIS; AND DIRECTS TRIAL COURT ON REMAND TO ALLOW EXPERT TESTIMONY CONCERNING ADJUSTER’S OBLIGATION TO CLARIFY LEGAL INTERPRETATION OF POLICY TERMS, BUT NOT TO CONSIDER INSURED’S POST-DENIAL CONDUCT (Superior Court)
In Mohney v. American General Life Insurance Company, the Superior Court reversed the trial court, and remanded the insured’s statutory bad faith case against his disability insurer for a new trial.  At the time of this decision, the case had been pending in some form for 20 years. The insurer originally paid total disability...Read More >>
May 30, 2015
MAY 2015 BAD FAITH CASES: ALL OF INSURED’S CLAIMS AGAINST TITLE INSURER BARRED BY CONTRACTUAL LIMITATIONS PERIOD (Philadelphia Commerce Court)
In Oak Mortgage Co., LLC v. Fidelity National Title Insurance Company, the insured brought claims for declaratory relief, breach of contract, and bad faith against its title insurer.  The title insurer had issued a Closing Service Letter (CSL) which provided, in part, a one year contractual limitation period for the insured to bring any...Read More >>
May 29, 2015
MAY 2015 BAD FAITH CASES: TERMINATING POLICY WITH KNOWLEDGE THAT PROPER NOTICES WERE NOT SENT STATED AN ACTIONABLE BAD FAITH CLAIM; STATUTE OF LIMITATIONS WAS TRIGGERED UPON CLEAR NOTICE OF DENIAL WHICH BARRED POLICY HOLDER CLAIMS, BUT NOT BENEFICIARY CLAIMS, UNDER THE DISCOVERY RULE (Philadelphia Federal)
In Hilston v. American General Life Insurance Company, the plaintiff brought breach of contract and bad faith claims against her late father’s life insurer, the policy being held in a trust.  The court found that her claim as substitute trustee was barred by the two year statute of limitations, in light of notice to...Read More >>
May 28, 2015
MAY 2015 BAD FAITH CASES – DIETZ & WATSON PART III: ATTORNEY CLIENT PRIVILEGE WAIVED IN BAD FAITH CASE WHERE IT WAS NOT TIMELY ASSERTED, AND WHERE OTHER CONDUCT CONSTITUTED WAIVER (Philadelphia Federal)
In Dietz & Watson v. Liberty Mutual Insurance Company, Magistrate Judge Rueter continued to address the numerous discovery issues in the context of third party insurance bad faith litigation.  The first case is summarized as to mediation privileges issues here, and as to depositions of attorneys here. The current discovery disputes involved the insured’s...Read More >>
May 27, 2015
SUPREME COURT CHANGES DIRECTION ON EMPLOYERS’ LIABILITY EXCLUSION AFTER 48 YEARS
The Supreme Court of Pennsylvania has effectively overruled its 48 year old decision in Pennsylvania Manufacturers’ Association Insurance Co. v. AETNA Casualty & Surety Insurance Co., 426 Pa. 453, 233 A.2d 548 (1967) (PMA), at least in the context of commercial insurance policies.  Mutual Benefit Insurance Company v. Politsopoulos, No. 60 MAP 2014 (May...Read More >>
May 27, 2015
MAY 2015 BAD FAITH CASES: REMOVAL UNTIMELY EVEN AFTER PLAINTIFF SOUGHT TO AMEND COMPLAINT TO ADD A BAD FAITH CLAIM, TWO WEEKS PRIOR TO ONE YEAR REMOVAL PERIOD EXPIRING (Philadelphia Federal)
In Lare v. State Farm Fire & Casualty Company, the federal court remanded this breach of contract and bad faith action on the basis that the removal was filed more than one year after the original suit was filed. The insured brought a breach of insurance contract claim, seeking less than $50,000, in the...Read More >>
May 26, 2015
MAY 2015 BAD FAITH CASES: THERE CAN BE NO BAD FAITH WITHOUT THE DENIAL OF A BENEFIT; STATUTE OF LIMITATIONS APPLIED; DISCOVERY CONDUCT NOT A BASIS OF BAD FAITH CLAIM (Philadelphia Federal)
In Duda v. Standard Insurance Company, the court found the statutory bad faith claimed barred by the 2 year statute of limitations.  The statute of limitations begins to run when “an insurer clearly and unequivocally puts an insured on notice that he or she will not be covered under a particular policy for a...Read More >>
May 22, 2015
MAY 2015 BAD FAITH CASES: SUMMARY JUDGMENT GRANTED BECAUSE PRIOR WORKERS’ COMPENSATION DECISION ESTABLISHED REASONABLE BASIS FOR INSURER’S APPLICATION OF EXCLUSION (Philadelphia Federal)
In Gibble v. Cincinnati Insurance Companies, the court found that the plaintiff did not produce sufficient evidence from which a reasonable jury could find in his favor on a bad faith claim, and granted the insurer summary judgment. In this case, the policy exclusion relied upon by the carrier to exclude coverage was that...Read More >>
May 21, 2015
MAY 2015 BAD FAITH CASES: ATTORNEY’S FEES ONLY AVAILABLE IF THERE IS BAD FAITH; NO SEPARATE CLAIM FOR BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING; FACTS PLEADED MET PLAUSIBILITY STANDARD; COMPENSATORY AND CONSEQUENTIAL DAMAGES NOT AVAILABLE UNDER BAD FAITH STATUTE; AND PUNITIVE DAMAGES NOT AVAILABLE IN ACTION TO COMPEL SPECIFIC PERFORMANCE OF AN APPRAISAL (Philadelphia Federal)
In St. Clair v. State Farm Fire & Casualty Company, the court stated the following principles and legal conclusions:   A plaintiff can recover attorney’s fees under the bad faith statute for a bad faith breach of an insurance contract, but cannot recover attorney’s fees for the simple breach of contract claim in the...Read More >>
May 20, 2015
MAY 2015 BAD FAITH CASES: NO BAD FAITH WHERE NO BREACH OF OBLIGATION TO PAY BENEFITS; FEGLI PRE-EMPTS STATE BAD FAITH LAW (Western District)
In Hajdu v. Metropolitan Life Insurance Company, the court found: “Since, as a matter of law, did not breach the FEGLI contract by not paying benefits under annuitant policy, no claim for bad faith can be established.”  Further, the court found the FEGLI pre-empted state bad faith law. Date of Decision: ...Read More >>
May 19, 2015
MAY 2015 BAD FAITH CASES: INSURED PLEADS PLAUSIBLE CLAIM FOR BAD FAITH CLAIMS HANDLING AND LOW SETTLEMENT OFFER AS TO BOTH STATUTORY AND CONTRACTUAL BAD FAITH; CONSEQUENTIAL DAMAGES THEORETICALLY AVAILABLE ON CONTRACTUAL BAD FAITH CLAIM (Middle District)
In Lane v. State Farm Mutual Automobile Insurance Company, the insured was injured in an accident with an uninsured motorist. The insured sought the $100,000 limit from his carrier, and the carrier offered well below that figure.  The insured brought breach of contract, contractual bad faith, and statutory bad faith claims.  The carrier moved...Read More >>
May 18, 2015
MAY 2015 BAD FAITH CASES: COURT REFUSES TO REMAND CASE, EVEN WHERE PLAINTIFF PLEADS RELIEF IN A SUM “NOT IN EXCESS OF $50,000”, WHERE PUNITIVE DAMAGES AND ATTORNEYS FEES UNDER BAD FAITH STATUTE WERE CONSIDERED AS ALLOWING THE PLAINTIFF TO GO ABOVE THE $50,000 FIGURE (Philadelphia Federal)
In Sloan v. Liberty Insurance Corporation, the court denied a motion to remand the case to the Court of Common Pleas based on a disputed amount in controversy. Plaintiff had filed suit against her insurer, alleging breach of contract and bad faith with regards to a loss covered under her insurance policy. The insurer...Read More >>
May 15, 2015
MAY 2015 BAD FAITH CASES: HOMEOWNER INSUREDS PLEAD SUFFICIENT FACTS TO DEFEAT MOTION TO DISMISS BAD FAITH CLAIM BASED ON INVESTIGATION FAILURES (Middle District)
In Sutton v. Allstate Insurance Company, the court determined that the insured adequately pled a bad faith cause of action against their insurer. The matter arose out of a rejected claim on a homeowners insurance policy. After the insurer denied coverage, the insureds filed suit and alleged breach of contract and bad faith. The...Read More >>
May 14, 2015
MAY 2015 BAD FAITH CASES: COURT FINDS NO “GOOD FAITH AND FAIR DEALING” CAUSE OF ACTION SEPARATE FROM BREACH OF CONTRACT AND BAD FAITH ACTION (Middle District)
In Monck v. Progressive Corp., Plaintiff was involved in an automobile accident and received $16,000 from a policy held by the driver of the other vehicle. The insured claimed this amount was insufficient, and asserted that she was an insured under a policy issued to her aunt and uncle because she met the definition...Read More >>
May 13, 2015
2015 BAD FAITH CASES: THIRD CIRCUIT AFFIRMS SUMMARY JUDGMENT ON BAD FAITH CLAIM WHERE NO DISPUTE OF FACT INVESTIGATION WAS REASONABLE, “INITIAL” SETTLEMENT OFFERS COULD BE MADE SUBJECT TO FURTHER DISCOVERY AND EVALUATION, AND INSURED FAILED TO SHOW SELF INTEREST OR ILL WILL UNDER THE SUPERIOR COURT’S GROSSI DECISION (Third Circuit)
In Miezejewski v. Infinity Auto Insurance  Company, the insured was injured in an auto accident, and not only suffered physical injury, but alleged her physical condition deteriorated over time, causing her to be terminated from her employment.  She claimed that the carrier’s claim evaluation was too low, and failed to consider lost wages.  The...Read More >>
May 12, 2015
MAY 2015 BAD FAITH CASES: PLAINTIFF’S CLAIM FOR BAD FAITH DISMISSED AS A MATTER OF LAW WHEN NO COVERAGE EXISTED IN UNDERLYING SUIT (Western District)
In Hammond v. United States Liab. Ins. Co., the court cited the Third Circuit’s opinion in  Frog, Switch & Mfg. Co., Inc. v. Travelers Ins. Co., 193 F.3d 742, 751 (3d Cir. 1999), for the proposition that “under Pennsylvania law, if a court determines that there is no coverage, the insurance carrier had ‘good...Read More >>
May 11, 2015
MAY 2015 BAD FAITH CASES: CONTRACTUAL AND STATUTORY BAD FAITH MAY BE SUPPORTED BY EVIDENCE THAT AN INSURER MADE A MISREPRESENTATION OR FAILED TO COMMUNICATE WITH INSURED DURING A MEDIATION, IF THAT ACTION OR INACTION CAUSED THE INSURED TO MAKE A PERSONAL CONTRIBUTION TO A SETTLEMENT WITHIN POLICY LIMITS; THOUGH THE INVITATION TO CONTRIBUTE ITSELF WAS NOT ACTIONABLE IN THIS CASE (Western District)
This is a reposting link for our Saturday May 9, 2015 post. Chief Judge Conti of the Western District provided a detailed analysis of potential bad faith issues that might arise during settlement negotiations/mediation of a third party claim, where the insured (represented by personal counsel at the mediation) is involved in potentially or actually contributing personal funds...Read More >>
May 11, 2015
MAY 2015 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM IN AMENDED COMPLAINT WITH PREJUDICE UNDER TWOMBLY/IQBAL, AFTER INSUREDS WERE ON NOTICE OF PLEADING DEFICIENCIES AND FAILED TO CURE THEM IN THEIR AMENDED COMPLAINT (Philadelphia Federal)
In Groth v. State Farm Fire & Casualty Company, the insureds brought a bad faith claim against their homeowners’ insurer.  They alleged the insurer acted in bad faith through the manner of claims investigation, by placing the insurer’s interest over the insureds’ interest, by improperly construing the insurance policy, and by not paying the...Read More >>
May 10, 2015
Enjoy this Spring day, May is going to be a busy month for bad faith blog posts
  Photos by M. M. GinsbergRead More >>
May 9, 2015
MAY 2015 BAD FAITH CASES: CONTRACTUAL AND STATUTORY BAD FAITH MAY BE SUPPORTED BY EVIDENCE THAT AN INSURER MADE A MISREPRESENTATION OR FAILED TO COMMUNICATE WITH INSURED DURING A MEDIATION, IF THAT ACTION OR INACTION CAUSED THE INSURED TO MAKE A PERSONAL CONTRIBUTION TO A SETTLEMENT WITHIN POLICY LIMITS; THOUGH THE INVITATION TO CONTRIBUTE ITSELF WAS NOT ACTIONABLE IN THIS CASE (Western District)
In McMahon v. Medical Protective Company, the court decided cross-motions for summary judgment in a case where the insured offered to contribute some of her own money to settle a claim that could lead to a verdict in excess of policy limits if brought to trial.  The insured alleged both contractual bad faith and...Read More >>
May 7, 2015
MAY 2015 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT ON BAD FAITH CLAIM BASED ON REASONABLENESS OF INSURER’S VALUATION OF INSURED’S UIM CLAIM BY A SEASONED ADJUSTER (Philadelphia Federal)
In Insetta v. First Liberty Insurance Cop., the insurer made a verbal offer of $34,000 to the insured plaintiff, to settle his UIM claim. The insurer’s adjuster placed a monetary value on the claim based upon a review of plaintiff’s medical records and economic data showing wage losses due to the accident; and also...Read More >>
May 6, 2015
MAY 2015 BAD FAITH CASES: COURT ADDRESSES DISCOVERY DISPUTES OVER (1) CLAIMS MANUALS; (2) PERSONNEL FILES; AND (3) OTHER LAWSUITS, NARROWING DISCOVERY IN SOME INSTANCES TO SPECIFIC ADJUSTER WHOSE CONDUCT WAS AT ISSUE, AND NARROWING TIME PERIODS (Middle District)
In Stephens v. State Farm Fire & Casualty Company, the insured under a homeowners policy brought breach of contract and bad faith claims for failure to pay benefits, and an Unfair Trade Practices and Consumer Protection Law claim for termination of the policy.  The court addressed various discovery disputes concerning the bad faith claims...Read More >>
May 4, 2015
MAY 2015 BAD FAITH CASES: BAD FAITH CLAIM COULD PROCEED TO TRIAL ON THEORY THAT INSURER’S ADJUSTER REFUSED TO DISCUSS A SPECIFIC POLICY COVERAGE PROVISION WITH THE INSURED (Philadelphia Federal)
In Windowizards, Inc. v. Charter Oak Fire Insurance Company, the insured sought coverage for damaged roof trusses and losses for required upgrades based upon ordinance violations, in a commercial building. The insurer accepted that the damage to some of the trusses may be covered if damaged by snow, but not others if the damage...Read More >>
May 3, 2015
MAY 2015 BAD FAITH CASES: NO BAD FAITH IN FIRST PARTY CASE WHERE DECISION NOT TO PAY LIFE INSURANCE BENEFITS WAS FAIRLY DEBATABLE (New Jersey Federal)
In Barratt v. Metropolitan Life Insurance Company, the insured asserted a breach of the covenant of good faith and fair dealing for failure to pay life insurance proceeds.  The carrier defended by arguing the policy has lapsed for non-payment of premiums.  The court granted the insurer summary judgment on the bad faith claim. As...Read More >>
May 1, 2015
MAY 2015 BAD FAITH CASES: NO BAD FAITH BASED ON INVESTIGATION AND EXPERIENCE OF INSURANCE TEAM, EVEN THOUGH EXPERT NOT USED IN INVESTIGATION, AND ORIGINAL REFERENCES IN DENIAL LETTER WERE TO GENERIC POLICY AND NOT INSURED’S SPECIFIC POLICY (Middle District)
In Boulware v. Liberty Insurance Corp., the insurer denied a claim for a damaged deck, under a homeowners policy, on the basis of exclusions for faulty workmanship, wear and tear and/or rot.  The insurer’s adjuster came to the scene and investigated, but did not bring an engineer.  He determined the cause was poor work...Read More >>
May 1, 2015
MAY 2015 BAD FAITH CASES: COURT REMANDS CASE TO COURT OF COMMON PLEAS BASED ON LACK OF DIVERSITY OF CITIZENSHIP, REJECTING FRAUDULENT JOINDER ARGUMENT (Middle District)
In Krol v. Allstate Insurance Company, the plaintiffs were injured when they were driving in a car that was struck by an uninsured driver. Plaintiffs were treated by a doctor whose principal place of business was in Pennsylvania. Plaintiffs’ insurers refused to pay their medical bills, and argued that Plaintiffs’ injuries were not causally...Read More >>
April 14, 2015
APRIL 2015 BAD FAITH CASES: COURT FINDS MERITORIOUS DEFENSE TO BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING WHERE INSURER ALLEGED IT PAID THE BENEFITS, AND OPENS DEFAULT AGAINST INSURER (New Jersey Federal)
In Ryan v. Liberty Mutual Insurance Company, a Hurricane Sandy case, the insurer was attempting to open a default judgment. In looking at the meritorious defense component of the test for opening a default judgment, the court found that the insurer had asserted meritorious defenses to the insureds’ claims for breach of contract and...Read More >>
April 14, 2015
APRIL 2015 BAD FAITH CASES: SECTION 8371 DOES NOT PROVIDE FOR COMPENSATORY OR CONSEQUENTIAL DAMAGES; THERE IS NO PRIVATE UIPA ACTION; INDEPENDENT ADJUSTER OWED NO DUTY TO INSURED (Philadelphia Federal)
In Tippett v. Ameriprise Insurance Company, the court observed that unlike claims for breach of the contractual duty of good faith and fair dealing, the remedy for statutory bad faith under section 8371 does not allow a plaintiff to recover compensatory or consequential damages. These plaintiffs also brought a count for violation of the...Read More >>
April 14, 2015
CAN SECTION 8371 BAD FAITH EXIST WHERE THERE IS NO DENIAL OF A BENEFIT
We posted a case summary yesterday, where the opinion, like many others, indicated that section 8371 bad faith can exist even where no benefit is denied.   There are times when the bad faith conduct at issue involves a delay in paying a benefit (or providing a defense), which many courts have equated with the...Read More >>
April 13, 2015
APRIL 2015 BAD FAITH CASES: BAD FAITH CLAIM PREEMPTED BY ERISA AS TO INSURER (Middle District)
In the court’s first decision in Hayes v. Reliance Standard Life Insurance Company, the insured’s bad faith claim against the insurer was preempted by ERISA.  Six days later, the same argument failed, as to a claim against an insurance broker, as insufficiently related to the plan at issue. Date of Decision:  March 17, 2015...Read More >>
April 13, 2015
APRIL 2015 BAD FAITH CASES: COURT DOES HISTORICAL REVIEW OF CASES APPLYING TWOMBLY/IQBAL TO DISMISS BAD FAITH CLAIMS FOR BAREBONES PLEADINGS (Philadelphia Federal)
In Schor v. State Farm Fire & Casualty Insurance Company, the court conducted an historical review of cases applying the Twombly/Iqbal standards to bad faith pleadings, where those cases were dismissed for only setting out bare bones allegations.  It then found the case before it no different, and dismissed the complaint with leave to...Read More >>
April 13, 2015
APRIL 2015 BAD FAITH CASES: COURT REFUSES TO SEVER CONTRACT AND BAD FAITH UIM CLAIMS, AND REFUSES TO STAY DISCOVERY; COURT RECOGNIZES PRIVILEGES REMAIN IN TACT ABSENT ADVISE OF COUNSEL DEFENSE, BUT ALLOWS DISCOVERY OF CLAIMS FILES AS TO EVALUATION PROCESS; COURT OBSERVES THAT IT IS NOT BOUND BY CONTRARY DECISIONS OF COURTS OF COMMON PLEAS, AND THAT INSURER TOOK THAT RISK WHEN IT REMOVED THE CASE TO FEDERAL COURT (Middle District)
In Griffith v. Allstate Insurance Company, the insurer brought a Rule 42 motion to sever the bad faith and contract claims in this UIM case, and to stay bad faith discovery. The court denied both motions. The court first found that the issues were intertwined on both claims. The pivotal “point for both cases...Read More >>
April 13, 2015
APRIL 2015 BAD FAITH CASES: INSURED DENIED SUMMARY JUDGMENT WHERE CLAIMS HANDLING ISSUES AND BAD FAITH TO BE RESOLVED BY JURY (Middle District)
In Scheirer v. Nationwide Insurance Company of America, the insured pleaded bad faith, among other claims, for an alleged inordinate delay in handling her claim. The claim involved alleged uninsured motorist (“UM”) benefits owed as a result of an injury the insured suffered in a bus accident. Both the insured and insurer brought motions...Read More >>
March 31, 2015
MARCH 2015 BAD FAITH CASES: MOTION TO DISMISS NOT SUITABLE MEANS TO ADDRESS WHETHER INSURER’S POSITION WAS FAIRLY DEBATABLE, IN THIS ACTION, AND WAS THEREFORE DENIED (New Jersey Federal)
In Zodda v. National Union Fire Insurance Company, the insured pleaded bad faith, among other claims, for denial of benefits on a disability policy.  The insured brought claims against multiple insurers, alleging an elaborate scheme in marketing the disability insurance at issue, and in denying benefits.  As to the insurance bad faith claim, the...Read More >>
March 30, 2015
MARCH 2015 BAD FAITH CASES – DIETZ & WATSON PART II: COURT PERMITS DEPOSITIONS OF INSURED’S COUNSEL IN CONNECTION WITH AFFIRMATIVE DEFENSES OF: SETTLEMENT WITHOUT CONSENT, AND ALLEGED UNCLEAN HANDS AND COLLUSION; BUT DENIES DEPOSITION OF INSURER’S COUNSEL WHOSE DECISIONS WERE MADE AFTER NOTICE OF BAD FAITH CLAIM, AND SOME OF THE DISPUTES WERE IN THE NATURE OF DISCOVERY DISPUTES WHICH ARE NOT THE BASIS OF A BAD FAITH CLAIM (Philadelphia Federal)
In Dietz & Watson v. Liberty Mutual Insurance Company, Magistrate Judge Rueter addressed numerous discovery issues in the context of third party insurance bad faith litigation.  The insurer asserted that documents the insured sought were protected by the mediation privilege and/or the attorney-client privilege or work product doctrine. (This is addressed in a separate...Read More >>
March 30, 2015
MARCH 2015 BAD FAITH CASES – DIETZ & WATSON PART I: STATUTORY MEDIATION PRIVILEGE APPLIES TO MEDIATIONS IN UNDERLYING TORT ACTION WHERE DISCOVERY IS SOUGHT FOR SUBSEQUENT BAD FAITH CASE; MEDIATION PRIVILEGE APPLIES TO NON-LAWYER INSURER REPRESENTATIVES; AND COURT INSTRUCTS INSURER TO PROVIDE A MORE DETAILED PRIVILEGE LOG FOR DOCUMENTS OUTSIDE THE MEDIATION PRIVILEGE WHERE THE INSURER SEEKS TO ASSERT THE ATTORNEY CLIENT PRIVILEGE OR WORK PRODUCT DOCTRINE (Philadelphia Federal)
In Dietz & Watson v. Liberty Mutual Insurance Company, Magistrate Judge Rueter addressed numerous discovery issues in the context of third party insurance bad faith litigation.  The insurer asserted that documents the insured sought were protected by the mediation privilege and/or the attorney-client privilege or work product doctrine.  Further, the insurer had objected to...Read More >>
March 27, 2015
MARCH 2015 BAD FAITH CASES: SUPERIOR COURT UPHOLDS BAD FAITH PUNITIVE DAMAGES AWARD, AND PERMITS INCLUSION OF ATTORNEY’S FEES AS PART OF BASE NUMBER UPON WHICH TO CALCULATE PUNITIVE DAMAGES (Superior Court of Pennsylvania, non-precedential)
In Davis v. Fidelity National Title Insurance Company, a non-precedential decision of the Superior Court, the insured brought breach of contract and bad faith claims against its title insurer.  After a lengthy process from the time the claim was made to the time the insurer paid another party claiming an ownership interest to clear...Read More >>
March 26, 2015
MARCH 2015 BAD FAITH CASES: NEW JERSEY APPELLATE DIVISION MAKES CLEAR THAT PROPER PRACTICE REQUIRES SEVERING BAD FAITH CLAIM FROM UNINSURED MOTORIST CLAIM, AND STAYING DISCOVERY OF THE BAD FAITH CLAIM UNTIL THE UNDERLYING CLAIM IS DETERMINED (New Jersey Appellate Division)
In Wacker-Ciocco v. GEICO, the court addressed the applicability of its earlier decision in Procopio v. Government Employees Insurance Company, 433 N.J. Super. 377, 80 A.3d 749 (App. Div. 2013), on the issue of discovery and severance of bad faith claims.  In the earlier case, the appellate court had ruled that where an uninsured...Read More >>
March 26, 2015
MARCH 2015 BAD FAITH CASES: PLEADING FACTS ABOUT AN INSURER’S CONDUCT, WITHOUT PLEADING ADDITIONAL FACTS AS TO WHY THAT CONDUCT WAS UNREASONABLE, INTENTIONAL AND/OR RECKLESS, COULD NOT SET OUT A PLAUSIBLE BAD FAITH CLAIM UNDER TWOMBLY/IQBAL (Philadelphia Federal)
In Allen v. State Farm Mutual Automobile Insurance Company, the insured brought breach of contract and bad faith claims arising out of an uninsured motorist case.  The insured had promptly filed an uninsured motorist claim after the accident, and alleged that she and the insurer “’failed to agree on the amount of uninsured motorist...Read More >>
March 24, 2015
MARCH 2015 BAD FAITH CASES: INSURER ENTITLED TO ATTORNEY’S FEES AGAINST OTHER INSURER IN DECLARATORY JUDGMENT ACTION; CLAIM OF UNCLEAN HANDS REJECTED (New Jersey Federal)
In Carolina Casualty Insurance Company v. Travelers Property Casualty Company, the plaintiff insurer brought a declaratory judgment action against two other insurers.  It sought a judgment that it owed no defense or coverage obligations in connection with an underlying claim.  The defendant insurers were successful in finding plaintiff owed coverage.  The plaintiff insurer was...Read More >>
March 23, 2015
MARCH 2015 BAD FAITH CASES: WHERE MATERIAL ISSUES OF FACT EXIST OVER ALLEGED MISREPRESENTATIONS BY INSURED, COURT WOULD NEITHER DISMISS THE INSURED’S BREACH OF CONTRACT CLAIM OR THE INSURER’S STATUTORY FRAUD CLAIM; HOWEVER, STATUTORY BAD FAITH CLAIM COULD BE DISMISSED (Philadelphia Federal)
In Henriquez-Disla v. Allstate Property & Casualty Insurance Company, the court addressed a battle of bad faith claims, the insured alleging breach of contract and bad faith for claim denials; and the insurer alleging insurance fraud in seeking dismissal of the insureds’ claims, and in pursuing affirmative relief under the insurance fraud statute, 18...Read More >>
March 20, 2015
MARCH 2015 BAD FAITH CASES: COURT REITERATES NO SEPARATE CAUSE OF ACTION FOR BREACH OF IMPLIED DUTY OF GOOD FAITH AND FAIR DEALING OUTSIDE OF BREACH OF CONTRACT CLAIM (Middle District)
In Cicon v. State Farm Mutual Automobile Insurance Company, the Court reiterated the long-standing proposition: “Pennsylvania law does not recognize a separate breach of the contractual duty of good faith and fair dealing where said claim is subsumed by a separately pled breach of contract claim.” The court then dismissed that separate claim. Date...Read More >>
March 19, 2015
MARCH 2015 BAD FAITH CASES: PLAINTIFF STATED BAD FAITH CLAIM WHEN ALLEGING THAT INSURER’S ADJUSTER ADMITTED A BASIS FOR LOSS AS TO WHICH COVERAGE WAS DUE, BUT INSURER LATER DENIED COVERAGE (New Jersey Federal)
In Bannon v. Allstate Insurance Company, a Hurricane Sandy case, the policy provided “that coverage for dwellings or other structures did not include loss caused by ‘flood, including, but not limited to, surface water, waves, tidal water or overflow of any body of water or spray from any of these things, whether or not...Read More >>
March 19, 2015
MARCH 2015 BAD FAITH CASES: NEW JERSEY SUPREME COURT FINDS NO BAD FAITH WHERE INSURER RELIED UPON UNPUBLISHED APPELLATE DIVISION OPINION IN TAKING ACTION, AND WHERE POLICY LANGUAGE MADE INSURER’S POSITION FAIRLY DEBATABLE; COURT RESTATES NEW JERSEY LAW ON FIRST PARTY BAD FAITH CLAIMS (New Jersey Supreme Court)
In Badiali v. New Jersey Manufacturers Insurance Group, the New Jersey Supreme Court issued its second opinion in a single day involving first party insurance bad faith claims.  The insured was injured by an uninsured motorist.  The insured had two insurers.  The matter went to arbitration on the uninsured motorist claim, and the insured...Read More >>
March 17, 2015
MARCH 2015 BAD FAITH CASES: NEW JERSEY SUPREME COURT FINDS UM BAD FAITH CLAIM BARRED BY RES JUDICATA, BUT REFERS THE FOLLOWING ISSUES TO THE CIVIL PRACTICE COMMITTEE IN CONNECTION WITH THE SCOPE AND APPLICABILITY OF NEW JERSEY’S RULES TO UM CLAIMS: (1) THE APPLICABILITY OF THE ENTIRE CONTROVERSY DOCTRINE TO ALLOWING THE BAD FAITH CLAIM TO BE RAISED AFTER THE UNDERLYING UM CASE IS LITIGATED; (2) WHETHER THE SANCTIONS UNDER AN OFFER OF JUDGMENT SHOULD BE MEASURED AGAINST A VERDICT MOLDED TO FIT POLICY LIMITS OR THE JURY VERDICT; AND (3) WHETHER R. 4:42-9(a)(6)’s EXCLUSION OF DIRECT CLAIMS BY INSUREDS SHOULD BE CHANGED (New Jersey Supreme Court)
In Wadeer v. New Jersey Manufacturers Insurance Company, New Jersey’s Supreme Court took the opportunity to address potential changes in the Rules of Civil Procedure in the context of first party bad faith claims. In this uninsured motorist case, the plaintiff insured was injured by a driver who was never identified. The matter went...Read More >>
March 16, 2015
MARCH 2015 BAD FAITH CASES: INSURED’S BAD FAITH CLAIM COULD NOT BE DISMISSED SOLELY ON BASIS THAT EXAMINATION UNDER OATH HAD NOT OCCURRED PRIOR TO FILING SUIT, UNDER THE CIRCUMSTANCES OF THIS CASE (Western District)
In Johnson v. State Farm Mutual Automobile Insurance Company, the insured wife was hit by an underinsured motorist while jogging.  The insureds’ own UIM limits were $250,000.  The injuries were diagnosed as serious and she sought policy limits. During negotiations in early 2014, the insurer made offers of less than policy limits, and when...Read More >>
March 12, 2015
MARCH 2015 BAD FAITH CASES: NO BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING IN FIRST PARTY CASE WHERE POLICY HAD LAPSED, AND WHERE NO EVIDENCE OF ILL MOTIVE OR BAD FAITH ON THE RECORD (New Jersey Federal)
In Shilling v. Reassure America Life Insurance Company, the beneficiary of a life insurance policy brought breach of contract and bad faith claims for the insurer’s alleged failure to pay death benefits. The insurer asserted that the policy lapsed for failure to pay premiums.  The court found in the insurer’s favor, and granted summary...Read More >>
March 11, 2015
MARCH 2015 BAD FAITH CASES: EVEN WHERE COURT RULES AGAINST INSURER’S INTERPRETATION OF POLICY LANGUAGE, NO BAD FAITH CAN EXIST WHERE THAT INTERPRETATION IS REASONABLE (Middle District)
In Gray v. Allstate Indemnity Company, the insured asserted breach of contract claim and bad faith claims due to the insurer’s alleged wrongful denial and refusal to pay insurance benefits for his fire loss claim, which was the result of vandalism.  The insurer asserted that the property was vacant and unoccupied from the time...Read More >>
March 10, 2015
MARCH 2015 BAD FAITH CASES: NO BAD FAITH UNDER “FAIRLY DEBATABLE” STANDARD WHERE DISPUTE EXISTED OVER MATERIAL FACT; INSUREDS DEEMED TO HAVE RECEIVED POLICY SO LONG AS THEIR BROKER RECEIVED IT (New Jersey Federal)
In Dooley v. Scottsdale Insurance Company, the insured homeowners suffered a flood in their home from a frozen/burst piping system, during a nearly four week hiatus from their home in December. There was a dispute of fact over whether the insureds turned off their heat, or left the thermostat on at a low temperature,...Read More >>
March 10, 2015
MARCH 2015 BAD FAITH CASES: ERISA PREEMPTION DEFENSE SUFFICIENT TO SET ASIDE DEFAULT ON STATE LAW CLAIMS (Middle District)
In Davis v. Metro. Life Ins. Co., the insured brought claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and bad faith under the Pennsylvania Unfair Insurance Practices Act (“UIPA”), 40 Pa. Cons. Stat. § 1171.1 et seq., pursuant to 42 Pa. Cons. Stat. Ann. § 8371,...Read More >>
March 9, 2015
MARCH 2015 BAD FAITH CASES: SUMMARY JUDGMENT CANNOT BE GRANTED WHERE ISSUES OF FACT ON REASONABLENESS AND INTENT PRONGS OF BAD FAITH STANDARDS EXIST, FOCUSING ON DECISION NOT TO TAKE A DEPOSITION OR STATEMENT UNDER OATH DURING CLAIM PROCESS (Middle District)
In Connolly v. Progressive Northern Insurance Company, the injured insured received a $250,000 settlement from a third party tortfeasor in connection with an auto accident.  She pursued underinsured motorist coverage from her own insurer, and also alleged there were multiple policies entitling her to stacking.  The insurer’s position was that the value of the injuries...Read More >>
March 5, 2015
MARCH 2015 BAD FAITH CASES: COURT DISMISSES BOILERPLATE BAD FAITH CLAIM WITH PREJUDICE, AS NO CONCEIVABLE BASIS TO CURE BY AMENDMENT (Philadelphia Federal)
In Williams v. USAA Cas. Ins. Co., the plaintiffs (an injured driver and two passengers in her car) brought an uninsured motorist claim against the injured driver’s insurer. The court found that the putative count for violating the UIM law was actually pleaded as a claim for breach of the implied duty of good...Read More >>
March 5, 2015
MARCH 2015 BAD FAITH CASES: ALLEGED BREACH OF DUTY TO IDENTIFY INSURER’S RISK OF EXPOSURE TO A BAD FAITH CLAIM FOR FAILURE TO SETTLE SOUNDS IN NEGLIGENCE, NOT CONTRACT (Middle District)
In New York Central Mutual Ins. Co v. Margolis Edelstein, the insurer alleged that its attorney failed to give it proper advice as a client, concerning settlement of a claim.  Among other things, the insurer’s complaint alleged: that the attorney “agreed to perform legal services for , which included agreeing to ‘provide [the...Read More >>
March 4, 2015
MARCH 2015 BAD FAITH CASES: NO BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING WHERE NO BAD FAITH OR ILL MOTIVE PLEADED, WHICH ARE ESSENTIAL PARTS OF THE CLAIM (New Jersey Federal)
In Dean v. New England Mutual Life Insurance Company, the plaintiff’s claims concerned allegations of life insurance payments under her ex-husband’s policy directly to their daughters, rather than to her, individually, or to her as trustee for her daughters.  A judgment of divorce had provided: “Husband shall maintain and pay the premium for insurance coverage...Read More >>
March 3, 2015
1,000th POSTING SINCE 2006
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March 2, 2015
MARCH 2015 BAD FAITH CASES: BAD FAITH CLAIM STATED FOR FAILURE TO PAY FULL SURRENDER VALUE OF INSURANCE POLICY (Western District)
In First National Bank of Pa. v. Transamerica Life Ins. Co., the dispute involved payment of the surrender value of certain insurance policies. The parties were approximately $2.6 Million apart on the amount of the surrender value.  The insured pleaded that the insurer, with the “assistance, cooperation and manipulation” of a consultant/agent, used “a...Read More >>
March 1, 2015
MARCH 2015 BAD FAITH CASES: (1) FOLLOWING UNITED STATES SUPREME COURT PRECEDENT THAT A PLAINTIFF CAN CONTROL REMOVAL TO FEDERAL COURT BY LIMITING DAMAGES BELOW $75,000, AND (2) THAT UNDER THIRD CIRCUIT PRECEDENT THIS WOULD ACT AS AN ESTOPPEL, THE INSURED’S BAD FAITH CASE REMANDED TO STATE COURT (PHILADELPHIA FEDERAL)
In Petrille Wind P.C. v. Liberty Insurance Underwriters, Inc., the insured lost a $50,000 judgment, which the carrier refused to defend.  The insured brought a statutory bad faith claim, later removed to federal court. The complaint sought actual damages of $50,000, as well as punitive damages and attorney fees. The complaint further stated that...Read More >>
February 26, 2015
Restatement of the Law of Liability Insurance Conference on February 27, 2015
On Friday, February 27, 2015, Rutgers-Camden School of Law’s Center for Risk and Responsibility will be holding a conference on “The ALI’s Principles of the Law of Liability Insurance”, which will include, among others, Restatement of the Law, Liability Insurance, Reporters Tom Baker (Penn) and Kyle Logue (Michigan).  The program is described here, and...Read More >>
February 26, 2015
FEBRUARY 2015 BAD FAITH CASES: ALLEGING THAT INSURER MALICIOUSLY AUDITED AND RE-ADJUSTED PREMIUMS DID STATE A CLAIM FOR BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING, EVEN WHERE CLAIMS HANDLING NOT INVOLVED; ATTORNEYS’ FEES NOT PERMITTED; PUNITIVE DAMAGES COULD BE PURSUED (New Jersey Federal)
In LM Ins. Corp v. All-Ply Roofing Co. the insured alleged, among other things, that the insurer audited its premiums, and reclassified its employees, as revenge for underreporting income, and that this stated a bad faith claim.  The insurer argued there are no recognizable bad faith claims in New Jersey for audit or premium...Read More >>
February 17, 2015
FEBRUARY 2015 BAD FAITH CASES: COURT WOULD NOT STRIKE ALLEGATION THAT BAD FAITH EXISTED BASED UIPA VIOLATION, SINCE THE SAME CONDUCT THAT COULD VIOLATE UIPA MIGHT ALSO BE EVIDENCE TO ESTABLISH BAD FAITH, DISTINCTLY FROM BEING LABELED AS A UIPA VIOLATION (Philadelphia Federal)
In Moore v. State Farm Fire & Cas. Co., the insurer moved to strike an averment that it violated the bad faith stated because it violated the Unfair Insurance Practices Act.  The court found that although the bad faith statute 42 Pa.C.S. § 8371 does not set forth a standard, Pennsylvania courts have uniformly...Read More >>
February 13, 2015
FEBRUARY 2015 BAD FAITH CASES: NEW JERSEY APPELLATE DIVISION REVERSES TRIAL COURT’S DISMISSAL OF INSURED’S BAD FAITH CLAIM DUE TO FAILURE TO COMPLY WITH PROCEDURAL REQUIREMENTS (New Jersey Appellate Division)
In Citizens United Reciprocal Exch. v. Espinoza, the Appellate Division of the Superior Court reversed and remanded a trial court’s dismissal of an insured’s counterclaim against its insurer alleging bad faith, breach of the duty of good faith and fair dealing, and other claims in a declaratory judgment action.  Plaintiff, the insurer, issued a...Read More >>
February 10, 2015
FEBRUARY 2015 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM TO THE EXTENT IT SOUGHT EMOTIONAL DAMAGES UNDER THE BAD FAITH STATUTE, FINDING THE PENNSYLVANIA STATUTE PRESCRIBES SPECIFIC REMEDIES (Middle District)
In Hoffman v. State Farm Fire & Cas. Co., plaintiffs brought suit alleging a claim of breach of insurance contract and a statutory bad faith claim.  Plaintiff purchased a homeowners’ insurance policy from the insurer, after which a fire rendered the home uninhabitable.   The firefighters at the scene of the fire concluded the incident...Read More >>
February 5, 2015
FEBRUARY 2015 BAD FAITH CASES: BAD FAITH CLAIM DISMISSED DUE TO LACK OF FACTUAL SUPPORT TO MAKE OUT A PLAUSIBLE CLAIM; PUTATIVE DISCOVERY VIOLATIONS DURING LITIGATION CANNOT CONSTITUTE BASIS FOR INSURANCE BAD FAITH CLAIM (Philadelphia Federal)
In Morrissey v. State Farm Fire & Cas. Co., plaintiffs’ home was damaged by a fire, making it uninhabitable.  Their homeowners’ insurance policy provided coverage limits of $220,000 for the house, $165,000 for personal property, and the actual value of the loss of use sustained. Plaintiffs filed claims for the damage to the home,...Read More >>
February 3, 2015
FEBRUARY 2015 BAD FAITH CASES: BAD FAITH CLAIM FUTILE BASED ON DISCOVERY DISPUTES INVOLVING DECLARATORY JUDGMENT CLAIM; AND WHERE POLICY PROVIDED INSURER A REASONABLE BASIS TO DENY CLAIM (Philadelphia Federal)
In Byars v. State Farm Mut. Auto. Ins. Co., plaintiff sought leave to amend his complaint to add an additional count against the defendant-insurer alleging bad faith.  In the proposed amended complaint, Plaintiff alleged the insurer had acted in bad faith during the litigation process in the pending coverage action between the two parties. ...Read More >>
February 2, 2015
FEBRUARY 2015 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM FOR FAILURE TO MEET TWOMBLY AND IQBAL STANDARDS (Philadelphia Federal)
In Mozzo v. Progressive Ins. Co., the Court dismissed a claim for bad faith due its “bares bones” conclusory allegations, and failure to provide a factual basis for an award of bad faith damages.  Plaintiff’s complaint contained only 12 numbered paragraphs, and merely alleged that plaintiff made a claim for damages under a policy...Read More >>
January 30, 2015
JANUARY 2015 BAD FAITH CASES: PLAINTIFF’S UIM BAD FAITH CLAIM NARROWLY SURVIVES SUMMARY JUDGMENT BECAUSE OF MUDDLED RECORD AS TO WHAT CAUSED DELAYS (Middle District)
In Clemens v. New York Central Mutual Fire Insurance Company, plaintiff brought a UIM bad faith case, with the chief issues focusing on the 39 month time period between the claim being asserted and the filing of suit.  There were three areas at issue on cross motions for summary judgment as to this lengthy...Read More >>
January 23, 2015
JANUARY 2015 BAD FAITH CASES: APPELLATE DIVISION REITERATES FACTORS FOR TRIAL COURTS TO CONSIDER IN DETERMINING WHETHER TO AWARD FEES UNDER R. 4:42-9(a)(6) (New Jersey Appellate Division)
In Encompass Insurance Company v. Quincy Mutual Fire Insurance Company, the court addressed the standards for awarding counsel fees under Rule 4:42-9(a)(6) to a successful claimant in a declaratory judgment action.  The court made clear that insurer bad faith is not a perquisite, but it is a factor trial courts may consider.  The trial...Read More >>
January 19, 2015
JANUARY 2015 BAD FAITH CASES: WHERE NO COVERAGE IS DUE AN INSURER HAS GOOD CAUSE TO DENY COVERAGE, AND THUS A BAD FAITH CLAIM CANNOT STAND (Philadelphia Federal)
In Guglielmelli v. State Farm Mut. Automobile Insurance Company, the insured brought breach of contract and bad faith claims seeking damages for bodily injury under an automobile insurance policy. The policy incorporated a “sign-down form,” which reduced the uninsured/underinsured motorist limits. The plaintiff was listed as the first-named insured, but did not execute the...Read More >>
January 16, 2015
JANUARY 2015 BAD FAITH CASES: HEALTH INSURER’S CHANGE IN POSITION CONCERNING COVERAGE FOR A MEDICAL TREATMENT NOT BAD FAITH (New Jersey Appellate Division)
A state-wide podiatrist society asserted that a health insurer violated its duty of good faith and fair dealing in deciding not to cover a medical procedure, for which it previously had provided coverage.  The provider was part of a broader national federation of related insurers, which did not generally provide coverage for this procedure....Read More >>
January 14, 2015
JANUARY 2015 BAD FAITH CASES: COURT REFUSES TO SEVER UIM BAD FAITH CLAIM OR TO STAY BAD FAITH DISCOVERY (Lackawanna County)
The Tort Talk Blog has reported on a Lackawanna County Common Pleas case where the court would neither sever the bad faith claim in a UIM case, nor stay bad faith discovery.Read More >>
January 12, 2015
JANUARY 2015 BAD FAITH CASES: COURT REFUSES TO UNIVERSALIZE BAD FAITH FROM SIMPLE DENIAL OF COVERAGE IN THE ABSENCE OF SPECIFIC EVIDENCE OF BAD FAITH (Philadelphia Federal)
In Easy Corner, Inc. v. State National Insurance Company, the court made clear the significance of a bad faith’s plaintiff’s need to prove something more than negligence, or that an insurer was simply wrong on coverage. In that case, the court granted summary judgment to the insurer because the plaintiff could not do so; and...Read More >>
January 9, 2015
JANUARY 2015 BAD FAITH CASES: UIM BAD FAITH PLAINTIFF ADEQUATELY PLEADS CLAIM WHERE CARRIER SWITCHES POSITIONS ON BASIS FOR DENIAL (Philadelphia Federal)
In Lyman v. State Farm Mutual Automobile Insurance Company, plaintiffs brought breach of contract and bad faith claims against their UIM insurer.  The carrier sought to dismiss the claims, asserting they were mere boilerplate and could not stand under Twombly.  The court disagreed. The court found that the complaint alleged specific acts of bad...Read More >>
January 9, 2015
PENNSYLVANIA SUPREME COURT ISSUES OPINION ON GIST OF THE ACTION DOCTRINE
In Bruno v. Erie Insurance Company, the Supreme Court affirmed the existence of the “gist of the action” doctrine. Rather than viewing this as a recent theory, initiated with the Superior Court’s 1992 Bash v. Bell Telephone Company of PA decision, the Supreme Court concluded that the gist of the action doctrine had been...Read More >>
January 8, 2015
JANUARY 2015 BAD FAITH CASES: BAD FAITH CLAIM STATED FOR CONDUCT OCCURRING AFTER INSURANCE CONTRACT WAS ENTERED, THE COURT HAVING REJECTED THE ARGUMENT THAT THE CLAIM WAS IN THE NATURE OF PRE-CONTRACT FALSE MARKETING (Philadelphia Federal)
In Jacoby v. AXA Equitable Life Insurance Company, it was alleged that the insured purchased a life insurance policy that required an initial series of premium payments on the policy, but thereafter the premiums would be paid from dividends on the policy without the need for separate premium payments.  During the course of the...Read More >>
January 8, 2015
JANUARY 2015 BAD FAITH CASES: COURT CONDUCTS CLOSE ANALYSIS OF WHETHER BAD FAITH CLAIM SHOULD BE REMANDED, AND FINDS THAT REMAND IS PROPER (Philadelphia Federal)
In Plunkett v. Nationwide Mutual Insurance Company, a federal district court was once again faced with a motion to remand a removed bad faith action, where the insured made representations that the case was not seeking in excess of the $75,000 jurisdictional minimum.  Specifically, the insureds’ complaint in the Philadelphia Court of Common Pleas...Read More >>
January 5, 2015
JANUARY 2015 BAD FAITH CASES: INSURER FAILS TO PROVIDE EVIDENCE SUPPORTING POSITION THAT GRANDSON WAS SUBJECT TO HOUSEHOLD EXCLUSION UNDER GRANDPARENTS’ POLICY, AND BAD FAITH CLAIM FOR DENIAL OF COVERAGE ALLOWED TO PROCEED (Philadelphia Federal)
In Ripley v. Brethren Mutual Insurance Company, a grandson stole from his grandparents, and the carrier disclaimed coverage on the basis of the household exclusion.  Plaintiff sought summary judgment on the basis that the grandson was not a member of the household, and thus not an insured, subject to the household exclusion. The insurer...Read More >>
December 27, 2014
DECEMBER 2014 BAD FAITH CASES: WHERE INSURER DENIES CLAIM, AND INSURED SETTLES WITH TORTFEASOR, COURT OBSERVES THAT IF INSURER’S DENIAL IS IN BAD FAITH THERE IS AN EQUITABLE WAIVER OF ITS SUBROGATION CLAIM (New Jersey Appellate Division)
In Nucci v. American Insurance Company, New Jersey’s Appellate Division addressed an insurer’s subrogation rights where it had originally denied coverage, was subject to suit for non-payment, and the insured partially settled the matter with another co-defendant whom had caused the damage for which the insured sought coverage.  The insurer argued that the insured’s...Read More >>
December 26, 2014
DECEMBER 2014 BAD FAITH CASES: COURT AFFIRMS TRIAL COURT’S DECISION TO VOID THE POLICY, BUT REMANDS FOR TRIAL ON STATE OF MIND ISSUE FOR INSURER’S CAUSE OF ACTION UNDER NEW JERSEY’S INSURANCE FRAUD PREVENTION ACT (New Jersey Appellate Division)
In Continental Casualty Co. v.  Hochschild, an insured sought coverage for damage to his boat, and the insurer claimed that no coverage was due because of misrepresentations in the insurance application.  The Appellate Division found that the policy was to be voided on the basis of equitable fraud, and affirmed the trial court’s decision...Read More >>
December 26, 2014
DECEMBER 2014 BAD FAITH CASES: INSURED LIABLE UNDER NEW JERSEY’S INSURANCE FRAUD PREVENTION ACT (IFPA) (New Jersey Federal)
In Federal Insurance company v. Von Windherburg-Cordeiro, the insurer had denied a disability claim.  The insured pursued the matter in a AAA arbitration, where the insurer counterclaimed for fraud.  The insurer successfully defeated the insured’s affirmative claims, and prevailed on its counterclaim, and was awarded attorney’s fees.  The arbitrator had concluded that the insured’s...Read More >>
December 19, 2014
DECEMBER 2014 BAD FAITH CASES: FEDERAL COURT INTERPRETS STATUTORY REQUIREMENTS OF UNDERINSURED WAIVER REJECTION; INSURED DOES NOT NEED TO DATE FORM FOR IT BE VALID AND INSUREDS’ CLAIMS DISMISSED (Philadelphia Federal)
Husband and wife plaintiffs allege their vehicle was involved in an accident, the damages resulting from the collision exceeded the amount of insurance recovered from the tortfeasor, that they made a claim to their insurer for underinsured motorist coverage, and that the insurer wrongfully and in bad faith denied coverage on the claim.  The...Read More >>
December 17, 2014
DECEMBER 2014 BAD FAITH CASES: PENNSYLVANIA SUPREME COURT RULES THAT STATUTORY BAD FAITH CLAIMS MAY BE ASSIGNED, FOCUSING ON LEGISLATIVE INTENT AND REMEDIAL NATURE OF STATUTE (Supreme Court of Pennsylvania)
In Allstate Property and Casualty Ins. Co. v. Wolfe, the Third Circuit had certified the issue to the Supreme Court of Pennsylvania as to whether an insured may assign the right to recover damages from his insurance company deriving from the insurer’s bad faith toward the insured, under 42 Pa.C.S. § 8371.  District Courts...Read More >>
December 12, 2014
DECEMBER 2014 BAD FAITH CASES: COURT WOULD NOT ABSTAIN FROM HEARING BAD FAITH CASE FOR DAMAGES MIXED WITH DECLARATORY JUDGMENT ACTION WHERE NO PARALLEL STATE COURT CASE PENDING (Western District)
In Tube City IMS Corp. v. Allianz Global Risks US Insurance Company, the insurer removed a case based on breach of contract and bad faith, or in the alternative, a claim that the insurer had to provide coverage based upon its misrepresentations about the scope of coverage.  The insured sought remand on the basis...Read More >>
December 4, 2014
DECEMBER 2014 BAD FAITH CASES: NO ASSIGNMENT CLAUSE DOES NOT BAR COVERAGE WHERE INSURED UNDERGOES A STATUTORY MERGER; INSURER REQUIRED TO PAY COUNSEL FEES, EVEN IN ABSENCE OF BAD FAITH (New Jersey Federal)
In Lime Tree Assocs., LLC v. Burlington Ins. Co., the court considered whether an insurer had properly denied coverage under a ‘no assignment’ clause in the policy, where the underlying insured-company underwent a statutory merger, resulting in a surviving LLC.  Under New Jersey law, such a merger entitles the surviving entity to “all of...Read More >>
November 26, 2014
Happy Thanksgiving to All
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November 24, 2014
NOVEMBER 2014 BAD FAITH CASES: INSURER EXPOSED TO BAD FAITH CLAIM BY USING INSURED IN CLAIMS HANDLING PROCESS INSTEAD OF PAYING FOR THIRD PARTY TO DO THE WORK (WHERE INSURED FELL THROUGH A ROOF) (Western District)
In Selmek v. State Farm Fire & Cas. Co. the insurance adjuster had asked for some assistance from the insured in inspecting a damaged roof and securing it from further damage, as a result of which the insured fell through the roof.  The insured brought claims for negligence and bad faith.  The Court found...Read More >>
November 13, 2014
NOVEMBER 2014 BAD FAITH CASES: NAMING WRONG INSURER WITHIN INSURANCE GROUP AS DEFENDANT REQUIRES DISMISSAL OF CLAIMS (New Jersey Federal)
In Klein v. Hanover Insurance Company, the court addressed the not infrequent situation where an insurance company is part of a family or group of insurers, and either the group name or another member of the group is named as a defendant.  In this breach of contract/breach of the covenant and good faith and...Read More >>
November 11, 2014
NOVEMBER 2014 BAD FAITH CASES: INSURED FAILED TO PLEAD SUFFICIENT FACTS TO MAKE OUT BAD FAITH CLAIM WHERE PARTIAL PAYMENT MADE BY CARRIER, BUT LEAVE TO AMEND GRANTED (Middle District)
In Stephens v. State Farm Fire & Cas. Co., a husband and wife brought suit against their homeowners’ insurance carrier alleging breach of contract, statutory bad faith, and a claim under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.  Plaintiffs alleged they suffered concurrent losses to their home via theft, vandalism, and water damage. ...Read More >>
November 7, 2014
NOVEMBER 2014 BAD FAITH CASES: CARRIER’S INVESTIGATION AND DENIAL OF UIM BENEFITS FOLLOWING PAYMENT OF FIRST PARTY MEDICAL CLAIM NOT BAD FAITH; NEITHER LENGTH OF INVESTIGATION ALONE NOR DISPUTING CAUSATION AFTER NOT MAKING IT AN ISSUE IN ORIGINAL CLAIM CREATE BAD FAITH PER SE (Middle District)
In Shaffer v. State Farm Mut. Auto. Ins. Co., plaintiff and his wife brought a bad faith claim against their carrier after being denied UIM coverage, following payment of medical coverage on a first party claim.  The claim resulted from a motor vehicle accident in which the other driver was primarily at fault.  After...Read More >>
November 4, 2014
NOVEMBER 2014 BAD FAITH CASES: EXCESS INSURER HAD NO DUTY TO POST APPEAL BOND AND COULD NOT BE LIABLE IN BAD FAITH FOR FAILING TO DO SO; COURT OBSERVES THAT PROOF OF BAD FAITH IS MORE DIFFICULT WHERE LAW AT ISSUE ON COVERAGE IS UNSETTLED (Philadelphia Federal)
In the most recent decision in Charter Oak Ins. Co. v. Maglio Fresh Food, which has been discussed at length in previous postings in 2013 and 2014, the Court addressed claims against the excess insurer after holding a short non-jury trial.  It concluded that under the unique circumstances of that case, the excess insurer did...Read More >>
October 16, 2014
OCTOBER 2014 BAD FAITH CASES: NO BAD FAITH IN UIM CASE WHERE INSURER CORRECTLY DETERMINED COVERAGE BASED ON INSUREDS’ CONTRACTUAL CHOICE TO LIMIT UIM AMOUNTS, AND WHERE NO OTHER FORM OF BAD FAITH ASIDE FROM COVERAGE DENIAL WAS PLEADED (Philadelphia Federal)
In Davis v. Allstate Property & Casualty Company, the UIM plaintiff brought claims for breach of contract and bad faith, based upon an alleged failure to pay $600,000 in connection with a fatal car accident.  The court found, however, that the insureds had complied with all the requirements necessary under Pennsylvania’s Motor Vehicle Financial...Read More >>
October 14, 2014
OCTOBER 2014 BAD FAITH CASES: COURT REFUSES TO BIFURCATE BAD FAITH AND UIM CLAIMS WHERE SIGNIFICANT FACTUAL OVERLAP EXISTS (Middle District)
In Hoffer v. Grange Insurance Company, the court addressed the insurer’s request to bifurcate the bad faith and UIM claims.  The insured had settled with the other driver and made a UIM claim to his carrier. The insurer denied the claim on the basis that the insured was the one responsible for the collision. ...Read More >>
October 10, 2014
OCTOBER 2014 BAD FAITH CASES: NEW JERSEY TRIAL JUDGE DISMISSES BAD FAITH CLAIM WHERE DISPUTED FACTS WOULD NOT PERMIT INSURED TO OBTAIN SUMMARY JUDGMENT ON SUBSTANTIVE COVERAGE CLAIMS (New Jersey Law Division, Bergen County)
In Omega Financial Services v. Aspen Specialty Insurance Company, a New Jersey Superior Court Law Division case, the court addressed whether a mortgage broker’s claims for indemnification were excluded under its professional liability policy, as well as the insured’s bad faith claim.  The insurer had filed a motion for summary judgment.  After a close...Read More >>
October 9, 2014
OCTOBER 2014 BAD FAITH CASES: NO BAD FAITH CLAIM STATED FOR DENIAL OR DELAY ON DISABILITY POLICY WHERE MATERIAL ISSUES OF FACT CONCERNING RELIANCE ON CONSULTANTS AND CAUSES OF DELAY MADE OUTCOME “FAIRLY DEBATABLE”; NO STATUTORY ATTORNEY’S FEES AVAILABLE ON FIRST PARTY CLAIMS (New Jersey Federal)
In Onex Credit v. Atrium 5 Ltd., a company has purchased a disability policy on its CEO.  The policy provided that if the terms were met, the company could receive a large lump sum payment.  There were numerous conditions and exclusions, and after a lengthy investigation by the carrier’s representative coverage was denied.  The...Read More >>
October 8, 2014
OCTOBER 2014 BAD FAITH CASES: NEW JERSEY FEDERAL JUDGE ELUCIDATES HOW INSUREDS ADEQUATELY PLEAD BAD FAITH UNDER TWOMBLY TO AVOID DISMISSAL UNDER “FAIRLY DEBATABLE” STANDARD (New Jersey Federal)
Laing v. American Strategic Insurance Corporation is a Hurricane Sandy case, alleging that the insurer failed to properly adjust the claim and underpaid under the terms of the policy. The insureds alleged that the insurer both misrepresented the scope of the insurance policy and made false representations regarding scope of the damage to their...Read More >>
October 7, 2014
OCTOBER 2014 BAD FAITH CASES: COURT FINDS “LACK-OF-FORTUITY” EXCLUSION IMPLIED IN EVERY ALL RISK INSURANCE POLICY, AND NO BAD FAITH WHERE DENIAL HAD A REASONABLE BASIS (Philadelphia Federal)
In Fry v. Phoenix Insurance Company, the insured homeowners suffered a wall collapse, after a long history of issues with the wall. There were various expert reports on problems with the wall that led the court to conclude that the insureds had knowledge of both potential problems causing the collapse, and that they failed...Read More >>
October 6, 2014
OCTOBER 2014 BAD FAITH CASES: NO BAD FAITH CLAIM WHERE INSURER CARRIED OUT REASONABLE INSPECTION AND CAME TO CONCLUSION THAT RESULT OF THE INSPECTION FELL WITHIN AN EXCLUSION, & INSUREDS DID NOT OFFER MATERIAL FACTS TO SHOW, EVEN IF WRONG, THAT POSITION WAS UNREASONABLE OR THE RESULT OF INTENT SUFFICIENT TO MEET THE BAD FAITH STANDARD (Middle District)
In Focht v. State Farm Fire & Casualty Company, the homeowner insureds brought breach of contract and bad faith claims centering on a water based loss.  The coverage issue centered on whether the damage at issue was caused by flood damage arising up inside the house, or water penetrating the house during a storm...Read More >>
October 1, 2014
OCTOBER 2014 BAD FAITH CASES: (1) STATUTORY BAD FAITH CLAIM SUFFICIENTLY PLEADED BECAUSE PLAINTIFF ALLEGED BASIS FOR UNREASONABLE CANCELLATION; (2) NO STATUTORY BAD FAITH ACTIONABLE AGAINST A BROKER WHO IS NOT AN INSURER; (3) NO BREACH OF FIDUCIARY DUTY CLAIM PLEADED THAT GOES BEYOND CONTRACT CLAIM FOR DUTY OF GOOD FAITH AND FAIR DEALING (Philadelphia Federal)
In Kofsky v. Unum Life Insurance Company of America, the insured purchased a disability insurance policy.  He alleged that the defendants, the insurer and the insured’s broker, unilaterally cancelled his insurance policy without prior notice. Thereafter, the insured claimed that he still forwarded payment under the policy, and that he fulfilled his duties under...Read More >>
September 30, 2014
SEPTEMBER 2014 BAD FAITH CASES: INSURER’S ARGUMENTS THAT BAD FAITH STATUTE DID NOT ENCOMPASS POLICY SOLICITATION CONDUCT OR POST-CLAIMS UNDERWRITING WERE INAPPOSITE WHERE INSURED ALLEGED THAT INSURER USED ALLEGEDLY FRAUDULENT APPLICATION FORMS AS A BASIS TO DENY COVERAGE (Western District)
In Fields v. Gerber Life Insurance Company, the case involved an out-of-state insurer licensed to sell endowment life insurance policies, marketed as college savings plans, through the internet and telephone.  Plaintiff obtained a policy for her seriously infirm infant grandson.  She was forthcoming on the telephone about the child’s condition, but was allegedly not...Read More >>
September 29, 2014
SEPTEMBER 2014 BAD FAITH CASES: AFTER JURY VERDICT FOR DISABILITY INSURER IN BAD FAITH CASE, COURT FOUND THAT (1) LIMITED DISCLOSURE OF EVIDENCE ON REGULATORY HISTORY WAS WITHIN THE COURT’S DISCRETION; (2) ALLOWING WIDE LATITUDE ON CROSS OF EXPERT MET DAUBERT; AND (3) JURY HAD SUFFICIENT EVIDENCE, TAKEN IN LIGHT MOST FAVORABLE TO THE VERDICT WINNER, TO RULE AS IT DID (Philadelphia Federal)
In Leporace v. New York Life and Annuity Corp., involving a disability policy, the jury found for the insurer on the contractual and statutory bad faith claims.  In summarizing the law on both causes of action, Judge Baylson looked to Judge McLaughlin’s Dewalt opinion in addressing the different standards of proof, and the type...Read More >>
September 26, 2014
SEPTEMBER 2014 BAD FAITH CASES: COURT GIVES PARTIES 60 DAYS TO DO DISCOVERY TO DETERMINE IF POLICY FALLS WITHIN SAFE HARBOR TO ERISA PREEMPTION (Philadelphia Federal)
In Van Arsdel v. Liberty Mutual Insurance Company, the insurer sought dismissal of state law claims, including bad faith, based upon ERISA pre-emption.  The insured responded that there were questions of fact as to whether ERISA covered the insurance at issue or whether it fell under ERISA’s Safe Harbor Provisions.  To qualify for the...Read More >>
September 26, 2014
SEPTEMBER 2014 BAD FAITH CASES: WHERE INSURED GAVE MATERIALLY INACCURATE WRITTEN INFORMATION IN INSURANCE APPLICATION, EVEN IF SHE GAVE CORRECT INFORMATION ORALLY TO INSURER’S AGENT, INSURER HAD A REASONABLE BASIS TO DECLINE COVERAGE, AND SO THERE COULD BE NO VIABLE BAD FAITH CLAIM (Western District)
In Jones v. State Farm Fire & Casualty Company, the insured suffered a fire to a home.  At the time, the home was not her primary residence, and it was being renovated.  The insured claimed that prior to obtaining the insurance policy at issue, she informed the insurer’s agent of this fact, and further...Read More >>
September 23, 2014
SEPTEMBER 2014 BAD FAITH CASES: COURT DETERMINES TIME WHEN INSURER REASONABLY ANTICIPATED IN LITIGATION IN DECIDING DISCOVERY DISPUTES OVER WORK PRODUCT PROTECTION VS. DISCOVERABLE ORDINARY BUSINESS RECORDS; SIDES WITH THOSE DISTRICT COURTS IN THE THIRD CIRCUIT ALLOWING FOR DISCOVERY OF RESERVES; AND REFUSES TO ALLOW MERE ALLEGATION OF BAD FAITH TO BLOW UP WORK PRODUCT PROTECTIONS (Philadelphia Federal)
In Borgia v. State Farm Mutual Automobile Insurance Co., the court addressed discovery disputes in the context of UIM breach of contract and bad faith claims, based on refusal to pay the $750,000 policy limits and alleged unreasonable delays in claim processing.  The insured had sustained serious physical and cognitive injuries, and was unable...Read More >>
September 21, 2014
SEPTEMBER 2014 BAD FAITH CASES: INSURED’S FAILURE TO RESPOND TO A RENEWAL QUOTE IS NOT A NON-RENEWAL REQUIRING 60 DAYS NOTICE, AND THE INSURED’S CLAIM FOR BAD FAITH FAILED (Philadelphia Commerce Court)
In Get Busy Living Solutions, LLC v. Main Line Insurance Office, LLC, the carrier, through its agent, sent a renewal quotation to the insured about one month prior to the policy’s end date. The insured never replied prior to the policy’s end time and date, but texted his agent 7 hours after the policy...Read More >>
September 19, 2014
UPDATE ON INDALEX: SUPREME COURT DENIES PETITION FOR ALLOWANCE OF APPEAL
For those who have been following the fate of the Superior Court’s Indalex Opinion, and its discussion of “occurrence” under Kvaerner, as well as the gist of the action doctrine, on September 18, 2014, the Supreme Court denied the Petition for Allowance of Appeal.Read More >>
September 19, 2014
SEPTEMBER 2014 BAD FAITH CASES: INSUREDS LIABLE FOR OVER $800,000 UNDER NEW JERSEY’S INSURANCE FRAUD PROTECTION ACT; INSURER NOT REQUIRED TO RETURN PREMIUMS AS PREDICATE FOR RECOVERY IN CASE WHERE FRAUD IS ALLEGED IN MAKING A CLAIM ON THE POLICY, NOT IN PROCURING THE POLICY (New Jersey Appellate Division)
In Masaitis v. Allstate New Jersey Insurance Company, the jury not only ruled that the insureds were not entitled to compensation from the insurer for a fire loss to their home, but there was a judgment awarding more than $800,000 against them under N.J.S.A. 17:33A-7(a), a provision of the Insurance Fraud Protection Act (IFPA),...Read More >>
September 19, 2014
SEPTEMBER 2014 BAD FAITH CASES: BAD FAITH CLAIM NOT TIME BARRED BASED ON DATE OF DENIAL TRIGGERING CAUSE OF ACTION; COMMON LAW BAD FAITH CLAIM SUBSUMED IN BREACH OF CONTRACT CLAIM, WHICH HAD BEEN DISMISSED ON BASIS OF CONTRACTUAL LIMITATIONS PERIOD (Philadelphia Federal)
In Blackwell v. Allstate Insurance Company, the court found that the contractual one year period for bringing a claim under a homeowners policy barred the insureds breach of contract claim; however, the statutory bad faith claim was not barred by that contractual term, nor, on the face of the complaint, was it barred by...Read More >>
September 18, 2014
SEPTEMBER 2014 BAD FAITH CASES: CLAIM FOR BREACH OF THE IMPLED COVENANT OF GOOD FAITH AND FAIR DEALING SUBSUMED IN BREACH OF CONTRACT CLAIM; ECONOMIC LOSS DOCTRINE BARS UTPCPL CLAIM (Middle District)
  In Zeglen v. Northwestern Mutual Life Insurance Company, the case involved a disability insurance policy, and the insured brought action for breach of contract, breach of the implied duty of good faith and fair dealing, statutory bad faith, and under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL). The court found that...Read More >>
September 18, 2014
SEPTEMBER 2014 BAD FAITH CASES: IN THIS SUPERSTORM SANDY CASE, INSURED ALLOWED TO PROCEED ON BAD FAITH CLAIM WHERE INSURER REFUSED TO ENGAGE IN APPRAISAL PROCESS, BUT COURT DISMISSES BAD FAITH CLAIM BASED UPON ALLEGED UNDUE INFLUENCE ON INSURED’S ROOFING CONTRACTOR (Philadelphia Federal)
Currie v. State Farm Fire & Casualty Co., involved damage to the insured’s home from Superstorm Sandy, and a dispute over the homeowner insurer’s payment obligation. The matter was before the court on summary judgment. After finding summary judgment could not be granted on the breach of contract claim, the court then addressed the...Read More >>
September 18, 2014
SEPTEMBER 2014 BAD FAITH CASES: CPA EXPERT PRECLUDED FROM TESTIFYING ABOUT INSURANCE LAWS AS IRRELEVANT AFTER PRIOR RULING ON BAD FAITH CLAIMS, BUT ALSO BECAUSE OF RISK OF JURY CONFUSION (Western District)
In United States Fire Ins. Co. v. Kelman Bottles, a case with a lengthy history concerning a number of bad faith claims the insured attempted to assert which were limited by the court, the court addressed numerous motions in limine prior to trial.  This included efforts by the insurer to limit the testimony of...Read More >>
September 17, 2014
SEPTEMBER 2014 BAD FAITH CASES: NO BAD FAITH UNDER PENNSYLVANIA LAW WHERE INSURED FAILED TO DISCLOSE FACTS TO DISABILITY INSURER; NO BREACH OF FIDUCIARY DUTY UNDER NEW JERSEY LAW FOR SAME REASON (Philadelphia Federal)
In Hayes v. American International Group, a case involving a disability insurance claim, the Magistrate Judge concluded in her Report and Recommendation that there could be no statutory bad faith under Pennsylvania law where the carrier paid total disability benefits for over four years until it learned that the insured had been working over...Read More >>
September 17, 2014
Other Bad Faith Decisions of Interest from Pennsylvania State Trial Courts
Following on today’s post concerning bad faith decisions by state trial judges, we note recent postings in the Tort Talk Blog with bad faith decisions emanating from state courts.  The first is a Monroe County decision, discussed here, granting a motion to sever and stay a bad faith claim in a UIM case.   The second...Read More >>
September 17, 2014
SEPTEMBER 2014 BAD FAITH CASES: STATE TRIAL COURT, FOLLOWING SUPERIOR COURT, HOLDS THAT BAD FAITH CAN GO BEYOND A PURE DENIAL, AND CAN INCLUDE BAD FAITH IN INVESTIGATING AND COMMUNICATING WITH INSURED; THEN FINDING THAT SOME OF THESE CLAIMS WERE TIME BARRED, BUT OTHERS MUST BE DETERMINED BY THE TRIERS OF FACT, IN ONLY GRANTING PARTIAL SUMMARY JUDGMENT TO EXCESS CARRIER (Centre County Common Pleas)
In Mountainside Holdings, LLC v. American Dynasty Surplus Lines Ins. Co., the defendant insurers were excess directors and officers liability insurance carriers at the tertiary level, with primary coverage and the first layer of excess coverage providing $10,000,000 in coverage.  The dispute arose out of underlying claims against the insureds in a qui tam...Read More >>
September 16, 2014
SEPTEMBER 2014 BAD FAITH CASES: WHERE POLICY CLEARLY EXCLUDES COVERAGE FOR WALL COLLAPSE, WITH NO APPLICABLE EXCEPTION FOR HIDDEN DECAY, THERE CAN BE NO BAD FAITH BECAUSE CARRIER HAD REASONABLE BASIS TO DENY CLAIM (Philadelphia Federal)
In White v. Metropolitan Direct Property & Casualty Insurance Co., the insureds suffered a wall collapse, which they originally claimed was “sudden and accidental” and the result of a heavy rain (which was later denied by them).  Coverage was denied, and the insureds sued for breach of contract and bad faith. First, the court...Read More >>
September 16, 2014
SEPTEMBER 2014 BAD FAITH CASES: INSURER DID NOT PROVE INSURED ENTERED SETTLEMENT IN BAD FAITH OR UNREASONABLY; INSURED DID NOT HAVE TO PROVE BAD FAITH TO RECOVER ATTORNEYS’ FEES (New Jersey Federal)
In The Travelers Property Casualty Co. of America v. USA Container Co., the insured was subject to suit over a spoiled overseas delivery of corn syrup to a European buyer. The carrier declined coverage, but during settlement negotiations between the insured and plaintiff, did make a limited offer to contribute to a settlement, subject...Read More >>
September 4, 2014
In case you missed this Labor Day Weekend Post: WHERE POLICY EXCLUSION WAS CLEAR, AND INSUREDS OFFERED NO ACTUAL FACTS TO MEET THEIR HIGH BURDEN TO PROVE THAT INSURER’S POSITION LACKED A REASONABLE BASIS, SUMMARY JUDGMENT WAS GRANTED TO THE INSURER ON BAD FAITH CLAIM (Philadelphia Federal)
In Leitner v. Allstate Insurance Company, the insureds alleged bad faith on the basis of improper denial of their claim and/or unreasonable delay in the investigation process.  The court cited the bad faith statute and the standards imposed by case law, emphasizing the “high bar” an insurance bad faith plaintiff had to leap to...Read More >>
September 3, 2014
2014 SEPTEMBER BAD FAITH CASES: NATIONAL FLOOD INSURANCE ACT PREEMPTS STATE BAD FAITH LAW CLAIMS (New Jersey Federal)
In Damiano v. Harleysville Insurance Company, the court ruled that the National Flood Insurance Act preempted state bad faith law claims against an insurer. Date of Decision:  July 17, 2014 Damiano v. Harleysville Ins. Co., Civil Action No. 3:13-cv-07239-FLW-LHG, 2014 U.S. Dist. LEXIS 97988 (D.N.J. July 17, 2014) (Wolfson, J.)Read More >>
September 2, 2014
2014 SEPTEMBER BAD FAITH CASES: COURT RULES THAT ATTORNEY CLIENT PRIVILEGE DOES NOT APPLY WHERE ATTORNEY ACTS AS A CLAIMS INVESTIGATOR; BUT REJECTS THE INSURED’S “THEORY OF WHOLESALE WAIVER” WHERE INSURER DENIES ACTING IN BAD FAITH IN ANSWER AND WHERE LEGAL OPINION AFFECTS ADJUSTER’S MIND, IN ABSENCE OF ADVICE OF COUNSEL DEFENSE; AND GENERAL ADMONITION THAT EACH REDACTED ITEM MUST BE ANALYZED INDIVIDUALLY BY COUNSEL (Philadelphia Federal)
In Henriquez-Disla v. Allstate Property & Casualty Insurance Company, the insured brought bad faith and fraud claims against its insurers.  There were two discovery issues: (1) whether certain communications in the case involving a lawyer were subject to the attorney client privilege or whether the lawyer was acting as a claims adjuster rather than...Read More >>
September 1, 2014
SEPTEMBER 2014 BAD FAITH CASES: VICTORY ON COVERAGE ISSUES, ON AMBIGUOUS BASIS, DID NOT PRECLUDE BAD FAITH AGAINST PRIMARY AND EXCESS INSURERS CONCERNING DUTY TO DEFEND OR SETTLE; CONDUCT OF DEFENSE COUNSEL IN DECIDING NOT TO REQUEST SPECIAL INTERROGATORIES REMAINED AN ISSUE; AND INSURED’S EXPERT TESTIMONY WAS EXCLUDED ON ISSUE OF ACTUAL CONFLICT IN APPOINTING DEFENSE COUNSEL, BUT ALL EXPERTS COULD OTHERWISE TESTIFY (Philadelphia Federal)
  In Charter Oak Insurance Company v. Maglio Fresh Foods, a primary and excess carrier sought declaratory judgments that they owed the insured no coverage duty under their policies.  The insured counterclaimed for bad faith.  The parties agreed to let the court decided the coverage issues before ruling on the bad faith issue.  The...Read More >>
August 31, 2014
AUGUST 2014 BAD FAITH CASES: WHERE POLICY EXCLUSION WAS CLEAR, AND INSUREDS OFFERED NO ACTUAL FACTS TO MEET THEIR HIGH BURDEN TO PROVE THAT INSURER’S POSITION LACKED A REASONABLE BASIS, SUMMARY JUDGMENT WAS GRANTED TO THE INSURER ON BAD FAITH CLAIM (Philadelphia Federal)
In Leitner v. Allstate Insurance Company, the insureds alleged bad faith on the basis of improper denial of their claim and/or unreasonable delay in the investigation process.  The court cited the bad faith statute and the standards imposed by case law, emphasizing the “high bar” an insurance bad faith plaintiff had to leap to...Read More >>
August 20, 2014
AUGUST 2014 BAD FAITH CASES: “CLOSING PROTECTION LETTER” ISSUED BY TITLE INSURANCE COMPANY IS AN INDEMNITY AGREEMENT, BUT DOES NOT CONSTITUTE INSURANCE FOR PURPOSES OF BAD FAITH STATUTE (Philadelphia Federal)
In Bancorp Bank v. Lawyers Title Insurance Corp., the court had to decide whether a “closing protection letter” (CPL) was title insurance, and thus subject to the bad faith statute. Under Pennsylvania law, a closing protection letter is defined as “an agreement by a title insurance company to indemnify a lender, or in some...Read More >>
August 20, 2014
AUGUST 2014 BAD FAITH CASES: COURT OBSERVES NEARLY 15 YEARS OF PRECEDENT THAT TERLETKSY REASONABLENESS PRONG IS AN OBJECTIVE TEST WHEN EVALUATING BAD FAITH CLAIMS, NOT REQUIRING ACTUAL SHOWING THAT INSURER CONSIDERED PARTICULAR BASIS FOR REASONABLENESS OF ARGUMENT FORMING A BASIS TO DECLINE COVERAGE OR DELAY SETTLEMENT, (Middle District)
In Bodnar v. Amco Insurance Company, without ruling on the matter, the court observed the potential issue of whether Terletsky’s “reasonableness” prong was to be evaluated objectively or subjectively.  In the seminal case of Williams v. Hartford Cas. Ins. Co., 83 F. Supp. 2d 567, 574 (E.D. Pa. 2000), the court had held that this first...Read More >>
August 20, 2014
AUGUST 2014 BAD FAITH CASES: FAILURE TO FOLLOW INVESTIGATIVE AND CLAIMS HANDLING STANDARDS IN INSURER’S OWN MANUAL, ADJUSTER’S FAILURE TO CONSULT WITH OTHERS AND GO BEYOND HER OWN CONCLUSIONS, AND FAILURE TO CONDUCT IME DEFEAT MOTION TO DENY BAD FAITH CLAIM (Western District)
Mineo v. Geico involved a UIM claim.  The insured was a Vietnam War Veteran who had suffered significant combat injuries during the War.  Years later he was in a motor vehicle accident and suffered a shoulder injury.  After the accident, there was some record that he suffered a further shoulder injury.  The insurer offered...Read More >>
August 15, 2014
AUGUST 2014 BAD FAITH CASES: COURT DENIES INSURERS MOTIONS TO PRECLUDE EXPERT TESTIMONY, BIFURCATE THE TRIAL AND FOR SUMMARY JUDGMENT WHERE INSURER REQUIRED 3 IMES WHICH REACHED INCONSISTENT RESULTS (Middle District)
In Monaghan v. Travelers Prop. Cas. Co. of Am., the Court, in three separate opinions, addressed the issues of the adequate burden of proof in bad faith claims, admissibility of expert testimony, and proper bifurcation of trial. The Court found that the pleading standards were met, that expert testimony should not be precluded, although...Read More >>
August 5, 2014
AUGUST 2014 BAD FAITH CASES: COURT PERMITS DEPOSITIONS OF INSURER’S EXECUTIVE OFFICERS WHO WERE NOT DIRECTLY INVOLVED IN HANDLING A SPECIFIC CLAIM, ON THE THEORY THAT THE ACTUAL CLAIMS HANDLERS MAY BE FOLLOWING CORPORATE POLICIES OF THE INSURER THAT RESULTED IN THE ALLEGED BAD FAITH CLAIMS HANDLING (Middle District)
In Clemens v. New York Central Mutual Fire Insurance Company, the court addressed the propriety of deposing the insurer’s corporate officers in the context of a UIM bad faith claim. The bad faith claim was the only claim remaining in the case. The insurer offered two persons as the appropriate deponents, because they were...Read More >>
August 1, 2014
AUGUST 2014 BAD FAITH CASES: THERE IS NO BAD FAITH CLAIM WHERE THE BREACH OF INSURANCE CONTRACT CLAIMS FAILED EITHER BECAUSE THERE WAS NO COVERAGE OR INSURER’S POSITION WAS REASONABLE; CONTRACT CLAIMS AGAINST THE INSURED CONTRACTOR FAILED BECAUSE THEY DO NOT CONSTITUTE AN OCCURRENCE UNDER KVAERNER OR AS “SUBCONTRACTED WORK PROPERTY DAMAGE”; OR ARE SUBJECT TO CGL EXCLUSIONS j(5) AND j(6), AND CONDUCT AT ISSUE IS OUTSIDE PRODUCTS COMPLETED OPERATION HAZARD; AND THERE IS NO DUTY TO DEFEND IN THE ABSENCE OF A SUIT (Third Circuit and Western District)
In Allegheny Design Management v. Travelers Indemnity Company of America, the insured was a general contractor with a commercial general liability policy. It hired a subcontractor to install glass and another to clean the glass that was to go in the new construction of a store. After installation, but during the cleaning process, the...Read More >>
July 29, 2014
JULY 2014 BAD FAITH CASES: INSUREDS FAILED TO PLEAD ANY FACTS TO SUPPORT A PLAUSIBLE BAD FAITH CLAIM IN UIM CASE, COURT GIVING EXAMPLES OF FAILURES IN PLEADING, BUT GIVES LEAVE TO AMEND; COURT STATES FIDUCIARY RELATIONSHIP ONLY EXISTS BETWEEN INSURED AND INSURER IN LIMITED CIRCUMSTANCES (Middle District)
In Flynn v. Nationwide Insurance Company of America, the insured brought a UIM claim, alleging breach of contract, lost wages and bad faith, and included within his complaint allegations that the carrier breached its fiduciary duty.  The carrier moved to dismiss the bad faith claim, and to strike references to its alleged fiduciary duty....Read More >>
July 28, 2014
JULY 2014 BAD FAITH CASES: NO BAD FAITH CLAIM STATED WHERE COURT FOUND NO DUTY TO PAY BENEFITS; AND FURTHER FOUND THAT THE COMPLAINT DID NOT ALLEGE SUFFICIENT FACTS TO MAKE OUT A BAD FAITH CLAIM EVEN HAD IT RULED OTHERWISE ON COVERAGE (Western District)
In Hackbarth v. Nationwide Mutual Insurance Company, the insured fell while attempting to enter his car.  The court found that ice caused the fall, and the vehicle was not an instrumentality of the injury.  Thus, there was no coverage.  Thus, it dismissed the insured’s breach of contract claim. As to the insured’s bad faith...Read More >>
July 23, 2014
JULY 2014 BAD FAITH CASES: INSURED ADEQUATELY ALLEGED BAD FAITH CLAIMS BY PLEADING SPECIFIC FACTS CONCERNING DELAYS IN THE CLAIMS HANDLING PROCESS, A LACK OF COMMUNICATION, AND DISCREPANCY BETWEEN THE ALLEGED INJURY AND SETTLEMENT SUM OFFERED (Philadelphia Federal)
In Padilla v. State Farm Mutual Automobile Insurance Company, the plaintiff brought a breach of contract and bad faith claim based on UIM coverage. The insurer took an examination under oath, had a medical examination done, and referred the case to counsel. The plaintiff alleged that the defendant acted in bad faith by delaying...Read More >>
July 21, 2014
JULY 2014 BAD FAITH CASES: APPELLATE DIVISION UPHOLDS TRIAL COURT DECISION NOT TO AWARD ATTORNEYS FEES UNDER RULE 4:42-9(a)(6) FROM ONE INSURER TO ANOTHER IN DECLARATORY JUDGMENT ACTION, PARTICULARLY WHERE LOSING INSURER’S ARGUMENT WAS MADE IN GOOD FAITH (New Jersey Appellate Division)
In Strunk v. M&A Trucking, the court refused to award attorney’s fees under Rule 4:42-9(a)(6) in a declaratory judgment action between two insurers arguing coverage issues, where one insurer had defended and indemnified the insured in the underlying action; particularly where the trial court determined the issues were worthy of consideration. Date of Decision:...Read More >>
July 20, 2014
JULY 2014 BAD FAITH CASES: COURT FINDS THAT VIOLATION OF UIPA CAN NOT BE BASIS FOR BAD FAITH CLAIM; AND FINDS THAT INSURED COULD NOT MEET CLEAR AND CONVINCING EVIDENCE STANDARD ON REASONABLENESS PRONG OF BAD FAITH TEST (Western District)
In United States Fire Insurance Company v. Kelman Bottles, LLC, property damage occurred for the insured from an event concerning an industrial glass making furnace. The insured’s all risk carrier brought a declaratory judgment action against the insured. The insured also had a Boiler and Machinery insurance policy, and it joined that carrier by...Read More >>
July 19, 2014
JULY 2014 BAD FAITH CASES: NO SEPARATE TORT CAUSE OF ACTION FOR BREACH OF DUTY OF GOOD FAITH; STATUTORY BAD FAITH CLAIM PLEADED MERE POSSIBILITY OF BAD FAITH, NOT A PLAUSIBLE BAD FAITH CLAIM, AND WAS DISMISSED WITH LEAVE TO AMEND (Western District)
In Plummer v. State Firm Fire & Casualty Insurance Company, the insureds made a first party damage claim, involving storm damage to its roof. The insureds claimed that the insurer failed to pay anything toward the roof damage, while paying a claim for roof damage to their neighbor for damage to the neighbor’s roof...Read More >>
July 19, 2014
JULY 2014 BAD FAITH CASES: CONTRACTUAL LIMITATIONS PERIOD DID NOT APPLY TO STATUTORY BAD FAITH CLAIMS; BUT CLAIM STILL DISMISSED FOR FAILING TO MEET TWOMBLY STANDARDS (Philadelphia Federal)
In Mattia v. Allstate Insurance Company, the case involved a first party property damage claim.  The policy had a contractual one year commencement of suit period.  The court found that this contractual limitations period was permissible under Pennsylvania law, in altering the normal 4 year statute of limitations period.  However, following the trend in...Read More >>
July 15, 2014
JULY 2014 BAD FAITH CASES: COURT FINDS THAT UIPA VIOLATIONS CAN SUPPORT STATUTORY BAD FAITH CLAIM; AND THAT INSURED PLEADED SUFFICIENT FACTS REGARDING ALLEGED UNDERVALUATION TO STATE A CLAIM FOR BAD FAITH (Middle District)
In Militello v. Allstate Property & Casualty Insurance Company, the insured owned a horse barn that suffered damage when one of the horses struck a support.  The insured made a claim, and the carrier offered to pay approximately half the claim.  The insured asserted that the barn was otherwise in good condition, and it...Read More >>
July 10, 2014
JULY 2014 BAD FAITH CASES: COURT FINDS THAT FAILURE TO CURE TITLE DEFECTS COULD BE NEGLIGENCE, BUT DOES NOT ESTABLISH BAD FAITH UNDER NEW JERSEY LAW CONCERNING DELAY IN CLAIM PAYMENT (Third Circuit)
In Granelli v. Chi. Title Ins. Co., plaintiffs brought claims for bad faith and negligence, inter alia, against defendant title insurer, alleging that the insurer failed to find and resolve several title defects which repeatedly prevented them from selling their home. Although the insurer cured all defects after the commencement of the litigation, the...Read More >>
July 8, 2014
JULY 2014 BAD FAITH CASES: MERE REFUSAL TO PAY A CLAIM CAN NOT CREATE A BAD FAITH CAUSE OF ACTION UNDER THE UTPCPL (Philadelphia Federal)
In Post v. Liberty Mutual Group addressing Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) in the context of a claim against an insurer by its insured, the court observed that the “UTPCPL does not provide a cause of action for bad faith conduct based solely upon an insurance company’s refusal to pay...Read More >>
July 8, 2014
JULY 2014 BAD FAITH CASES: INSURER’S MOTION TO DISMISS HOSPITAL’S BAD FAITH BREACH OF CONTRACT CLAIM DENIED (New Jersey Federal Court)
In Conn. Gen. Life Ins. Co. v. Roseland Ambulatory Surgery Ctr., the plaintiff/counterclaim-defendant insurer brought claims against defendant/counterclaim-plaintiff hospital for failure to require patients to pay certain out-of-pocket expenses. The insurer originally brought a claim alleging that the hospital had violated ERISA by refusing to charge the expenses to patients. The hospital counterclaimed, alleging...Read More >>
July 4, 2014
JULY 2014 BAD FAITH CASES: BERKS COUNTY TRIAL JUDGE AWARDS $18,000,000 IN PUNITIVE DAMAGES AND $3,000,000 IN ATTORNEY’S FEES AND COSTS (Berks County Court of Common Pleas)
Following in temper the trial court judges’ decisions in Hollock v. Erie Insurance Exchange, 54 Pa. D.&C. 4th 449 (C.C.P. Luzerne 2002), and Corch Construction Company v. Assurance Company of America, 64 Pa. D.&C. 4th 496 (C.C.P. Luzerne 2003), a Berks County Judge has issued a decision imposing $18,000,000 in punitive damages, and $3,000,000...Read More >>
July 3, 2014
All The Best for the Fourth of July
Photo by M. M. GinsbergRead More >>
July 2, 2014
JULY 2014 BAD FAITH CASES: INSURER SUCCESSFUL IN DISMISSING BAD FAITH CLAIM AND IN OBTAINING INDEMNIFICATION FROM INSURANCE AGENT (Philadelphia County Common Pleas)
In Markus v. Infinity Indem. Ins. Co., the defendant insurance agency sought appeal of an order denying its Motion for Post-Trial Relief. The underlying action involved a motor vehicle accident in which Plaintiff’s brother was driving her vehicle. Plaintiff’s claim was ultimately denied on the basis that her brother was not a driver listed...Read More >>
June 27, 2014
JUNE 2014 BAD FAITH CASES: CONCLUSORY LEGAL ALLEGATIONS ARE INSUFFICIENT TO STATE BAD FAITH CLAIM UNDER TWOMBLY/IQBAL, BUT COURT GAVE PLAINTIFF OPPORTUNITY TO AMEND AND CURE PLEADING DEFICIENCIES (Middle District)
In Warnstorff v. State Farm Automobile Insurance Company, the insured brought a bad faith claim against its carrier for unreasonably delaying the evaluation of her underinsured motorist claim, and withholding payment. The plaintiff alleged four specific actions in her complaint which she claimed constituted bad faith. These allegations were: “failing to promptly evaluate the...Read More >>
June 26, 2014
JUNE 2014 BAD FAITH CASES: WORKERS’ COMPENSATION CARRIER HAD RIGHT TO PLACE A LIEN ON SETTLEMENT WITH THIRD PARTY, AND THUS BAD FAITH CLAIM DISMISSED (Philadelphia Commerce Court)
In Askew v. Insurance Company of the State of Pennsylvania, the court determined that a contractual provision requiring a construction company to waive its subrogation rights as against the owner, general manager, and any contractors involved in a construction project, did not apply to that contractor’s workers’ compensation insurance carrier. Thus, the workers’ compensation...Read More >>
June 25, 2014
JUNE 2014 BAD FAITH CASES: ATTORNEY INSURED’S BREACH OF CONTRACT AND BAD FAITH CLAIMS DISMISSED UNDER PRIOR KNOWLEDGE EXCLUSION IN MALPRACTICE POLICY WHERE DRAGONETTI ACTION AGAINST ATTORNEY AND THE CLIENTS BRINGING SUBSEQUENT MALPRACTICE SUIT CREATED OBJECTIVELY REASONABLE BASIS TO KNOW OF POTENTIAL MALPRACTICE CLAIM (Philadelphia Federal)
In Ettinger & Assocs., LLC v. Hartford/Twin City Fire Ins. Co., the court addressed coverage under an attorney’s professional liability policy. The initial events concerned a suit against a realtor, who purportedly failed to inform his clients correctly about the zoning of a lot adjacent to a property. Although the realtor’s clients profited from...Read More >>
June 24, 2014
JUNE 2014 BAD FAITH CASES: IN A WIDE RANGING DECISION ON IMPORTANT DISCOVERY ISSUES, THE COURT RULED THAT: (1) CLAIMS LOGS WITH FACTUAL INFORMATION PROVIDED BY ATTORNEYS TAKING EXAMINATIONS UNDER OATH, PRIOR TO A COVERAGE DECISION, ARE NOT SUBJECT TO THE ATTORNEY-CLIENT PRIVILEGE (INCLUDING THE IDENTITY OF LAWYER DECISION MAKERS IN THE EUO PROCESS), WHILE OTHER INFORMATION CONCERNING ADVICE OR POST-DECISION INFORMATION IS PRIVILEGED; (2) INFORMATION RELATING TO SUBROGATION POSSIBILITIES, AND OBTAINING A CAUSE AND ORIGIN REPORT, ARE NON-PRIVILEGED ORDINARY BUSINESS FUNCTIONS IN CLAIMS INVESTIGATION; AND (3) SPECIFIC CLAIMS AND PROCEDURE MANUALS ACTUALLY GIVEN TO AN INDIVIDUAL CLAIMS HANDLER ARE DISCOVERABLE, BUT MUST BE KEPT CONFIDENTIAL (Philadelphia Federal)
In Henriquez-Disla v. Allstate Property and Casualty Insurance Company, the carrier had provided redacted claim files, asserting the attorney-client privilege, and including a privilege log. The insured moved to compel production of the unredacted files on the basis that the attorney was acting in the role of claims adjuster or investigator. The insured also...Read More >>
June 19, 2014
JUNE 2014 BAD FAITH CASES: COURT FINDS INSURER COULD NOT ASSERT FORUM SELECTION CLAUSE AFTER IT CONSENTED TO REMOVAL TO FEDERAL COURT (Western District)
In Roman v. UniGroup Worldwide, the plaintiff insured contracted with the defendant shipping company and its agents to transport his household property from Israel to Pittsburg. Along with the shipping contracts, he also took out a policy with the defendant insurer. Plaintiff brought both statutory bad faith claims pursuant to the Pennsylvania Bad Faith...Read More >>
June 11, 2014
JUNE 2014 BAD FAITH CASES: INSURED STATED A BAD FAITH CLAIM BY ALLEGING ENOUGH FACTS TO PUT REASONABLENESS OF THE INSURER’S COVERAGE DENIAL AT ISSUE, AND THUS DISCOVERY WAS NEEDED TO DETERMINE THE ISSUED OF REASONABLENESS (Middle District)
In Rizk v. State Farm Fire & Cas. Co., the insured had a homeowners policy that excluded coverage for frozen plumbing pipes; however, the exclusion did not apply “if the insured used reasonable care to maintain heat in the building.” The insured alleged that although he was away from the home during the winter...Read More >>
May 26, 2014
MAY 2014 BAD FAITH CASES: COURT DENIES MOTION TO STRIKE AVERMENT OF CONTRACTUAL DUTY OF GOOD FAITH, BUT GRANTS MOTION REQUIRING A MORE DEFINITE STATEMENT FROM PLAINTIFF-INSURED TO PLEAD MORE FACTUAL AND LEGAL DETAIL SUPPORTING HER STATUTORY BAD FAITH CLAIM (Middle District)
In Hoffer v. Grange Insurance Company, the Magistrate Judge addressed, via his Report and Recommendation which was later adopted by the District Court, two technical motions under the Federal Rules of Civil Procedure: a Rule 12(f) motion to strike a paragraph of the Complaint; and requiring a more definite statement of a claim under...Read More >>
May 24, 2014
MEMORIAL DAY: “But in a larger sense, we cannot dedicate, we cannot consecrate, we cannot hallow this ground. The brave men, living and dead who struggled here have consecrated it far above our poor power to add or detract.”
Fourscore and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty and dedicated to the proposition that all men are created equal. Now we are engaged in a great civil war, testing whether that nation or any nation so conceived and so dedicated can long endure. We...Read More >>
May 21, 2014
MAY 2014 BAD FAITH CASES: DISTRICT COURT DENIES MOTION TO REMAND WHERE BAD FAITH CLAIMS COULD RESULT IN PUNITIVE DAMAGES AWARD THAT WOULD EXCEED $75,000 (New Jersey Federal)
In Carevel, LCC v. Aspen American Insurance Company, a Super Storm Sandy coverage case, the court addressed the issue of whether to remand the matter to state court for failure to meet the federal jurisdictional minimum of $75,000. The complaint asserted claims for breach of contract; failure to promptly effectuate a settlement to conduct...Read More >>
May 20, 2014
MAY 2014 BAD FAITH CASES: ON MOTION IN LIMINE, COURT DECIDES: (1) PLAINTIFF’S INSURANCE CLAIM HANDLING EXPERT CANNOT TESTIFY ON MEDICAL ISSUES OR RESERVES; (2) EVIDENCE OF RESERVES NOT PROPER IN DISABILITY INSURANCE CLAIM; (3) PAST GENERAL CLAIMS HANDLING PRACTICES NOT ADMISSIBLE, BUT PRE-CLAIM EVIDENCE CONCERNING ACTUAL INSURED ADMISSIBLE; (4) PLAINTIFF CAN RECOVER FOR EMOTIONAL DISTRESS UNDER COMMON LAW CONTRACT BREACH OF DUTY OF GOOD FAITH; BUT (5) PLAINTIFF CANNOT RECOVER FOR “LITIGATION STRESS” EXPERIENCED IN THE BAD FAITH LITIGATION ITSELF (PHILADELPHIA FEDERAL)
In Leporace v. New York Life & Annuity Corp. the court addressed various motions in limine on a bad faith claim against a disability insurer. On the first issue, both parties attempted to disqualify the other’s experts. Plaintiff’s expert was qualified on most issues, but was not permitted to testify on the strengths of...Read More >>
May 19, 2014
MAY 2014 BAD FAITH CASES: COURT REJECTS INSUREDS’ ATTACK ON THEIR OWN APPRAISER, AND DENIES MOTION TO SET ASIDE APPRAISAL AWARD (Philadelphia Federal)
In Mitchell v. Safeco Insurance Company, a fire loss action, the appraisers for the insured and insurer agreed to the value of the loss, without the need to go to the umpire, and stipulated in writing to the appraisal award. The insureds, however, challenged the result on the basis that their own appraiser suffered...Read More >>
May 16, 2014
MAY 2014 BAD FAITH CASES: COURT ALLOWS AMENDMENT TO COMPLAINT ADDING BAD FAITH CLAIM OVER TWO YEARS INTO THE CASE WHERE COVERAGE DENIAL OCCURRED DURING THE LITIGATION, AND THE NEW ALLEGATIONS CONCERNED EVENTS OR OCCURRENCES THAT ONLY CAME TO LIGHT AFTER THE ORIGINAL COMPLAINT WAS FILED (Middle District)
In Kump v. State Farm Fire & Casualty Company, the insured plaintiff sought to amend his complaint. The case arose out of a fire to the insured’s home. The insured claimed that the fire destroyed a valuable art and artifact collection worth many millions of dollars, or that the art and artifacts were stolen...Read More >>
May 15, 2014
MAY 2014 BAD FAITH CASES: THIRD CIRCUIT (1) UPHOLDS DISCOVERY RULINGS THAT RESERVES AND COMMUNICATIONS WITH REINSURER WERE NOT DISCOVERABLE; (2) REITERATES THAT INSURER IS NOT OBLIGATED TO MAKE PARTIAL PAYMENTS ON A DISPUTED CLAIM; AND (3) FINDS NO BAD FAITH IN INSURER NOT ALTERING ITS ORIGINAL POSITION BASED ON ITS FIRST EXPERT’S VALUATION – DESPITE A SUBSEQUENT HIGHER VALUATION BY ITS SECOND EXPERT– PENDING THE OUTCOME OF THE APPRAISAL PROCESS (Third Circuit)
In Mirarchi v. Seneca Specialty Insurance Company, the Third Circuit affirmed the District Court’s judgment in the carrier’s favor on a fire loss claim. The policy at issue had a $600,000 limit, directing that valuation on claims be done according to the property’s actual cash value (ACV). The policy defined ACV as the amount...Read More >>
May 14, 2014
MAY 2014 BAD FAITH CASES: IN ENCYCLOPEDIC OPINION ON SEALING DOCUMENTS TO BE FILED IN COURT AS PART OF SUMMARY JUDGMENT MOTION, COURT OBSERVES THE PRESENCE OF A PUBLIC INTEREST IN BAD FAITH DISPUTES WITH INSURERS; AND ADDRESSES CIRCUMSTANCES OF WHEN COMMUNICATIONS BETWEEN INSURED AND INSURER, WHICH INCLUDED PRIVILEGED DOCUMENTS BETWEEN INSURED AND ITS COUNSEL, MAY RESULT IN THE LOSS OF THE ATTORNEY CLIENT PRIVILEGE (Western District)
Mine Safety Appliances Co. v. North River Insurance Company involved breach of contract and bad faith claims by the insured against its insurer for alleged failure to cover losses under an umbrella policy. The underlying claims against the insured involved hundreds of asbestos actions. At issue before the court were motions to file documents...Read More >>
May 13, 2014
MAY 2014 BAD FAITH CASES: WHILE DENYING SUMMARY JUDGMENT ON COVERAGE IN EARTHQUAKE/EARTH MOVEMENT CASE, SUMMARY JUDGMENT GRANTED ON BAD FAITH CLAIM WHERE INSURER REASONABLY RELIED ON ENGINEER’S REPORT AND OTHER FACTS OFFERED BY THE INSURED COULD NOT ESTABLISH BAD FAITH UNDER THE SUBSTANTIAL CLEAR AND CONVINCING EVIDENCE STANDARD; THOUGH COURT WOULD NOT CONSIDER INSURER’S EXPERT REPORT CONCLUDING THAT INSURER’S CONDUCT DID NOT CONSTITUTE BAD FAITH (Middle District)
Honesdale Volunteer Ambulance Corp. v. American Alternative Insurance Corp. involved a property damage claim in relation to an earthquake. The policy excluded coverage for “earth movement,” but covered earthquake damage and had an “earthquake deductible” of $57,910.00. The insured argued that the earthquake caused damage to the building, and the carrier contended that damage...Read More >>
May 9, 2014
2014 MAY BAD FAITH CASES: INSURED CANNOT BRING UNJUST ENRICHMENT CLAIM IN SUITS OVER INSURANCE POLICY (Middle District)
In Stephens v. State Farm Fire & Casualty Company, the court was faced with common law bad faith claims in the context of the insured pleading breach of contract and unjust enrichment. The insurer moved to dismiss the unjust enrichment claims. The Magistrate Judge recommended dismissal on the basis that where a written contract...Read More >>
May 9, 2014
MAY 2014 BAD FAITH CASES: THERE IS NO BAD FAITH WHERE AUTO INSURER HAD NO DUTY TO INDEMNIFY INSURED FOR DAMAGES CAUSED BY FAULTY REPAIR WORK IN BODY SHOP (Philadelphia Common Pleas)
In Rogers v. Allstate Property and Casualty Ins. Co., plaintiff brought an action against a body shop for damages to her car, and also named her auto insurer, bringing claims against it for Fraud, Bad Faith, Negligence, UTPCPL violations, and for Breach of contract, and alleging a general count of “Pattern and Practice.” The...Read More >>
May 8, 2014
MAY 2014 BAD FAITH CASES: NEW JERSEY DISTRICT COURT FINDS THAT “FAIRLY DEBATABLE” STANDARD DID NOT APPLY IN CONTEXT OF THIRD PARTY CLAIM, WHERE INSURED ASSERTED BAD FAITH FOR FAILURE TO SETTLE WITHIN POLICY LIMITS TO AVOID AN EXCESS VERDICT (New Jersey Federal)
In State National Insurance Company v. County of Camden, the County was sued for a serious personal injury sustained when the injured party drove off the road and into a guardrail owned and maintained by the County. After a series of events, including the jury awarding over $31 Million and the trial judge reducing...Read More >>
May 7, 2014
MAY 2014 BAD FAITH CASES: COURT DENIES INSURER SUMMARY JUDGMENT IN BAD FAITH UIM CASE WHERE ISSUES OF FACT REMAINDED ON REASONS FOR DELAY AND APPROPRIATENESS OF RELIANCE UPON CERTAIN MEDICAL PROVIDERS (Middle District)
In Strausser v. Merchants Insurance Group, the insured brought a claim for breach of contract and bad faith on a UIM claim. The insured had received payment from the tortfeasor’s carrier. The insured asserted that the insurer complicated the settlement process by requesting 33 separate authorizations and tax returns in piecemeal fashion over a...Read More >>
May 6, 2014
MAY 2014 BAD FAITH CASES: COURT WOULD NOT DISMISS BREACH OF CONTRACT AND BAD FAITH CLAIMS ON BASIS OF INSURANCE POLICY’S ANTI-ASSIGNMENT CLAUSE WHEN TIME OF ASSIGNMENT WAS CONSTRUED AS BEING PLEADED TO ARISE AFTER THE LOSS (Philadelphia Federal)
In Charbonneau v. Chartis Property Casualty Co., the plaintiff brought suit against an insurance company, claiming violations of contractual rights to proceeds from an insurance policy that had been assigned to her. The insurer filed a motion to dismiss on numerous procedural grounds (claim preclusion, issue preclusion, accord and satisfaction, and release), but argued...Read More >>
May 5, 2014
MAY 2014 BAD FAITH CASES: DISTRICT COURT HOLDS BAD FAITH CLAIMS ASSIGNABLE; ISSUE TO BE DECIDED BY PENNSYLVANIA SUPREME COURT (Philadelphia Federal)
Hennessy v. Allstate Insurance Co. is yet another district court decision involving the assignment of bad faith claims. Differing from prior decisions in the Eastern District, but consistent with Middle District opinions, this court found insurance bad faith claims assignable. The Supreme Court will be deciding this issue in Allstate Property and Casualty Insurance...Read More >>
May 5, 2014
MAY 2014 BAD FAITH CASES: COURT PERMITS MOST OF INSURER’S DISCOVERY REQUESTS ADDRESSING THE INSURED’S RESIDENCE WHERE INSURER WAS DECLINING COVERAGE BASED ON ALLEGED MATERIAL MISREPRESETATION ABOUT RESIDENCE; COURT PROHIBITS DISCOVERY OF INSURED’S THIRD PARTY LITIGATION FILE WHERE CLAIM AGAINST INSURER WAS FOR FIRST PARTY MEDICAL BENEFITS (Middle District)
In McBride v. Infinity Prop. & Cas. Corp., the court addressed an insurer’s subpoenas to third parties, arising out of personal injuries from an auto accident. The carrier had refused to pay its insured first party medical benefits on the basis that the insured allegedly misrepresented his state of domicile at the time he...Read More >>
May 4, 2014
MAY 2014 BAD FAITH CASES: INJURED THIRD PARTY HAS NO DIRECT CLAIM AGAINST INSURERS OF TORTFEASOR FOR BAD FAITH PROCESSING OF CLAIM IN ABSENCE OF ASSIGNMENT (New Jersey Superior Court Appellate Division)
In Ross v. Lowitz, New Jersey’s Appellate Division upheld the lower court’s dismissal of a third party’s claims directly against the insurers of the alleged tortfeasor for bad faith in the processing of the claim brought by them against the tortfeasor-insured. The lower court had found in a comprehensive written statement of reasons, that...Read More >>
May 4, 2014
MAY 2014 BAD FAITH CASES: TERM “A PERIOD OF TIME” IN POLICY FOUND NOT TO BE AMBIGUOUS IN COVERAGE DISPUTE; AND AS NO COVERAGE WAS DUE THERE WAS NO VIABLE BAD FAITH CLAIM (New Jersey Federal)
In Fifth v. State Farm Insurance Company, the case involved damage to a home from water leaking and mold. The policy excluded coverage for losses caused by continuous or repeated seepage or leakage of water or steam from a plumbing system which occurs over “a period of time”, which the insurer argued encompassed the...Read More >>
May 3, 2014
MAY 2014 BAD FAITH CASES: THERE CAN BE NO BREACH OF THE CONTRACTUAL COVENANT OF GOOD FAITH AND FAIR DEALING WHERE THERE IS NO CONTRACT BETWEEN PLAINTIFF AND DEFENDANT (New Jersey Federal)
In Zodda v. National Union Fire Insurance Company, the plaintiff alleged various claims based on an accident disability insurance policy. The court observed in regard to one defendant’s motion to dismiss that the plaintiff had made claims against four sets of defendants, but had not properly distinguished conduct as to each of them in...Read More >>
May 3, 2014
MAY 2014 BAD FAITH CASES — A SUNNY SATURDAY IN PHILADELPHIA BUT THE BLOGGING GOES ON: NO STATUTORY OR CONTRACTUAL BAD FAITH IN UIM CASE WHERE RECORD SHOWS INSURER DID NOT ACT UNREASONABLY IN CLAIMS HANDLING OR SETTLEMENT (Western District)
In Rowe v. Nationwide Insurance Company, the insured was injured in an auto accident in which she bore no fault. She settled with the other driver’s carrier for $15,000, and brought UIM and property damage claims against her own insurer. On the property damage claim, the parties were approximately $3,500 apart in settling the...Read More >>
May 2, 2014
MAY 2014 BAD FAITH CASES: COURT DENIES MOTION TO DISMISS BAD FAITH CLAIM AGAINST HEALTH INSURER WHERE POLICY WAS RESCINDED ON BASIS OF ANSWER TO QUESTION IN APPLICATION THAT WAS NOT CLEARLY MATERIAL TO THE DISEASE FOR WHICH THE INSURED WAS BEING TREATED, AND DISCOVERY INTO BASIS FOR RESCISSION WAS NEEDED; UTPCPL CLAIM DISMISSED UNDER ECONOMIC LOSS DOCTRINE (Middle District)
In Muckelman v. Companion Life Insurance Company, the insured brought claims against his health insurer. The insured was treated for cancer during the policy period, and alleged that he had requested that the insurer give authorization for additional specialized treatments beyond what he was undergoing. After months of review, without any prior notice to...Read More >>
May 1, 2014
WELCOME MAY — AND NOW BACK TO BUSINESS: MAY 2014 BAD FAITH CASES: DISTRICT COURT REMANDS BAD FAITH ACTION AS INSURER REMOVING CASE CANNOT SHOW DAMAGES MAY EXCEED $75,000 TO A LEGAL CERTAINTY, EVEN WHERE PLAINTIFF’S LAWYER WOULD NOT STIPULATE THAT CLAIM WOULD NOT EXCEED THAT SUM (Philadelphia Federal)
Picture by M. M. Ginsberg In Martino v. Hartford Ins. Co., the insured filed a breach of contract and bad faith action which the insurer removed to federal court. The case would be remanded if it appeared “to a legal certainty that the plaintiff cannot recover more than the jurisdictional amount of $75,000.” “When...Read More >>
April 30, 2014
APRIL 2014 CASE ON DECLARATORY JUDGMENT ACTIONS: THIRD CIRCUIT PUTS SOME BRAKES ON DISTRICT COURTS’ ABSTAINING IN FEDERAL DECLARATORY JUDGMENT ACTIONS INVOLVING INSURANCE COVERAGE (Third Circuit)
In Reifer v. Westport Insurance Corporation, the Third Circuit issued its most important decision on the exercise of federal jurisdiction in insurance declaratory actions since its 2000 decision in State Auto Ins. Co. v. Summy, 234 F.3d 131 (3d Cir. 2000). For practical purposes, the most important statement in the new Opinion may be...Read More >>
April 29, 2014
APRIL 2014 BAD FAITH CASES: COURT ORDERS PRODUCTION OF RESERVE INFORMATION IN BAD FAITH CASE; DENIES PRODUCTION OF WORK PRODUCT PREPARED IN ANTICIPATION OF LITIGATION (Middle District)
In Shaffer v. State Farm Mut. Auto. Ins. Co., Judge Rambo issued her second discovery opinion in the insurance bad faith context within three days. The Judge had ordered the insurer to submit unredacted versions of all redacted and partially redacted pages of the claims log to the court for an in camera review. The...Read More >>
April 27, 2014
APRIL 2014 BAD FAITH CASES: INSURED STATED CLAIM FOR COMMON LAW CONTRACTUAL BAD FAITH UNDER BIRTH CENTER AND COWDEN FOR COMPENSATORY DAMAGES, INCLUDING POSSIBILITY OF RECOVERING DAMAGES FOR EMOTIONAL DISTRESS; AND THE COURT PERMITTED THE CASE TO PROCEED ON BAD FAITH THEORY THAT THE INSURER SOUGHT A GLOBAL SETTLEMENT OF UNDERLYING COVERAGE AND BAD FAITH CLAIMS, EVEN THOUGH COURT QUESTIONED THE STRENGTH OF THAT POSITION (Philadelphia Federal)
In Perrugia v. American Home Assurance Company, the District Court revisited principles of common law contractual bad faith claims under Cowden and Birth Center, and found that under these principles, damages for emotional distress were recoverable even where the sum paid under the policy was no longer in dispute. The insured worked for Verizon,...Read More >>
April 26, 2014
APRIL 2014 BAD FAITH CASES: FEDERAL DISTRICT JUDGE PROVIDES DETAILED ANALYSIS ON PROPER SCOPE OF DISCOVERY IN UIM BAD FAITH CASE AS TO RESERVES, CLAIMS HANDLING DOCUMENTS AND PRACTICES, EVALUATING VALUE OF CLAIMS, RATIONALE FOR NON-PAYMENT, ADJUSTER’S MENTAL IMPRESSIONS, FILE REDACTION, AND DISCOVERABILITY OF OTHER BAD FAITH CLAIMS AGAINST THE SAME INSURER (Middle District)
In Keefer v. Erie Insurance Exchange, the court addressed the scope of discovery in a bad faith UIM context. The insurer had objected to producing discovery on the following:   1)      The initial reserve value for Plaintiff’s claim and the amount in which it has changed, if at all; 2) Claims manuals and any...Read More >>
April 25, 2014
APRIL 2014 BAD FAITH CASES: THIRD CIRCUIT AFFIRMS APPLICATION OF EXCLUSIONS TO DAMAGES ARISING FROM FLUID RELEASE OF DECOMPOSING BODY (Third Circuit)
In Certain Underwriters at Lloyd’s London Subscribing to Policy No. SMP3791 v. Creagh, the District Court found that certain policy exclusions precluded coverage for property damage arising out of fluid release from a decomposing body, which is detailed in this earlier blog entry.  The Third Circuit affirmed on the grounds explained by the District...Read More >>
April 25, 2014
APRIL 2014 BAD FAITH CASES: PENNSYLVANIA SUPREME COURT TO CONSIDER ISSUE OF WHETHER BAD FAITH CLAIM CAN BE ASSIGNED
In Wolfe v. Allstate Property Casualty Ins. Co., Judge Jones of the Middle District held that statutory bad faith claims could be assigned. This runs contrary to rulings in the Eastern District, holding that such claims cannot be assigned; one of which decisions, Feingold v. Liberty Mutual Group, was upheld in a non-precedential opinion from the...Read More >>
April 25, 2014
APRIL 2014 BAD FAITH CASES: AFTER FINDING INSURER IMPROPERLY DENIED COVERAGE, COURT FOUND SUMMARY JUDGMENT MOTION ON BAD FAITH CLAIM PREMATURE, AS THE RECORD WAS INSUFFICIENT TO DETERMINE IF THE INSURER ACTED WITH KNOWLEDGE OR RECKLESS DISREGARD OF THE LACK OF A REASONABLE BASIS FOR DENYING THE INSUREDS’ CLAIM (New Jersey Federal)
In Tripoldi v. Universal North American Ins. Co., the insureds had attempted to construct a water proofing system in their basement, the results of which ultimately damaged the structure of a basement wall in their home to the degree that it became uninhabitable. They made a claim and the insurer denied covered.  The insured brought...Read More >>
April 25, 2014
APRIL 2014 BAD FAITH CASES: NO BAD FAITH IN CLAIMS PROCESSING WHERE NO COVERAGE DUE AND COVERAGE WAS DISPUTED, AND WHERE FACTS DID NOT DEMOSTRATE THE KIND OF KNOWLEDGE OR RECKLESS DISREGARD TO ESTABLISH BAD FAITH (New Jersey Appellate Division)
In Johnson v. Plasser American Corporation, an excess carrier paid in its $4,000,000 policy limits to settle a severe personal injury case involving the insured’s employee.  There were issues concerning exclusions and whether the duty to defend was ever invoked based on exhaustion of the underlying policy’s limits.  There was some alleged delay in...Read More >>
April 25, 2014
APRIL 2014 BAD FAITH CASES: FOLLOWING PRIOR PRECEDENT, LEBANON COUNTY JUDGE SEVERS BREACH OF CONTRACT AND BAD FAITH ACTIONS (Lebanon County)
In Audrey’s Crafts and Home Decor, Inc. v. Pennsylvania National Insurance, Judge Charles of Lebanon County followed prior Court precedent in severing a bad faith claim from the breach of insurance contract action.  Thanks to the excellent Tort Talk blog for identifying and summarizing this case, and providing a link to Judge Charles’ Opinion.Read More >>
April 21, 2014
APRIL 2014 BAD FAITH CASES: AN INSURED BUSINESS STATED A BAD FAITH CAUSE OF ACTION AGAINST ITS E&O CARRIER WHERE ITS ALLEGED CONDUCT, WHETHER LEGAL OR NOT, INVOLVED PROFESSIONAL SERVICES; AND AN EXCLUSION RELIED UPON BY THE CARRIER TO DENY COVERAGE, EVEN IF APPLICABLE, DID NOT COVER ALL CLAIMS IN UNDERLYING ACTION AND COULD NOT BE A BASIS TO DENY COVERAGE FOR ALL CLAIMS (Western District)
In Municipal Revenue Services v. Houston Casualty Company, plaintiffs were in the business of purchasing government tax liens.  A law firm accused plaintiffs of scheming with other attorneys to improperly move those tax liens to others.  The law firm sought equitable relief to enjoin those parties’ alleged on-going criminal, civil and fiduciary misconduct, and...Read More >>
April 21, 2014
APRIL 2014 BAD FAITH CASES: THIRD CIRCUIT AFFIRMS RULING THAT BAD FAITH CLAIMS CANNOT BE ASSIGNED, AT LEAST IN CONTEXT WHERE ASSIGNEE WAS ATTORNEY OF INSURED; AND FURTHER HELD THAT INSURER REJECTING UM ARBITRATION RESULT, BY ITSELF, CANNOT MEET REQUIREMENTS TO PROVE BAD FAITH (ThirdCircuit)
In Feingold v. Liberty Mutual Group, the Third Circuit affirmed the District Court’s holding that an attorney claiming he was partially assigned his client’s bad faith claim had no standing, as bad faith claims were in the nature of unassignable personal injury claims under Pennsylvania law.  The court also found that the insured’s estate...Read More >>
April 8, 2014
APRIL 2014 BAD FAITH CASES: COURT REFUSES TO DISQUALIFY INSURER APPOINTED COUNSEL POST TRIAL AFTER AN EXCESS VERDICT (New Jersey Appellate Division)
In Carbone v. Potouridis, the carrier had appointed defense counsel to represent an individual insured and the estate of her son, and later appointed a separate counsel to represent the estate after an excess verdict.  Plaintiff had attempted to settle within policy limits, but the carrier did not settle, the matter went to trial,...Read More >>
April 8, 2014
APRIL 2014 BAD FAITH CASES: NO BAD FAITH WHERE ALLEGED MISREPRESENTATIONS OCCURRED PRIOR TO POLICY’S INCEPTION; CONTRACTUAL LIMITATION ON STACKING PERMISSIBLE (Third Circuit)
In Grudkowski v. Foremost Ins. Co., the court addressed an appeal, with the class action appellee-insureds asserting that the insurance provided them should have been deemed illusory by the lower court.  The Third Circuit affirmed, and denied the request to certify the issue to Pennsylvania’s Supreme Court. The insured had two policies, each of...Read More >>
April 7, 2014
APRIL 2014 BAD FAITH CASES: COURT CLOSELY SCRUTINIZES PLAINTIFF’S EXPERT AND GIVES DETAILED OPINION ON LIMITS TO THAT EXPERT’S TESTIMONY AND GUIDELINES ON HOW EXPERT REPORT MUST BE MADE AND PRESENTED TO SURVIVE A MOTION TO STRIKE THAT TESTIMONY (Philadelphia Federal)
In Leporace v. N.Y. Life & Annuity Corp. the insurers filed a motion to exclude expert testimony, on plaintiff’s bad faith expert.  The expert was previously by one of the defendants that handle claims for an insurer defendant.  She affied that she has worked in the field of disability insurance for seventeen years, and...Read More >>
April 7, 2014
APRIL 2014 BAD FATIH CASES: COURT FINDS: (1) PLEADING OF CLAIMS HANDLING ADEQUATE TO SURVIVE TWOMBLY CHALLENGE; (2) NO SUFFICIENTLY CLEAR CLAIM DENIAL TO TRIGGER STATUTE OF LIMITATIONS; (3) CLAIMS OF FALSE ADVERTISING PRIOR TO INCEPTION OF POLICY NOT ACTIONABLE UNDER BAD FAITH STATUTE; (4) CLAIM OF BREACH OF FIDUCIARY OBLIGATION NOT MATERIAL ELEMENT OF SECTION 8371 CLAIM; (5) CLAIM OF “INDIFFERENCE” TO POLICY HOLDERS GENERALLY STRICKEN WHERE CASE WAS NOT A CLASS ACTION; (6) ALLEGATIONS CONCERNING RESERVES COULD BE MATERIAL; AND (7) CLAIMS OF UIPA VIOLATIONS WERE TO BE STRICKEN, THOUGH BASIS MAY HAVE BEEN LACK OF OPPOSITION BY INSUREDS (Middle District)
In Clemens v. New York Cent. Mut. Fire Ins. Co., the Court addressed a UIM case, where the accident arose in August 2009, plaintiff gave notice of a possible UIM claim in April 2010, and the carrier gave plaintiff consent to settle against the third party’s carrier in July 2011.  Plaintiff alleges numerous conversations...Read More >>
April 3, 2014
APRIL 2014 BAD FAITH CASES: COURT DENIES CARRIER’S SUMMARY JUDGMENT MOTION BECAUSE INSURED ALLEGED CONDUCT WHICH A JURY COULD FIND AMOUNTS TO BAD FAITH (Middle District)
In Universal Underwriters Ins. Co. v. J. Murray Co., an insured automotive dealer, service center, and financier purchased an insurance policy from the defendant-carrier to insure property at its place of business.  During Tropical Storm Lee in September 2011, the insured suffered $1,700,000 in storm damage, notified its carrier of the damages and received...Read More >>
April 3, 2014
APRIL 2014 BAD FAITH CASES: COURT UPHOLDS ATTORNEYS FEE AWARD, FINDING THAT BAD FAITH IS NOT A PREREQUISITE (New Jersey Appellate Division)
In DeMarco v. Stoddard, a medical malpractice coverage appeal, the appellate court upheld the trial court’s grant of attorney fees, finding that bad faith was not a prerequisite for such an award. Date of Decision: January 22, 2014 DeMarco v. Stoddard, No. A-3924-12T1, 434 N.J. Super. 352, 84 A.3d 965(App.Div. Jan. 22, 2014) (ASHRAFI,...Read More >>
March 31, 2014
MARCH 2014 BAD FAITH CASES: COURT REFUSED TO DISMISS BAD FAITH CLAIM ON STATUTE OF LIMITATIONS GROUNDS WHERE BOTH TIMING OF WHEN CLAIM BEGAN AND DISCOVERY RULE APPLICATION SHOULD BE LEFT TO TRIER OF FACT (Middle District)
In Agrotors, Inc. v. Ace Global Markets, the insured claimed bad faith, which the court analyzed solely as a section 8371 claim.  Such a claim is subject to a two year statute of limitations which accrues when the right to institute and maintain a lawsuit arises. However, pursuant to the discovery rule, the statute...Read More >>
March 31, 2014
MARCH 2014 BAD FAITH CASES: INSURED’S CONCEALMENT OF FACT THAT MANUFACTURER PAID FOR LOSS DESPITE MAKING CLAIM AND RECEIVING FUNDS FROM CARRIER COULD NOT CREATE BAD FAITH IN CARRIER, BUT DID STATE A COLORABLE CLAIM AGAINST INSURED’S UNDER FRAUD PREVENTION ACTION (New Jersey Appellate Division)
In AIG Casualty Company of New York v. Walsh, AIG’s policy required it to pay for losses to a damage yacht engine, less a deductible, and it did so.  However, the manufacturer replaced the engine at no cost. The carrier sought return of the funds paid, as there was no loss, and the insureds...Read More >>
March 31, 2014
MARCH 2014 BAD FAITH CASES: COURT WOULD NOT DISMISS BAD FAITH CLAIM AT PLEADING STAGE BASED ON INSURER’S CLAIM THAT IT RELIED UPON EXPERT REPORT (Middle District)
In Aldsworth v. State Farm Fire & Casualty Co., the insured initially claimed that they suffered water infiltration in their home after a wind and rain storm damaged the roof.  The insurer sent out an engineer.  The engineer concluded that the cause of the loss was a construction defect on the part of a...Read More >>
March 30, 2014
MARCH 2014 BAD FAITH CASES: SUMMARY JUDGMENT GRANTED ON BAD FAITH CLAIM WHERE INVESTIGATION WAS REASONABLE, DELAYS ATTRIBUTABLE TO BOTH PARTIES, AND WHERE INSURER ENGAGED EXPERTS THAT RESOLVED ANY CONTRADICTION BY ITS PRIOR EXPERT ON NEED FOR REPLACMENT OVER REPAIR (Middle District)
Moran Industries v. The Netherlands Insurance Company involved numerous disputes between the insured and the insurer over the extent of fire damage to a building and the terms of an insurance policy.  The carrier claimed there was a contractual two year limitations period for bringing a claim, and the insured denied ever receiving that...Read More >>
March 30, 2014
MARCH 2014 BAD FAITH CASES: THIRD CIRCUIT APPLIES RESTATEMENT TO DETERMINE APPLICABLE STATE’S LAW ON POLICY INTERPRETATION WHERE PENNSYLVANIA AND NEW JERSEY CONFLICTED ON SCOPE OF “EMPLOYER’S EXCLUSION”; NO BAD FAITH WHERE INSURED SUPPLIED INSURER WITH WRONG DOCUMENTS AS BASIS FOR COVERAGE, AND WHERE THERE WAS A DISPUTE OF LAW ON APPLICABILITY OF EMPLOYER’S EXCLUSION AND TRIAL COURT HAD FOUND NEW JERSEY LAW TO REACH A SIMILAR CONCLUSION AS PENNSYLVANIA LAW (Third Circuit)
In Arcelormittal Plate, LLC v. Joule Tech. Servs., the issue involved yet another case on the effect of an employer’s exclusion upon an insured that did not itself employ the injured plaintiff-employee. The injured employee was an employee of a the named insured, who brought a claim against an additional insured.  The case hinged...Read More >>
March 30, 2014
Welcome Spring 2014
Our first post of the Spring finds a rainy day, but it all looks like bright sunshine now that the snow has gone.  We at the Pennsylvania and New Jersey Insurance Bad Faith Insurance Blog wish you bright days ahead. Pictures by M. M. GinsbergRead More >>
March 30, 2014
MARCH 2014 BAD FAITH CASES: BAD FAITH CLAIM SURVIVES SUMMARY JUDGMENT WHERE DENIAL OF COVERAGE BASED ON NON-COOPERATION HAD MATERIAL ISSUES OF FACT OPEN AS TO THE SUBSTANTIALITY OR PREJUDICE OF MATTERS ON WHICH INSURED DID NOT TIMELY PROVIDE INFORMATION (Philadelphia Federal)
In Page v. Infinity Indemnity Insurance Company, the insured’s car was destroyed in a fire, which resulted from arson.  The insurer investigated the claim at great length, on the possibility that the insured’s were responsible for the fire, including pursuit of financial records and the insured’s history of shopping for a new vehicle.  The...Read More >>
March 19, 2014
MARCH 2014 BAD FAITH CASES: COURT GRANTS MOTION FOR SUMMARY JUDGMENT WHERE PLAINTIFF FAILED TO SUBMIT TO INDEPENDENT MEDICAL EXAMINATION BASED ON VIOLATION OF COOPERATION CLAUSE IN INSURANCE POLICY (Philadelphia Federal)
In Goddard v. State Farm, plaintiff brought suit against his insurer alleging breach of contract and bad faith arising from the insurer’s refusal to pay UM/UIM benefits to plaintiff for an accident which took place on August 6, 1998.  Although the claim was timely submitted to the insurer, plaintiff refused or failed to submit...Read More >>
March 19, 2014
MARCH 2014 BAD FAITH CASES: COURT REMANDS AFTER DEFENDANT FAILS TO PROVIDE EVIDENCE ESTABLISHING AMOUNT IN CONTROVERSY TO REQUISITE LEGAL CERTAINTY (Western District)
In Brewer v. GEICO, plaintiff filed suit appealing an arbitration award, seeking damages for personal injury suit and bad faith. The insurer removed the case to federal court just before the pre-trial conference took place.  Plaintiff filed a motion to remand, arguing his case did not meet the amount in controversy requirement, and therefore...Read More >>
March 19, 2014
MARCH 2014 BAD FAITH CASES: MIDDLE DISTRICT DISMISSES COMPLAINT FOR FAILURE TO PLEAD SPECIFIC ACTIONS CONSTITUTING BAD FAITH (Middle District)
In Wanat v. State Farm, plaintiff was hit by an underinsured motorist, and settled with the driver’s insurer for $48,000, just under the $50,000 policy limit.  Plaintiff then filed an underinsured claim under her own policy which provided $25,000 in underinsured coverage and $25,000 in liability, non-stacked.  The insurer denied the claim, claiming plaintiff...Read More >>
March 18, 2014
MARCH 2014 BAD FAITH CASES: WHERE PLAINTIFF FAILS TO SHOW HOW ADDITIONAL INVESTIGATION WOULD HAVE ALTERED THE INSURER’S CONDUCT OR VALUATION, THERE CAN BE NO BAD FAITH; INVESTIGATION ADEQUATE AND APPROPRIATE IN UIM CLAIM (Middle District)
In Miezejewski v. Infinity Auto Ins. Co., the insured was injured in an auto accident, and not only suffered physical injury, but alleged her physical condition deteriorated over time, causing her to be laid off.  She claim that the carrier’s claim evaluation was too low, and failed to consider lost wages.  The carrier sought...Read More >>
March 18, 2014
HAPPY ST. PATRICK’S DAY, AND MAY WE HAVE SEEN THE END OF WINTER SNOWS IN 2014
  Pictures by M. M. GinsbergRead More >>
March 18, 2014
MARCH 2014 BAD FAITH CASES: WHERE CARRIER INVESTIGATED CLAIM AND THERE WERE FACTS SUPPORTED TWO POTENTIAL CAUSES OF LOSS, ONE COVERED AND ONE NOT COVERED, SUMMARY JUDGMENT COULD NOT BE GRANTED ON COVERAGE, BUT COULD BE GRANTED ON BAD FAITH AS REASONABLENESS OF INSURER’S ACTIONS COULD NOT MEET EXACTING BAD FAITH STANDARDS (Middle District)
In Kojsza v. Scottsdale Ins. Co., personal property insurance was at issue, in connection with a burglary claim. The insured and the carrier’s investigator disputed over whether there were signs of forced entry, the policy’s the critical language being: Theft, including attempted theft and loss of property provided theft is a result of burglary...Read More >>
March 18, 2014
MARCH 2014 BAD FAITH CASES: WHERE FACTS DID NOT SUPPORT APPLICATION OF THE OF THE POLICY’S TERMS, THERE WAS NO CONTRACTUAL OBLIGATION TO PAY AND NO BAD FAITH (Middle District)
In Kitsock v. Baltimore Life Ins. Co., Plaintiff beneficiary brought breach of contract and statutory bad faith claims for the insurer’s refusal to pay accidental death benefits under a life insurance policy, from fatal injuries sustained by the insured when the insured fell and struck his head on his bed rail. The parties agreed...Read More >>
March 6, 2014
MARCH 2014 BAD FAITH CASES: COMPLAINT SUFFICIENTLY PLEADED THAT CARRIER ENGAGED BIASED DOCTOR FOR IME IN MAKING OUT BAD FAITH CLAIM (Middle District)
In Neal v. State Farm Mut. Auto. Ins., the plaintiff sought relief on the basis that she was denied benefits based on a biased independent medical examination (IME), and that the insurer abused the IME process.  Defendant moved to dismiss for a a failure to adequately plead under Twombly, and because any claims of...Read More >>
March 6, 2014
MARCH 2014 BAD FAITH CASES: CLAIMS THAT AN INSURER ACTED UNREASONABLY DO NOT SET OUT A BAD FAITH CLAIM ON THE FACE OF THE CLAIM, BUT CFA CLAIM ALLOWED TO PROCEED (New Jersey Federal)
In Beekman v. Excelsior Ins. Co., another Superstorm Sandy case, the plaintiff’s asserted that the insurer defendants improperly adjusted his loss claim.  His pleaded that this amounted to a breach of the implied covenant of good faith and fair dealing. It is true that under New Jersey law, a duty of good faith and...Read More >>
March 6, 2014
MARCH 2014 BAD FAITH CASES: BAD FAITH CLAIMS AGAINST INSURER FOR BRINGING INTERPLEADER ACTION DISMISSED (New Jersey Federal)
In Amethyst International, Inc. v. Duchess, a Hurricane Sandy flood damage claim, an insurer that was joined as a defendant in a hotly disputed suit among claimant/parties, brought an interpleader action by way of counterclaim and cross claim, wanting to pay the proceed into court, rather than pay any one of the various parties...Read More >>
March 6, 2014
MARCH 2014 BAD FAITH CASES: STATUTORY BAD FAITH CLAIMS CAN ONLY BE BROUGHT AGAINST INSURERS WITH WHOM PLAINTIFF HAD AN INSURANCE CONTRACT (Philadelphia Federal)
In Wallace v. State Farm, the court dismissed most of the bad faith claims on res judicata grounds, wherein the earlier suit was ended by a praecipe to settle, discontinue, and end, which the court found to be the equivalent of a final judgment for res judicata purposes.  A final bad faith count was...Read More >>
March 4, 2014
MARCH 2014 BAD FAITH CASES: ONCE JURY FOUND INSUREDS COMMITTED INSURANCE FRAUD, IT COULD NOT FIND IN FAVOR OF THOSE SAME INSUREDS ON BAD FAITH CLAIMS AGAINST THAT INSURER (Philadelphia Federal)
In Zenith Insurance Co. v. Wells Fargo Ins. Services of PA, Inc., even though the insureds lost before a jury on the issue of insurance fraud, they still pursued post-verdict motions that the jury erred in failing to find bad faith against the carrier.  The court stated: “At trial, the jury was instructed on...Read More >>
March 4, 2014
MARCH 2014 BAD FAITH CASES: BAD FAITH CLAIM DISMISSED BECAUSE FILED MORE THAN TWO YEARS FROM ALLEGED ACT OF BAD FAITH (Philadelphia Federal)
In Hatchigian v. State Farm Ins. Co., the insured claim that the carrier improperly made out a settlement check to both him and his lawyer.  He asserted a bad faith claim, but did not file the action for more than three years after the check was issued.  As the statute of limitations on bad...Read More >>
March 4, 2014
MARCH 2014 BAD FAITH CASES: COURT DISMISSES BAD FAITH COUNTERCLAIM TO INSURER’S INJUNCTIVE ACTION FOR RESCISSION, WHICH WAS DEFENDING INSURED UNDER A RESERVATION OF RIGHTS, AS LOSS OF A DEFENSE AS A RESULT OF THE RESCISSION ACTION IS NOT BAD FAITH (New Jersey Federal)
In Nova Casualty Co. v. Col-Mor Apartments, Inc., the insured was sued on the basis that it was providing drinking water contaminated with radioactive materials.  The insurer defended under a reservation of rights, brought also brought an action seeking the equitable remedy of rescission, alleging that the insured knew about the contamination prior to...Read More >>
March 4, 2014
MARCH 2014 BAD FAITH CASES: COURT GRANTS INSUREDS’ MOTION TO REMAND CASE WHERE NOTICE OF REMOVAL WAS UNTIMELY (Philadelphia Federal)
In Minissale v. State Farm Fire & Cas. Co., the insureds filed a claim for breach of contract and bad faith after water damaged the granite flooring of their home and their homeowner’s insurance carrier refused to pay. The insureds’ claim sought damages “in excess of $50,000 together with interest and costs and the...Read More >>
March 4, 2014
MARCH 2014 BAD FAITH CASES: COURT DENIES CARRIER’S MOTION TO DISMISS WHERE IT WAS ALLEGED THAT THE CARRIER UTILIZED A CONTRACTOR TO OBTAIN A LOWER VALUATION OF THE INSUREDS’ LOSS (Philadelphia Federal)
In Williamson v. Chubb Indem. Ins. Co., the insureds sought benefits under their homeowner’s insurance policy after incurring damage to their home.  After notifying the carrier of their claim, the carrier acknowledged that the damage was covered under the policy. The carrier retained an independent contractor to assess the amount of the insureds’ loss,...Read More >>
March 4, 2014
MARCH 2014 BAD FAITH CASES: COURT RULES THAT CARRIER ACTED WITH POOR JUDGMENT, BUT DID NOT ENGAGE IN BAD FAITH (Western District)
In Schifino v. Geico Gen. Ins. Co., the Plaintiff-insured sued his insurance carriers seeking underinsured motorist (“UIM”) benefits pursuant to automobile insurance policies issued by each defendant-carrier. The insured argued that the carriers had breached their contractual duties in failing to pay UIM benefits and claimed that one of the carriers engaged in bad...Read More >>
February 11, 2014
FEBRUARY 2014 BAD FAITH CASES: INSURER COULD NOT SEEK ATTORNEY’S FEES FROM ANOTHER CARRIER IN DECLARATORY JUDGMENT ACTION FOR PAYING SHARE OF INSURED’S FEES ON THE BASIS OF BAD FAITH, BUT COULD PROCEED ON STATUTORY CLAIM UNDER 42 Pa. C. S. § 2503(7) (Western District)
In Nat’l Union Fire Ins. Co. v. Essex Ins. Co., plaintiff insurer filed a declaratory judgment action against one of its co-insurer after the insurer declined to pay its portion of defense costs in an underlying suit against the companies insured. Included in that action was a claim for attorney’s fees and delay damages....Read More >>
January 29, 2014
JANUARY 2014 BAD FAITH CASES: ARBITRATION CLAUSE APPLIES TO BAD FAITH CLAIM AS IT ARISES OUT OF UNDERLYING ARBITRABLE BREACH OF CONTRACT CLAIM (Philadelphia Federal)
In United Ref. Co. v. Nat’l Union Fire Ins. Co., Plaintiff brought suit against its insurer alleging the insurer was liable for business losses incurred by the plaintiff when a ruptured pipeline delayed shipments of crude oil to plaintiff’s refining facilities. The insurer provided plaintiffs with an “all-risk” policy, as well as providing “contingent...Read More >>
January 29, 2014
JANUARY 2014 BAD FAITH CASES: INSURER’S SUMMARY JUDGMENT AFFIRMED ON EQUITABLE FRAUD COUNT AND POLICY RESCINDED (New Jersey Appellate Division)
In Those Certain Underwriters at Lloyd’s, London Subscribing to Policy No. Buy1780 v. Cleopatra, LLC, the insurer brought suit against its insured seeking declaratory judgment and rescission of the policy for material misrepresentation by the client on the insurance application. In November of 2009 defendant-hotel suffered severe damage caused by high winds and rain...Read More >>
January 22, 2014
Back from Winter Break
We are back from a brief winter hiatus, and hope you are finding some sun and warmth on these cold winter days.Read More >>
January 22, 2014
JANUARY 2014 BAD FAITH CASES: BAD FAITH CLAIM ARISING FROM DEATH IN 1999 BARRED BY STATUTE OF LIMITATIONS (Philadelphia Commerce Court)
In Tertyshnaya v. Std. Sec. Life Ins. Co., plaintiff, wife of the late Philadelphia Flyers player Dmitri Tertyshny, brought suit against the insurer that provided her husband with a disability and accidental death policy when it denied her benefits under the policy after her late husband’s death at a summer training camp. The policy...Read More >>
January 22, 2014
JANUARY 2014 BAD FAITH CASES: EASTERN DISTRICT DENIES INSURED’S MOTION ON THE PLEADINGS OF INSURER’S BAD FAITH BREACH OF CONTRACT COUNTERCLAIM (Philadelphia Federal)
In Solid Waste Servs. v. New York Marine & Gen. Ins. Co., plaintiff brought suit against its insured concerning subrogation of an employee’s personal injury claim. Plaintiff was self-insured up to $1 million per claim under the Pennsylvania Workers’ Compensation Act, after which the insurer provided an excess policy to plaintiff for up to...Read More >>
January 22, 2014
JANUARY 2014 BAD FAITH CASES: PRIMA FACIE EVIDENCE CLAUSE ENFORCED AGAINST PRINCIPAL IN SURETY CASE THAT CONSIDERED STANDARDS FOR BAD FAITH IN SURETY CONTEXT (Chester County)
Plaintiff, the surety, brought suit against its principal seeking indemnification for damages paid on the principal’s behalf after issuing a bond for a construction project. Under the surety agreement, the principal was liable for indemnifying the surety for all losses and expenses arising from the execution or procurement of the bonds. The surety contract...Read More >>
January 4, 2014
JANUARY 2014 BAD FAITH CASES: CLAIM CONCERNING FIRST PARTY MEDICAL BENEFITS GOVERNED BY SECTION 1797 OF MVFRL WHICH PRE-EMPTS BAD FAITH CLAIMS (Philadelphia Federal)
In our first post of 2014, Yang v. State Farm Mut. Auto. Ins. Co., the Court found that plaintiff’s claims concerning improper conduct by insurers in paying first party medical benefits is governed by section 1797 of the Motor Vehicle Financial Responsibility Law, which pre-empts any potential claim under the Bad Faith Statute. Date...Read More >>
December 28, 2013
DECEMBER 2013 BAD FAITH CASES: INSURANCE ISSUED PURSUANT TO FEDERAL NATIONAL FLOOD INSURANCE PROGRAM PRE-EMPT STATE LAW STATUTORY BAD FAITH CLAIMS (Eastern District)
In Rudi v. State Farm Fire & Cas. Co., State Farm has issued flood dwelling insurance that was federally underwritten, in a Standard Flood Insurance Policy administered  by it pursuant to the National Flood Insurance Program (“NFIP”). Allstate argued that the insureds’ statutory bad faith claim was foreclosed because federal law preempts state law extra-contractual...Read More >>
December 27, 2013
2013 BAD FAITH CASES: DISTRICT COURT CONFIRMS ARBITRATION AWARD IN FAVOR OF INSURER FINDING INSURED ATTEMPTED TO MAKE FRAUDULENT CLAIM (New Jersey Federal)
In Fed. Ins. Co. v. Von Windherburg-Cordeiro, defendant was an insured under a $1.5M Voluntary Accident Insurance Policy, providing coverage for, amongst other things, ‘permanent total disability.’ In 2005, defendant gave notice of a claim for permanent total disability benefits as a result of injuries suffered from a fall down an escalator at the...Read More >>
December 27, 2013
2013 BAD FAITH CASES: PLAINTIFF SUFFICIENTLY STATES CLAIM FOR BAD FAITH AND INSURER’S MOTION TO DISMISS BAD FAITH CLAIM UNDER TWOMBLY STANDARDS (Philadelphia Federal)
In Sabia Landscaping v. Merchs. Mut. Ins. Co., plaintiff, a landscaping company, brought suit against its insurer seeking a declaratory judgment establishing the insurer’s duty to defend plaintiff in an underlying tort action, as well as claims for breach of contract and bad faith as a result of the insurer’s denial of the claim....Read More >>
December 27, 2013
2013 BAD FAITH CASES: COURT GRANTS MOTION FOR SUMMARY JUDGMENT ON COVERAGE ISSUE BASED ON BABCOCK RULING, REJECTING WAIVER AND ESTOPPEL ARGUMENTS ON BASIS OF PROPER RESERVATION OF RIGHTS; BUT UNADJUDICATED BAD FAITH CLAIM ON FAILURE TO SETTLE, RATHER THAN INTERPLEAD POLICY LIMITS, REMAINED OPEN (Philadelphia Federal)
Charter Oak Ins. Co. v. Maglio Fresh Food involves a coverage dispute between plaintiff, the primary insurer, the defendant-insured, and the excess and umbrella insurer.  Plaintiff filed a complaint alleging its policy did not provide coverage for the insured’s claim, and listing the excess insurer as a “nominal defendant,” although plaintiff and the excess...Read More >>
December 27, 2013
2013 BAD FAITH CASES:COURT RULES ON “BAD FAITH SET-UP” AFFIRMATIVE DEFENSE; COURT PERMITS SUBPOENAS ON INSURED, BUT REJECTS ARGUMENT THAT DOCUMENTS WHICH INSURER DID NOT CONSIDER BE PROVIDE DEFENSE TO BAD FAITH (Middle District)
In Shannon v. New York Cent. Mut. Ins. Co., plaintiff brought suit against its insurer for bad faith after a molded verdict of $906,000 was entered against him in excess of his $25,000 policy limit. The insurer filed an answer to the bad faith claim, and in paragraph 120, set forth allegations asserting that...Read More >>
December 25, 2013
HAPPY HOLIDAYS AND ALL THE BEST FOR THE NEW YEAR
We thank you for visiting our Blog, and look forward to seeing you again (and again) in 2014. May it be a good year for all, FINEMAN KREKSTEIN & HARRIS  Read More >>
December 12, 2013
IS THE SUPERIOR COURT DIALING BACK ON KVAERNER AND THE MEANING OF OCCURRENCE? (December 2013)
In Indalex, Inc. v. National Union Fire Ins. Co., Pennsylvania’s Superior Court, following reasoning in a U.S. District Court case, National Fire Ins. Co. v. Robinson Fans, has limited the application of Kvaerner Metals Division of Kvaerner U.S., Inc. v. Commercial Union Ins. Co. in defining what constitutes an occurrence.  While identifying various rationales...Read More >>
December 5, 2013
DECEMBER 2013 BAD FAITH CASES: NEW JERSEY SUPERIOR COURT HOLDS SIMULTANEOUS BREACH OF CONTRACT AND BAD FAITH CLAIMS MUST BE BIFURCATED, WITH THE BAD FAITH CLAIM, INCLUDING DISCOVERY, STAYED PENDING RESOLUTION OF THE BREACH OF CONTRACT CLAIM (New Jersey Appellate Division)
In Procopio v. Gov’t Emples. Ins. Co., the Appellate Division reversed an order from the Law Division bifurcating and staying plaintiff’s bad faith claim from his UIM claim for trial purposes, but allowing discovery to advance simultaneously on the two claims. Although the trial court judge allowed that any discovery requests implicating privileged materials...Read More >>
December 5, 2013
DECEMBER 2013 BAD FAITH CASES:INSURER’S FAILURE TO FOLLOW INDEPENDENT COUNSEL’S ADVICE LEADS TO BAD FAITH CLAIM (Lackawanna County Common Pleas)
In Kearney v. Travelers Ins. Co., the plaintiffs were injured in an auto crash, and pursued a claim against the third party tortfeasor. Upon settlement of the third party claim, plaintiffs filed a UIM claim with its insurer. The insurer did not settle that claim, and the claim was forced to go to arbitration....Read More >>
December 5, 2013
DECEMBER 2013 BAD FAITH CASES: : INSURER PROPERLY REFUSED DEFENSE, AND CARRIED OUT REASONABLE INVESTIGATION, AND SUMMARYJUDGMENT GRANTED (Lawrence County Common Pleas)
In Lanigan v. T.H.E. Ins. Co., plaintiff brought suit against its insurer alleging breach of contract and bad faith for the insurer’s denial of a defense against claims in an underlying suit. Plaintiff was the driver at a race at Mercer Raceway Park. While plaintiff was participating in the race, the throttle of his...Read More >>
December 5, 2013
DECEMBER 2013 BAD FAITH CASES: INSURER SUCCESSFULLY EXCLUDES PLAINTIFF’S BAD FAITH EXPERT ON MOTION IN LIMINE (Middle District)
In Scott v. Geico Gen. Ins. Co., the court was faced with three motions in limine prior to trial. The first concerned the individual plaintiff hired to act as his bad faith expert. Plaintiff selected the individual based on his experience as a former attorney who had handled more than 10,000 insurance claims as...Read More >>
November 27, 2013
NOVEMBER 2013 BAD FAITH CASES: FORMER SUPERIOR COURT JUDGE’S CLAIM FOR BAD FAITH AGAINST INSURER DISMISSED ON IN PARI DELICTO GROUNDS; FEDERAL CONVICTION PREVENTED CIVIL ACTION (Pennsylvania Superior Court)
The case Joyce v. Erie Ins. Exchange arises out of a claim for damages, paid out by the insurers, and then ordered to be repaid to the insurer by plaintiff in restitution following his conviction for mail fraud and money laundering associated with the claim payment. Plaintiff brought suit against the insurers seeking to...Read More >>
November 26, 2013
NOVEMBER 2013 BAD FAITH CASES: SUPERIOR COURT AFFIRMS BAD FAITH FINDING BASED ON ADJUSTER’S FAILURE TO PERFORM INDEPENDENT EVALUATION ON UIM CLAIM; PERMITS EXPERT TESTIMONY ON CLAIMS HANDLING; UPHOLDS PUNITIVE DAMAGE AWARD; AND DOES NOT PERMIT EXPERT FEES, INVESTIGATIVE FEES, ARBITRATION FEES AND TRIAL PREPARATION EXPENSES WITHIN THE TERM “COURT COSTS” (Pennsylvania Superior Court)
In Grossi v. Travelers Personal Ins. Co., plaintiff brought suit against his insurer for bad faith handling of his UIM claim after he was awarded $4M at arbitration despite the insurer’s refusal to settle for more than its $1,000 reserve.  Plaintiff won at the trial level on his bad faith claim, and the insurer...Read More >>
November 26, 2013
NOVEMBER 2013 BAD FAITH CASES: EXCESS INSURER CORRECTLY DENIED COVERAGE WHERE UNDERLYING SETTLEMENT HAD NOT YET BEEN PAID (Pennsylvania Superior Court)
In Lexington Ins. Co. v. Charter Oak, the trial court granted defendant, the excess insurer, summary judgment, ruling the carrier’s duty to defend and indemnify were not triggered because the underlying policies were not exhausted at the time the plaintiff tendered the claims, as the underlying settlement had not actually been paid yet. On...Read More >>
November 16, 2013
NOVEMBER 2013 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM FINDING PLAINTIFF’S OWN CONDUCT, NOT THE INSURER’S, LED TO DELAYS IN THE CLAIM INVESTIGATION (Western District)
In Hayden v. Westfield Ins. Co., plaintiffs brought suit against their homeowner insurer seeking damages for breach of contract and bad faith after their home was allegedly damaged in a hail and windstorm. The storm took place in March of 2011. Six months later, in September of 2011, plaintiffs first provided notice to the...Read More >>
November 16, 2013
NOVEMBER 2013 BAD FAITH CASES: AMBIGUITY IN RECORDED CONVERSATION WITH INSURED DEFEATS BAD FAITH CLAIM (Philadelphia Federal)
In Lites v. Trumbull Ins. Co., plaintiffs filed suit seeking a retroactive change to full tort coverage, and alleging bad faith for the insurer’s failure to change the coverage prior to plaintiffs’ request. One month before the expiration of their current auto policy, plaintiffs contacted their insurer and requested their coverage be changed from...Read More >>
November 16, 2013
NOVEMBER 2013 BAD FAITH CASES: EASTERN DISTRICT DECIDES PENNSYLVANIA BAD FAITH STATUTE DOES NOT EXTEND TO SURETY BONDS (Philadelphia Federal)
In Upper Pottsgrove Twp. v. Int’l Fid. Ins. Co., an Eastern District judge held Pennsylvania’s bad faith statute does not apply to companies that issue surety bonds.  Plaintiff hired a construction company to make improvements to its public spaces. The construction contract required the construction company to purchase a bond for the value of...Read More >>
November 8, 2013
NOVEMBER 2013 BAD FAITH CASES: CLAIMS-MADE POLICY EXCLUDES COVERAGE FOR FORESEEABLE LITIGATION, INSURER PREVAILS ON BREACH OF CONTRACT AND BAD FAITH CLAIMS (Philadelphia Federal)
In Fishman v. Hartford, the insurer refused to provide plaintiffs, an attorney and his law firm, with a defense in an underlying malpractice suit alleging plaintiffs failed to file suit within the applicable statute of limitations. The insurer provided plaintiffs a professional liability claims-made policy, which excluded coverage for all claims which any insured...Read More >>
November 8, 2013
NOVEMBER 2013 BAD FAITH CASES: PRODUCTS-COMPLETED OPERATIONS HAZARD EXTENDS ONLY TO WORK BY GENERAL CONTRACTOR; DAMAGE CAUSED BY SUBCONTRACTOR NOT COVERED, PRECLUDING BAD FAITH CLAIM FOR DENIAL (Western District)
In Allegheny Design Mgmt. v. Travelers Indem. Co. of Am., plaintiff, a general contractor, brought suit against its insurer after a scratch was discovered in the store-front glass at one of plaintiff’s project sites, and the insurer refused to cover the claim. The scratch was discovered shortly before the project was completed, and the...Read More >>
November 8, 2013
NOVEMBER 2013 BAD FAITH CASES: REVERSING ON BREACH OF CONTRACT CLAIMS IN THE INSURED’S FAVOR, THIRD CIRCUIT STILL AFFIRMS SUMMARY JUDGMENT ON BAD FAITH COUNT FOR FAILURE TO MEET EVIDENTIARY BURDEN OF CLEAR AND CONVINCING EVIDENCE, AND THAT SUGGESTIONS FROM EXPERT REPORTS ALONE ARE NOT SUFFICIENT TO ESTABLISH BAD FAITH CLAIM (Third Circuit)
In U.S. Fire. Ins. Co. v. Kelman Bottles, the insured brought suit against its insurers for breach of contract after its claims for damages resulting from a glass melting furnace blow-up in its factory were denied. Defendant produces glass bottles, requiring it to store approximately 220 tons of molten glass at temperatures of 2300...Read More >>
November 8, 2013
NOVEMBER 2013 BAD FAITH CASES: COURT DISMISSES BANK’S CLAIM AGAINST TITLE INSURER FOR FAILURE TO STATE A CLAIM AND COMPLAINT DID NOT SET OUT BAD FAITH AND DID NOT SET OUT THE KIND OF CLAIM THAT COULD ALLOW FOR BAD FAITH EVEN WHERE THERE WAS NO COVERAGE OBLIGATION (Middle District)
In Bank of Am., N.A. v. Martin, plaintiff brought suit against the insurer alleging breach of contract and bad faith for its failure to pay plaintiff’s claim under its title insurance after an error was discovered in the title. The title in question was created when defendant landowners took out a mortgage for the...Read More >>
November 8, 2013
NOVEMBER 2013 BAD FAITH CASES: DISTRICT COURT REAFFIRMS ITS REFUSAL TO FIND A FIDUCIARY DUTY BETWEEN SURETY AND POLICYHOLDER (Western District)
In Reginella Constr. Co. v. Travelers Cas. & Sur. Co. of Am., the District Court refused to reopen its judgment dismissing plaintiff’s fiduciary-in-fact, tortious interference, and bad faith claims, previously discussed on this Blog. Plaintiff argued the court committed legal error by applying the gist of the action doctrine to its bad faith claim...Read More >>
November 7, 2013
NOVEMBER 2013 BAD FAITH CASES: PLAINTIFF’S BAD FAITH CLAIM POTENTIALLY GAVE AN INSURER THE ABILITY TO PIERCE ATTORNEY-CLIENT PRIVILEGE WHERE IT CAN ESTABLISH NO LESS INTRUSIVE SOURCE EXISTS ON THE SUBJECTS OF SETTLEMENT DEMANDS, OFFERS, OR THE REJECTION OF SETTLEMENT DEMANDS OR OFFERS ON AN IMPLIED WAIVER THEORY, BUT IT FIRST HAD TO ATTEMPT DISCOVERY WITHOUT ASKING ABOUT PRIVILEGED COMMUNICATIONS (New Jersey Appellate Division)
In V.K. v. New Jersey Mfrs. Ins. Co., plaintiff, her husband, and their minor children were involved in a car crash in which their vehicle was hit head-on by the other driver. Plaintiff and her children brought suit against the other driver. The driver carried a half-million dollar policy, which was ultimately offered to...Read More >>
November 1, 2013
NOVEMBER 2013 BAD FAITH CASES: BAD FAITH CLAIM TIME BARRED BY TWO YEAR STATUTE OF LIMITATIONS DESPITE POLICY STATUTE OF LIMITATIONS OF THREE YEARS; TIME OF DENIAL IS TIME WHEN STATUTE BEGINS (Western District)
In Sigal v. Gen. Am. Life Ins. Co., plaintiff brought suit alleging breach of contract and bad faith for two separate denials in 2005 and 2010 of his disability claims. Plaintiff, a surgical opthamologist, purchased three disability policies with “Own Occupation” riders from the insurer and its subsidiary. Two years after the purchase of...Read More >>
November 1, 2013
NOVEMBER 2013 BAD FAITH CASES: COURT HOLDS “EXTREME DELAY” IN PROCESSING OF CLAIM AND TENDER OF PAYMENT CAN CONSTITUTE BAD FAITH UNDER THE STATUTE; ENTERS $2M JUDGMENT AGAINST INSURER, INCLUDING PUNITIVE DAMAGES AND ATTORNEYS’ FEES (Lackawanna County)
In Davis v. Fidelity Nat’l Ins. Co., plaintiffs brought suit against the insurer alleging breach of contract and bad faith for the insurer’s failure to settle its claim under a title insurance policy for five years. Plaintiffs owned a parcel of land on which they intended to build townhomes. When they applied for the...Read More >>
November 1, 2013
NOVEMBER 2013 BAD FAITH CASES: COURT FINDS NO BAD FAITH WHERE INSURER DELAYED SETTLEMENT PENDING EXPERT REPORT ON CAUSATION (Blair County)
In Rhodes v. USAA Cas. Ins. Co., plaintiffs brought suit alleging the insurer had acted in bad faith by refusing to meet their settlement demand of $175,000 on their underinsured claim sooner than it did. To prove such a claim, the first prong of the bad faith statute (the insurer lacked a reasonable basis...Read More >>
October 25, 2013
OCTOBER 2013 BAD FAITH CASES: INSURER’S “PAID WHEN INCURRED” DISBURSEMENT OF FUNDS DID NOT BREACH CONTRACT; NO BAD FAITH (Philadelphia Federal)
In Pellegrino v. State Farm Fire & Cas. Co., plaintiffs brought suit alleging the insurer’s practice of withholding funds for certain repairs as “paid when incurred” (PWI) was a breach of contract and constituted bad faith. Plaintiffs’ roof and siding were damaged in a storm, and plaintiffs submitted a claim for damages to the...Read More >>
October 21, 2013
OCTOBER 2013 BAD FAITH CASES: BAD FAITH CLAIMS ALLEGING DELAY IN INVESTIGATION, UNREASONABLE INTERPRETATION OF POLICY, AND LACK OF ALE PAYMENT CAN ADVANCE TO TRIAL, THOUGH SUMMARY JUDGMENT GRANTED ON CLAIM RELATING OT AGGREGATION AND DEPRECIATION ON PERSONAL PROPERTY (Philadelphia Federal)
In Hudgins v. Travelers Home & Marine Ins. Co., plaintiff’s home was destroyed in a fire. An investigation of the cause of the fire took place, and plaintiff’s son was arrested and charged with arson. The insurer continued its investigation, but failed to make a decision as to coverage until nearly 10 months after...Read More >>
October 21, 2013
OCTOBER 2013 BAD FAITH CASES: COVERAGE FOR QUI TAM ACTION DENIED UNDER “PRIOR OR PENDING LITIGATION” EXCLUSION; INSURED NEED NOT BE SERVED WITH COMPLAINT FOR EXCLUSION TO APPLY (Philadelphia Commerce Court)
In AmerisourceBergen Corp. v. ACE Am. Ins. Comp., plaintiff brought suit against the insurer alleging the insurer denied plaintiff’s professional liability claim in bad faith. Plaintiff provides pharmaceutical manufacturers with drug distribution services, clinical education, marketing, and business resources for their clients. On May 1, 2007, the insurer issued plaintiff a claims-made professional liability...Read More >>
October 19, 2013
OCTOBER 2013 BAD FAITH CASES: COURT QUASHED SUBPOENA DIRECTED TO ATTORNEY OF THIRD PARTY AS IT SOUGHT INFORMATION IRRELEVANT TO THE CARRIER’S CLAIMS HANDLING ON AN IRRELEVANT CONTRACT, AND WOULD VIOLATE THE ATTORNEY CLIENT PRIVILEGE AND WORK PRODUCT DOCTRINE (New Jersey Federal)
In Kull v. Arrowood Indemnity Company, the court addressed a motion to quash a subpoena issued in connection with an underlying case in federal district court in Ohio.  At the time of the subpoena, the only litigation issue in Ohio was a bad faith insurance claim by an insured corporation against one of its...Read More >>
October 19, 2013
OCTOBER 2013 BAD FAITH CASES: COURT REFUSES TO DISMISS UIM BAD FAITH CLAIM WHERE EVEN FACTS ALLEGED FROM WHICH BAD FAITH IN CLAIMS HANDLING AND DELAY IN SETTLEMENT OR INVESTIGATION MAY BE INFERRED FROM ALLEGATIONS (Middle District)
In Shaffer v. State Farm Mutual Automobile Insurance Company, the UIM insureds was injured, settled with the other driver and made a UIM claim against its carrier.  The insureds alleged they were cooperative, provided all pertinent medical information promptly, and submitted to an examination under oath.  The carrier’s investigation was ongoing and there had...Read More >>
October 18, 2013
OCTOBER 2013 BAD FAITH CASES: COURT REJECTS CARRIER’S MOTION FOR JUDICIAL NOTICE OF POINTS CONSTITUTING “LEGISLATIVE FACTS” RATHER THAN “ADJUDICATIVE FACTS” AS BASIS TO CREATE PREDICATE FOR DEFENSE JUDGMENT ON BAD FAITH; AMBIGUITY IN LAW REGARDING COVERAGE ISSUE IS NOT A DEFENSE TO BAD FAITH UNLESS INSURER ACTUALLY INCLUDED CONSIDERATION OF THAT AMBIGUITY IN ITS DECISION MAKING (Middle District)
In Bodnar v. Nationwide Mutual Insurance Company, the carrier used a somewhat innovative to establish a predicate for a later finding that it did not act in bad faith.  The carrier brought a motion asking the Court to take judicial notice of three items, under Federal Rule of Evidence 201(a):   1. During all...Read More >>
October 18, 2013
OCTOBER 2013 BAD FAITH CASES: NO BAD FAITH IN REQUESTING MEDICAL RECORDS WHERE CARRIER WAS REASONABLE IN MAKING SURE RECORDS WERE CURRENT AND INSUREDS DELAYED IN RESPONDING TO REQUESTS (Middle District)
In Schlegel v. State Farm Mutual Automobile Insurance Co., the insured made a UIM claim against her carrier, form an accident in which she was seriously injured, and for which she received $100,000 from the tortfeasor.  She was required to provide the carrier with all the details about the injury, treatment, and other information...Read More >>
October 17, 2013
OCTOBER 2013 BAD FAITH CASES: NO BAD FAITH WHERE NO COVERAGE DUE UNDER ENDORSEMENT FOR WATER DAMAGE (Philadelphia Federal)
In Advertir Inc. v. Peerless Indemnity Insurance Company, plaintiff’s warehouse suffered water damage when water entered the warehouse through its loading dock doors during two heavy storms. The carrier denied coverage under the policy’s exclusion for damage caused by flood and surface water. Plaintiff claimed the denial of coverage was improper, and that the...Read More >>
October 17, 2013
OCTOBER 2013 BAD FAITH CASES: STATUTORY BAD FAITH CLAIM PRE-EMPTED BY ERISA; NO PRIVATE CAUSE OF ACTION UNDER PENNSYLVANIA’S UNFAIR INSURANCE PRACTICES ACT (Philadelphia Federal)
In Minchella v. Sun Life Assurance Company, the decedent was insured under a group life insurance policy as a benefit of his employment.  The court found that statutory bad faith claims were pre-empted by ERISA, as were the claims under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.  The court further found that the...Read More >>
October 17, 2013
OCTOBER 2013 BAD FAITH CASES: STATE STATUTORY BAD FAITH CLAIM PRE-EMPTED BY ERISA (Philadelphia Federal)
In Gunning v. Prudential Insurance Company, the court rejected plaintiff’s various efforts to plead, either directly or indirectly, a Pennsylvania statutory claim for bad faith because such claims were pre-empted by ERISA.  The insured was a former employee of US Airways, and was insured under a group life insurance policy issued by the carrier....Read More >>
October 17, 2013
OCTOBER 2013 BAD FAITH CASES: EVEN THOUGH COURT DISMISSED BREACH OF CONTRACT ACTION ON UNTIMELINESS GROUNDS, IT PERMITTED INSUREDS TO PROCEED ON BAD FAITH ACTION (Middle District)
In Condi v. State Farm Ins. Co., the insureds’ home suffered water damage.  The insureds alleged that there was a storm, and a tree fell blocking a gutter which then acted to funnel water into the home cause damage.  The insurer took the position that the water infiltration was caused by winds, and was...Read More >>
October 16, 2013
OCTOBER 2013 BAD FAITH CASES: BAD FAITH CLAIM ADEQUATELY PLEADED WHERE, AMONG OTHER THINGS, INSURED ALLEGED THAT THE CARRIER UTILIZED AN IMPROPER EXPERT AND FAILED TO RETAIN LEGAL COUNSEL TO EVALUATE THE CLAIM, AS WELL AS DELAY IN SETTLEMENT. COURT ALSO PERMITTED CLAIM FOR NEGLIGENCE IN UNDERVALUING NECESSARY POLICY LIMITS TO PROCEED (Western District)
In Allied Dental Group v. State Farm Fire & Casualty Co., the plaintiff purchase a business insurance policy that provided coverage for business personal property and improvements and betterments, and coverage for the actual loss of business income sustained during a period of restoration. A fire severely damaged the office building plaintiff leased and...Read More >>
October 16, 2013
OCTOBER 2013 BAD FAITH CASES: INSURER’S CLAIM DENIAL BASED ON INDEPENDENT ADJUSTER’S AND ENGINEER’S EVALUATION SUFFICIENT AS BASIS TO DISMISS BAD FAITH CLAIM (Middle District)
In Dunn v. Scottsdale Ins. Co., plaintiff brought suit alleging breach of contract, statutory bad faith, and unjust enrichment against its insurer for denying a claim for water damage to plaintiff’s property. Plaintiffs alleged the interior water damage to their property was caused by severe storm conditions, which would be covered under the policy,...Read More >>
October 16, 2013
OCTOBER 2013 BAD FAITH CASES: COURT REFUSES TO DISMISS BAD FAITH CLAIM WHERE PLAINTIFF ALLEGES THAT CARRIER FAILED TO INVESTIGATE AND ATTEMPTED TO HAVE EXCULPATORY WITNESS CHANGE HIS STORY (Middle District)
In Pauling v. State Farm Mutual Automobile Insurance Co., the insured alleged that he was the victim of a hit and run accident, leaving him seriously injured, and was covered under his parents’ automobile policy, which included UM coverage. The father contacted a witness in the police report who said that the hit-and-run driver,...Read More >>
October 16, 2013
OCTOBE R 2013 BAD FAITH CASES: COURT DETERMINES DAMAGES AND ATTORNEYS’ FEES AWARDER TO INSURER AND AGAINST INSURED AND ITS PRINCIPAL UNDER INSURANCE FRAUD ACT (Philadelphia Federal)
In Zenith Insurance Company v. Glasbern, Inc., a jury found an insured and its principal liable under Pennsylvania’s insurance fraud act, 18 Pa.C.S. section 4117, in failure to make disclosures in connection with the issuance of a workers’ compensation policy. It was left to the court to determine damages and attorneys’ fees.  In its...Read More >>
October 16, 2013
OCTOBER 2013 BAD FAITH CASES: INVESTIGATIONS BY THE CARRIER THAT MAY HAVE LEAD TO DIFFERENT RESULTS HAD CERTAIN EVENTS OCCURRED WHICH DID NOT IN FACT OCCUR WAS NOT THE BASIS FOR A BAD FAITH UI, CLAIM (Western District)
In Deibler v. Nationwide Mutual Insurance Company, the insured brought a statutory bad faith claim against his UIM insurer.  The non-insured motorist had asserted the insured was at fault.  The carrier investigated that claim by reviewing the police record and attempted to speak with the plaintiff, but was not successful; though the plaintiff’s reasons...Read More >>
October 16, 2013
OCTOBER 2013 BAD FAITH CASES: RULE 42 MOTION TO SEVER AND STAY BAD FAITH CLAIM IN UIM CASE DENIED BY FEDERAL DISTRICT COURT (Western District)
In Cooper v. Metlife  Auto & Home, the insured sought UIM coverage from his carrier, after the tortfeasor’s carrier paid its $50,000 limit.  The UIM carrier refused to settle and the insured brought breach of contract and bad faith claims against the carrier in Mercer County, which was removed to federal court.  The carrier...Read More >>
October 15, 2013
OCTOBER 2013 BAD FAITH CASES: WHERE DISPUTE OVER ORIGIN OF LOSS WAS NOT UNREASONABLE, BAD FAITH CLAIM DISMISSED ON SUMMARY JUDGMENT (Philadelphia Federal)
In Helm v. Allstate Property & Casualty Ins. Co., the case involved a claim against a homeowner’s policy for water loss.  The insureds claim the loss arose from a single leak, originating above the kitchen.  The carrier sent an investigator and also requested a sworn proof of loss be resubmitted on two occasions after...Read More >>
October 15, 2013
OCTOBER 2013 BAD FAITH CASES: NO FIDUCIARY DUTY EXISTED WHERE INSURER DID NOT ASSERT RIGHT TO HANDLE CLAIMS; STATUTORY BAD FAITH CLAIM DOES NOT PROVIDE FOR ACTUAL OR CONSEQUENTIAL DAMAGES (Philadelphia Federal)
In Bare v. State Auto Group, the court dismissed the common law breach of fiduciary duty claims because a fiduciary duty higher than the duty of good faith and fair dealing does not arise out of an insurance contract until an insurer asserts a stated right under the policy to handle all claims asserted...Read More >>
October 15, 2013
OCTOBER 2013 BAD FAITH CASES: CASE REMANDED WHERE COMPENSATORY DAMAGES SOUGHT WERE A LITTLE OVER $11,000 AND ALL ARGUMENTS THAT CASE COULD EXCEED $75,000 WERE FOUND SPECULATIVE AND COLLECTING REMOVAL CASES (Philadelphia Federal)
In Mazza v. Peerless Indemnity Insurance Company, plaintiff sought a little over $11,000 in damages in the Court of Common Pleas of Montgomery County.  Plaintiff’s ad damnum clause stated that plaintiff was not seeking in excess of $50,000.  The carrier removed the case to federal court on the theory that because plaintiff had also...Read More >>
October 15, 2013
OCTOBER 2013 BAD FAITH CASES: NO BAD FAITH WHERE CARRIER HELD COVERAGE DECISION IN ABEYANCE PENDING OUTCOME OF CRIMINAL PROCEEDINGS; NO RIGHT TO ATTORNEY’S FEES WHEN INSURED PROCEEDS PRO SE (Middle District)
In Atwood v. State Farm Fire & Casualty Company, the plaintiff purchased a homeowner’s policy.  The DEA had knocked down the door of plaintiff’s home, and left it unsecured.  As the court described it, while plaintiff was “on the lam”, with the home still unsecured, the home was subject to various acts of vandalism....Read More >>
October 15, 2013
OCTOBER 2013 BAD FAITH CASES: NO SUMMARY JUDGMENT ON: (1) COVERAGE AS DISPUTE OF FACT OVER WHETHER DECAY WAS “HIDDEN” OR (2) BAD FAITH WHERE EVIDENCE CREATED ISSUE OF FACT ON INSURANCE ADJUSTER’S INTENT TO DENY CLAIM AND WHERE CONTRADICTIONS IN EXPERT REPORT AND TESTIMONY CREATED ISSUE OF FACT ABOUT INSURER’S REASONABLE RELIANCE THEREON (Western District)
In PMW Real Estate Mgmt., LLC v. State Farm Fire & Casualty Co., the court was faced, on summary judgment, with the issue of whether a building collapse was caused by “hidden decay”, as provided for in a coverage extension to the policy.  If the decay was hidden, then coverage would exist.  As the...Read More >>
October 15, 2013
OCTOBER 2013 BAD FAITH CASES: COURT DISMISSES BREACH OF FIDUCIARY DUTY CLAIM AS REDUNDANT WITH, AND SUBSUMED BY, STATUTORY BAD FAITH CLAIM (Middle District)
In Heffran v. State Auto Property & Casualty Insurance Co., the insured brought a statutory  bad faith claim based on failure to pay UIM benefits, and alleged a breach of fiduciary duty by the carrier.   The court found, however, that any separate claim for breach of fiduciary duty is subsumed by the bad faith...Read More >>
October 14, 2013
OCTOBER 2013 BAD FAITH CASES: SECTION 4117 IMMUNITY IS A STATUTORILY MANDATED NON-WAIVABLE DEFENSE AND MAY BE ASSERTED BY PRELIMINARY OBJECTION, AS MAY STATUTE OF LIMITATIONS IF CLEAR ON FACE OF PLEADINGS (Philadelphia Common Pleas)
In Fieldhouse v. Metropolitan Property & Casualty Insurance Co., plaintiff filed a complaint alleging that his insurer’s cooperation with law enforcement in a criminal investigation against him constituted bad faith. The insurer asserted affirmative defenses of immunity and statute of limitations in the form of preliminary objections in response to appellant’s complaint. The trial...Read More >>
October 14, 2013
OCTOBER 2013 BAD FAITH CASES: COURT OF EQUITY TOLLS STATUTE ON PIP CLAIM DESPITE PLAINTIFF’S FAILURE TO DETERMINE APPROPRIATE INSURER (New Jersey Appellate Divison)
In Raviv v. Farmer’s Ins. Group, the court was asked to determine whether the statute of limitations applicable to claims for personal injury protection (PIP) benefits expires two years after the date of the accident even where the claimant is unaware of the identity of the insurance carrier. In the case, plaintiff was injured...Read More >>
October 10, 2013
OCTOBER 2013 BAD FAITH CASES: INSURER’S MOTION TO DISMISS ON CHOICE-OF-LAW GROUNDS DENIED WHERE DELAWARE HAD NO ACTUAL INTEREST IN APPLICATION OF ITS LAW, WHICH LACKED STATUTORY BAD FAITH CLAIM SIMILAR TO PENNSYLVANIA (Middle District)
In Davis v. GEICO Gen. Ins. Co., plaintiff brought suit against the defendant-insurer alleging statutory bad faith for defendant-insurer’s handling of her UIM claim. Plaintiff was a citizen of Delaware at the time she purchased the policy and at the time of the underlying accident, and at all relevant times the insurer was a...Read More >>
October 10, 2013
OCTOBER 2013 BAD FAITH CASES: DISTRICT COURT DENIES MOTION FOR REMAND WHERE PLAINTIFF SEEKS ONLY $13,500 IN COMPENSATORY DAMAGES, ON BASIS OF POTENTIAL FOR PUNITIVE DAMAGES (Philadelphia Federal)
In Hatchigian v. State Farm Ins. Co., plaintiff brought suit against the insurer in a third-party personal injury claim alleging six counts, including statutory bad faith, after the insurer improperly delivered the settlement funds by including the attorney as a payee on the settlement check. This alleged breach of duty from the settlement agreement...Read More >>
October 10, 2013
OCTOBER 2013 BAD FAITH CASES: INSURER’S DECISION TO PROVIDE A DEFENSE UNDER ONLY ONE AMONG ITS THREE POLICIES, WHERE ONE POLICY APPLIED DEFENSE COSTS AGAINST COVERAGE AMOUNT, AND DISCONTINUE ITS DEFENSE OF INSURED BASED ON EVENTS DURING LITIGATION MAY CONSTITUTE BAD FAITH (Western District)
In Nat’l Fire Ins. co., v. Robinson Fans Holdings, Inc., plaintiff-insurer provided defendant-insured with three policies; a CGL policy, a Manufacturers Errors and Omissions policy, and an Umbrella policy. The insurer sought a declaratory judgment after the filing of the underlying suit, and the insured counterclaimed for statutory bad faith, among other claims. In...Read More >>
September 20, 2013
SEPTEMBER 2013 BAD FAITH CASES: COURT GRANTS DECLARATORY JUDGMENT IN INSURER’S FAVOR, ENFORCING CLAIMS MADE POLICY’S $100,000 SUBLIMIT FOR INSURED’S ILLEGAL ACTIONS (Philadelphia Federal)
In Camico Mut. Ins. Co., v. Heffler, Radetich & Saitta, LLP, the insurer sought a declaratory judgment relieving it of its duty to provide a defense to the insured under a claims made policy, asserting that a $100,000 policy sublimit applied to the claims against the insured.  The insured filed counterclaims (1) seeking defense...Read More >>
September 20, 2013
SEPTEMBER 2013 BAD FAITH CASES: PLAINTIFF’S CLASS ACTION DISMISSED WITH PREJUDICE FOR FAILURE TO STATE A CLAIM; MOTION FOR RECONSIDERATION DENIED (Middle District)
In Grudkowski v. Foremost Ins. Co., Plaintiff’s Motion for Reconsideration of the Memorandum and Order dismissing her First Amended Class Action Complaint was denied. Plaintiff brought suit asserting claims of breach of contract, violation of the Unfair Trade practices and Consumer Protection Law, unjust enrichment, and statutory bad faith on behalf of herself and...Read More >>
September 10, 2013
SEPTEMBER 2013 BAD FAITH CASES: INSURER PROPERLY DENIES COVERAGE WHERE INSURED DID NOT HAVE A WORKING SPRINKLER SYSTEM AS ALLEGED IN THE INSURANCE APPLICATION AND REQUIRED BY THE POLICY (Philadelphia Commerce Court)
In Yera, Inc. v. Travelers Cas. Ins. Co. of Am., the court granted the insurer’s Motion for Summary Judgment. Plaintiff brought suit alleging the insurer improperly denied coverage after an apartment building owned by plaintiff was destroyed by a fire and plaintiff provided proper and timely notice of the claim. The insurer denied coverage...Read More >>
September 9, 2013
SEPTEMBER 2013 BAD FAITH CASES: INSURER PROPERLY DENIED COVERAGE FOR PROPERTY DAMAGE CAUSED BY DECOMPOSING BODY UNDER MICROORGANISM AND SEEPAGE EXCLUSIONS (Philadelphia Federal)
In Certain Underwriters at Lloyd’s London Subscribing to Policy No. SMP3791 v. Creagh, the court was asked to determine whether the defendants “all risk” insurance policy covered claims for property damage and remediation arising from fluids released by a decomposing human body. The insurer asserted that the policy excluded coverage for the property damage...Read More >>
September 9, 2013
SEPTEMBER 2013 BAD FAITH CASES: INSURER’S INVESTIGATION OF LOST EARNINGS AND LOSS OF EARNING CAPACITY NOT BAD FAITH (Philadelphia Federal)
In Lublin v. Am. Fin. Group, Inc., plaintiff brought suit against his insurer for claims of bad faith in settling his underinsurd motorist claim. Plaintiff was driving in Philadelphia when he was forced to abruptly stop because another driver opened their door into the driving lane while parking their car. Plaintiff was then rear-ended....Read More >>
September 9, 2013
SEPTEMBER 2013 BAD FAITH CASES: INSURER PREVAILS ON MOTION TO TRANSFER BASED ON JURISDICTION OF UNDERLYING CASE (Philadelphia Court of Common Pleas)
In Schriner v. Peerless Ins. Co., the Court of Common Pleas of Philadelphia County transferred a bad faith case to the Court of Common Pleas of Dauphin County because the underlying suit was adjudicated in Dauphin County. In the underlying case, plaintiffs brought suit against their landlords for personal injuries caused by mold in...Read More >>
September 9, 2013
SEPTEMBER 2013 BAD FAITH CASES: INSURER CORRECTLY DENIED COVERAGE WHERE ATTORNEY FAILED TO PROVIDE TIMELY NOTICE UNDER CLAIMS MADE MALPRACTICE POLICY (Philadelphia Federal)
In Pelagatti v. Minn Lawyers Mut. Ins. Co., an attorney-insured brought suit against his legal malpractice insurer alleging breach of contract and bad faith for denying coverage under his claims-made policy where the insurer alleged the attorney failed to provide timely notice of the claim. In 2006, the insured undertook representation of a client...Read More >>
August 29, 2013
AUGUST 2013 BAD FAITH CASES: COMPLAINT’S “AND/OR” LANGUAGE CREATES DUTY TO DEFEND; FAILURE TO PROPERLY INTERPRET COMPLAINT NOT BAD FAITH (Philadelphia Commerce Court)
In CDL, Inc. v. Certain Underwriters at Lloyd’s, plaintiff brought suit alleging breach of contract and bad faith for the insurer’s failure to provide plaintiff with a defense against a claim of negligence. Plaintiff’s business consisted of leasing commercial truck drivers to its clients on a temporary basis. Plaintiff obtained a commercial general liability...Read More >>
August 29, 2013
AUGUST 2013 BAD FAITH CASES: PROPERTY OWNER CANNOT RECOVER UNDER CGL POLICY FOR SUBCONTRACTOR’S NEGLIGENT WORKMANSHIP (Philadelphia Commerce Court)
 In 525 Lancaster Ave Apts., L.P. v. Pa. Nat’l Mut. Ins. Co., plaintiff brought suit against a subcontractor’s insurance company seeking coverage for damage caused by the subcontractor’s work on its apartment building. Plaintiff hired a general contractor to oversee the renovation of its apartment building. The contractor then entered into a subcontract with...Read More >>
August 21, 2013
AUGUST 2013 BAD FAITH CASES: NO COVERAGE FOR PLAINTIFF-ADDITIONAL INSURED WHERE POLICY WAS RESCINDED AS TO NAMED INSURED, BUT CARRIER DID OWE ADDITIONAL INSURED A DEFENSE (Philadelphia Federal)
In Toll Bros., Inc. v. Century Sur. Co., plaintiff construction company brought suit against its surety company alleging, amongst other claims, breach of contract and breach of good faith and fair dealing.  Plaintiff is a luxury homebuilder that builds communities throughout Pennsylvania. Local ordinances sometimes require new homes be equipped with fire suppression systems,...Read More >>
July 17, 2013
JULY 2013 BAD FAITH CASES: SUPERIOR COURT ISSUES OPINION CREATING NEW STANDARD FOR RESERVATION OF RIGHTS LETTERS (Superior Court)
THIS DECISION WAS REVERSED BY THE PENNSYLVANIA SUPREME COURT ON JULY 21, 2015. In Babcock & Wilcox Co. v. Am. Nuclear Insurers & Mut. Atomic Energy Liab. Underwriters, the Pennsylvania Superior Court created new law by holding an insured may decline an insurer’s defense tendered under a reservation of rights and later seek to...Read More >>
July 17, 2013
July 2013 Bad Faith Cases: COURT FINDS INSURED’S DELAY IN PRODUCTION AND EFFECT ON INSURER’S CLAIM PROCESSING CREATE QUESTIONS OF FACT FOR JURY; NO FIDUCIARY RELATIONSHIP EXISTS BETWEEN THE INSURER AND INSURED IN UIM CLAIMS (Middle District)
Plaintiff and his wife were injured in an automobile accident on July 11, 2006. Plaintiff made a claim against the other driver, and settled at the limits of the other driver’s policy, $95,000. Plaintiff subsequently made a claim with his carrier (“the carrier”) under his underinsured motorist policy which carried limits of $300,000 per...Read More >>
July 12, 2013
JULY 2013 BAD FAITH CASES: PLAINTIFF’S BOILERPLATE COMPLAINT DISMISSED FOR FAILURE TO STATE A CLAIM. (Middle District)
In Yohn v. Nationwide Ins. Co., plaintiff brought suit against his insurance carrier alleging breach of an auto insurance contract and bad faith in connection with his claim for uninsured motorist coverage. Plaintiff was a passenger in a vehicle insured by the carrier that was involved in a collision with a vehicle that fled...Read More >>
July 12, 2013
JULY 2013 BAD FAITH CASES: CARRIER’S LETTER INDICATING IT WOULD CONSIDER AMENDED CLAIMS DID NOT REQUIRE CARRIER TO APPROVE CLAIM; FOLLOWING PRIOR PRECEDENT UIPA VIOLATIONS CANNOT BE CONSIDERED AS EVIDENCE (Philadelphia Federal)
In Weinberg v. Nationwide Cas. & Ins. Co., plaintiffs brought suit claiming breach of contract and bad faith when the carrier denied coverage on an amended claim after providing plaintiffs with a payment and letter indicating future amendments to the claim would be considered. Plaintiffs’ policy covered “direct loss caused by rain, snow, sleet,...Read More >>
July 5, 2013
JULY 2013 BAD FAITH CASES: LIFE INSURANCE POLICY PROPERLY RESCINDED FOR MATERIAL MISREPRESENTATION (Philadelphia Federal)
In S.B. v. United of Omaha Life Ins. Co., two minor plaintiffs brought suit through their court appointed guardian following their father’s death seeking benefits under his life insurance policy. A claim review took place because the policy had been issued within two years of decedent’s death. In the review process, decedent’s answers to...Read More >>
July 2, 2013
JULY 2013 BAD FAITH CASES: LARGE ARBITRATION AWARD IN EXCESS OF DE MINIMIS SETTLEMENT OFFER DOES NOT ESTABLISH BAD FAITH CONDUCT BY CARRIER WHERE OFFER BASED ON REASONABLE INVESTIGATION (Philadelphia Federal)
In Richardson v. United Fin. Cas. Co., plaintiff brought suit for bad faith following an arbitration award in extreme excess of the carrier’s settlement offers for plaintiff’s UIM claim. Plaintiff was in a low-impact crash on October of 2006. Following the crash, plaintiff required back treatments including therapy, injections, and ultimately surgery. Plaintiff’s medical...Read More >>
July 2, 2013
JULY 2013 BAD FAITH CASES: INSURER’S MOTION TO DISMISS BAD FAITH CLAIM BASED ON FAILURE TO ISSUE RESERVATION OF RIGHTS DENIED (Western District)
In Greenwich Ins. Co. v. BBU Servs., the court denied plaintiff’s motion to dismiss defendants’ counter claim for bad faith. Plaintiff-insurer initially brought suit against its insured. Defendant-insureds then filed a counter-claim against their insurer, alleging bad faith for plaintiff-insurer’s denial of coverage after agreeing to provide coverage and a legal defense without issuing...Read More >>
July 1, 2013
JULY 2013 BAD FAITH CASES: INSURER’S DELAY IN SETTLING THIRD PARTY CLAIM CONSTITUTES A DENIAL OF BENEFITS AND CAN CREATE A CAUSE OF ACTION FOR COMMON LAW AND STATUTORY BAD FAITH DESPITE PAYMENT OF POLICY LIMITS AND LACK OF EXCESS VERDICT (Middle District)
In Bodnar v. Nationwide Mut. Ins. Co., plaintiff brought suit against his insurer (“the carrier”) claiming its failure to settle an underlying case against plaintiff in a more timely fashion constituted a bad faith  under Pennsylvania’s bad faith statute. In the underlying case, the carrier initially denied the claims based on the policy’s employee...Read More >>
July 1, 2013
JULY 2013 BAD FAITH CASES: COURT GRANTS MOTION IN LIMINE BARRING EXPERT TESTIMONY REGARDING BAD FAITH CLAIM AS TO BOTH PARTIES; RULES ON OTHER MOTIONS. (Western District)
In Schifino v. Geico Gen. Ins. Co., both parties brought motions in limine before the court, seeking to have evidence excluded at the approaching trial. The court first ruled on the carrier’s motion to preclude the proposed testimony of plaintiff’s expert witness on bad faith. The carrier alleged the concept of bad faith is readily...Read More >>
June 29, 2013
JUNE 2013 BAD FAITH CASES: PLAINTIFF FAILS TO MEET 12(B)(6) STANDARDS BY PLEADING CONCLUSORY STATEMENTS (Middle District)
In Calandrello v. Sentinel Ins. Co., plaintiffs’ home sustained damage in August of 2011 during Hurricane Irene. Plaintiffs’ homeowners’ insurance policy covered damage to plaintiffs’ dwelling, including structures attached to the dwelling. The policy included coverage for wind and hail damage. Following the storm, plaintiffs visited their property and observed water infiltration on the...Read More >>
June 29, 2013
JUNE 2013 BAD FAITH CASES: PENNSYLVANIA DISTRICT COURT FINDS SURETY OWES NO FIDUCIARY DUTY TO POLICYHOLDER; GIST OF THE ACTION DOCTRINE BARS BAD FAITH CLAIMS (Western District)
In Reginella Constr. Co., Ltd. v. Travelers Cas. and Sur. Co. of Am., the court was presented with a question of whether a surety is a fiduciary, as well as whether a breach of surety contract could result  in a bad faith claim. Plaintiff is a Pittsburgh-based construction company that primarily deals in large-scale...Read More >>
June 26, 2013
JUNE 2013 BAD FAITH CASES: DECLARATORY JUDGMENT ACTION DOES NOT CONSTITUTE BAD FAITH WHERE CARRIER WAS ALLEVIATED OF ANY DUTY; LENDER DOES NOT HAVE STANDING TO BRING BAD FAITH CLAIM WHERE MORTGAGE SERVICE COMPANY SUBMITTED INITIAL CLAIM TO INSURER (Philadelphia Federal)
In U.S. Bank, N.A. v. First Am. Title Ins. Co., Allied Mortgage Group (“bank one”) provided a mortgage to a client for a real property purchase. The bank also purchased a title insurance policy from First American Title Insurance Company (“the carrier”) in connection with the mortgage, securing bank one’s mortgage as a first...Read More >>
June 26, 2013
JUNE 2013 BAD FAITH CASES: COMPLAINT WAS LEGALLY SUFFICIENT TO SURVIVE MOTION TO DISMISS FOR DENIAL OF COVERAGE FOR CLAIMS ARISING FROM DEFAULTED MORTGAGE LOANS VIEWED AS POST-CLAIM UNDERWRITING; AND USE OF 5 EXEMPLARY INCIDENTS OUT OF NEARLY 250 DISTINCT EVENTS LEGALLY SUFFICIENT (Western District)
In PNC Bank, N.A. v. Republic Mortg. Ins. Co., the court considered whether pleadings alleging bad faith conduct in the handling of claims arising from the mortgage crisis were legally sufficient. Plaintiff is a bank that provided home mortgage loans to individual consumers. These loans were insured by defendant (“the carrier”) through “flow” policies,...Read More >>
June 26, 2013
JUNE 2013 BAD FAITH CASES: SUMMARY JUDGMENT DENIED ON ISSUE OF BAD FAITH POLICY INTERPRETATION; INSURED’S CLAIM THAT POLICY IS AMBIGUOUS IN BREACH OF CONTRACT PART OF CASE IS NOT DISPOSITIVE FOR CARRIER ON BAD FAITH (Middle District)
In Davis v. Peerless Indem. Ins. Co., plaintiffs, a law firm and the property owner of the firm’s office space, brought suit against the firm’s insurer (the “carrier”), when the carrier denied payments after a sump pump back-up at the firm’s office space. The firm’s policy provided coverage for direct physical loss or damage...Read More >>
June 18, 2013
JUNE 2013 BAD FAITH CASES: PLAINTIFF’S WELL-PLED CLAIM FOR BAD FAITH IN DENIAL OF COVERAGE ALLEGEDLY BASED ON CONCURRENT CAUSES MEETS F.R.C.P. 12 MOTION TO DISMISS STANDARD (Middle District)
In Donahue v. Burns, plaintiff purchased a homeowner’s policy that provided coverage for the dwelling, personal property and loss of use of his home. The policy excluded water damage resulting from water or sewage overflow or back, and at defendant-carrier’s suggestion, plaintiff purchased a back-up sewer endorsement. On September 8, 2011, a back-up of...Read More >>
June 17, 2013
JUNE 2013 BAD FAITH CASES: COURT DISMISSES STAND-ALONE COMMON LAW BAD FAITH CLAIM (Philadelphia Federal)
In Tubman v. USAA Cas. Ins. Co., the plaintiff suffered severe injuries after a car crash in which she was ejected from the vehicle. The opposing driver had a policy with a limit of $15,000, which were tendered to the plaintiff. Plaintiff’s insurer (the “carrier”) approved the settlement, and the carrier agreed to allow...Read More >>
June 14, 2013
JUNE 2013 BAD FAITH CASES: DELAYED RESPONSE AND LACK OF COMMUNICATION IN ADDRESSING CLAIM ALLOWS PLAINTIFF TO MOVE PAST SUMMARY JUDGMENT STAGE
In Clark v. Allstate Ins. Co., the plaintiff suffered damage to her home on August 27, 2011 and provided notice to her insurance provider (the “carrier”) on August 31, 2011. On September 26, the carrier sent an adjuster to inspect the property and take pictures. During the inspection, the adjuster took photos, measurements, and...Read More >>
June 13, 2013
JUNE 2013 BAD FAITH CASES: PLAINTIFF FAILS TO MEET TWOMBLY/IQBAL REQUIREMENTS BY PLEADING ONLY LEGAL CONCLUSIONS (Philadelphia Federal)
In Clark v. Progressive Advanced Ins. Co., plaintiff was injured in a rear-end accident. The driver responsible for the crash had only the statutorily required $15,000 policy limit, the entirety of which was tendered, but insufficient to cover plaintiff’s injuries. Plaintiffs (the injured woman and her husband) filed a claim with their insurer (the...Read More >>
June 10, 2013
JUNE 2013 BAD FAITH CASES: COURT FINDS CARRIER’S FAILURE TO FOLLOW-UP ON POTENTIAL CAUSES OF DAMAGE ALLOWS CLAIM TO ADVANCE BEYOND MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM (Western District)
In Robinson Eye Ctr. v. State Farm Fire & Cas. Co., the plaintiff limited liability company submitted a total of five claims for water damage caused by a leaky roof in the office the company leased. The first claim was for damage that occurred when soaked ceiling tiles fell onto plaintiff’s equipment and property....Read More >>
June 6, 2013
JUNE 2013 BAD FAITH CASES: COURT FINDS INVESTIGATION INTO POTENTIAL MATERIAL MISREPRESENTATIONS SUFFICIENT TO DEFEAT A CLAIM OF BAD FAITH (Philadelphia Federal)
In Hasan v. Allstate Ins. Co., plaintiffs brought suit against their insurance carrier (the “carrier”) for bad faith over a coverage dispute for a fire that occurred in their home and damaged the property and their personal items. While there was no dispute that the homeowners policy issued by the carrier was in effect...Read More >>
June 3, 2013
JUNE 2013 BAD FAITH CASES: COURT FINDS BAD FAITH STATUTE ONLY PROVIDES REMEDY TO INSUREDS, NOT AGENTS OR ATTORNEYS OF INSUREDS (Philadelphia Federal)
In Feingold v. Liberty Mut. Group, a pro se plaintiff , who was a disbarred attorney, brought suit against an insurance carrier and affiliated companies (the “carrier”), and against the administratrix of the estate of his former client. Among other things, he claimed that the carrier was directly liable to him for bad faith....Read More >>
May 20, 2013
MAY 2013 BAD FAITH CASES: COURT GRANTS INSURED’S PRELIMINARY OBJECTIONS, DENIES BAD FAITH CLAIM AND RULES THAT NEGLIGENT SUPERVISION DOES NOT TRIGGER COVERAGE (Philadelphia Commerce Court)
In Calfayan Constr. Assocs. v. Erie Ins. Exch., the insured, a general contractor, filed suit for bad faith and breach of contract, seeking a declaration that the carrier owed a duty to defend the insured in an underlying negligent construction lawsuit. The carrier filed preliminary objections, arguing that the cause of action in the...Read More >>
May 20, 2013
MAY 2013 BAD FAITH CASES: COURT AFFIRMS SUMMARY JUDGMENT BECAUSE INSURED FILED SUIT AFTER THE ONE-YEAR SUIT LIMITATION PERIOD EXPIRED (New Jersey Appellate Division)
In Zaun v. Franklin Mut. Ins. Co., the court heard an insured’s appeal from the trial court’s summary judgment to a homeowner’s insurance carrier. The suit arose after the carrier denied coverage over water damage to the insured’s home. The carrier denied coverage because the premises had been vacant for more than 60-days, triggering...Read More >>
May 20, 2013
MAY 2013 BAD FAITH CASES: COURT DENIES INTERVENOR’S MOTION TO PLACE BAD FAITH SETTLEMENT IN ESCROW (Philadelphia County Common Pleas)
In Weist v. Pierce, the claimant, a police officer, was injured in an auto accident in the course of her employment. She settled with the negligent party for $625,000, a figure that took into consideration a bad faith claim against negligent parties’ insurance carrier. The officer’s employer filed an intervening motion to stay the...Read More >>
May 10, 2013
MAY 2013 BAD FAITH CASES: COURT RULES THAT BAD FAITH CLAIM CANNOT BE PREMISED ON CARRIER’S FILING FOR DECLARATORY JUDGMENT (Philadelphia Federal)
In First Liberty Ins. Corp. v. Walker, the carrier filed a declaratory judgment action to determine its obligation to defend its insured in an underlying state court property damage action. The underlying action was commenced by the insured’s neighbor as the result of intentional property damage and as a means to concede an easement...Read More >>
May 10, 2013
MAY 2013 BAD FAITH CASES: COURT GRANTS CARRIER’S SUMMARY JUDGMENT MOTION BECAUSE INSURED FAILED TO ALLEGE A CLAIM FOR BAD FAITH (Philadelphia Federal)
In Quinn v. Liberty Mut. Group, the carrier filed for summary judgment on a claim for bad faith brought by the representative of an insured decedent’s estate (see this post). The decedent sustained serious injuries as the result of a car accident with an uninsured motorist. The carrier refused to pay an arbitration award...Read More >>
May 10, 2013
MAY 2013 BAD FAITH CASES: COURT RULES THAT CARRIER HAS NO DUTY TO NOTIFY INSURED OF PROVISION IN POLICY FOR REIMBURSEMENT OF LOST WAGES AND TRAVEL EXPENSES (Superior Court)
In Albert v. Erie Ins. Exch., an insured appealed a decision of the trial court that granted the carrier’s motion to dismiss the insured’s claims. Specifically, the insured claimed that the carrier’s failure to reimburse her for lost wages and travel expenses, which the insured incurred when she attended a deposition in connection to...Read More >>
May 10, 2013
MAY 2013 BAD FAITH CASES: COURT LARGELY PRECLUDES EXPERT TESTIMONY; GRANTS SUMMARY JUDGMENT TO CARRIER BECAUSE DELAY IN PAYMENT WAS NOT IN BAD FAITH AND CARRIER’S INITIAL FAILURE TO PROPERLY ISSUE TAX REMITTANCE CHECK WAS MERE NEGLIGENCE; DIFFERENCE IN VALUATIONS AND TERMS FOR DETERMINING COST NOT BAD FAITH (Philadelphia Federal)
In Mirarchi v. Seneca Specialty Ins. Co., the court heard cross motions for summary judgment from a carrier and its insured, stemming from the insured’s suit for breach of contract and bad faith. The insured alleged that the carrier unreasonably delayed the payment of insurance proceeds after a fire damaged his commercial property. First,...Read More >>
May 10, 2013
MAY 2013 BAD FAITH CASES: COURT OVERTURNS TRIAL COURT’S GRANT OF SUMMARY JUDGMENT BECAUSE INNOCENT SPOUSE WAS VICTIM OF ABUSE, REMANDS FOR DETERMINATION OF BAD FAITH (Superior Court)
In Lynn v. Nationwide Ins. Co., the court heard an insured’s appeal from the trial court’s summary judgment in favor of the carrier, ruling that the insured’s policy had been cancelled. The case arose after the insured’s estranged wife, a co-insured, attempted to cancel an insurance policy on their home. The wife later attempted...Read More >>
May 10, 2013
MAY 2013 BAD FAITH CASES: COURT RULES THIRD-PARTY DEFENDANT IS REQUIRED TO INDEMNIFY DEFENDANT AND PAY LEGAL FEES, DESPITE INDEMNITOR’S FAILURE TO PURCHASE INSURANCE AND THE ABSENCE OF BAD FAITH (New Jersey Appellate Division)
In Choinski v. Dendrite Int’l, the appellate court reviewed the validity of an indemnification clause entered into by the defendant and third-party in a personal injury action. A jury found that the defendant was not negligent in the underlying suit and the court ordered the third-party defendant to reimburse the primary defendant for (1)...Read More >>
May 10, 2013
MAY 2013 BAD FAITH CASES: COURT REFUSES TO HOLD THAT CARRIER ACTED UNDER COLOR OF STATE LAW; DISAGREES WITH PLAINTIFF THAT CARRIER ACTED IN BAD FAITH
In Andrekovich v. PennPrime Liab. Trust, the plaintiff was a police officer whose employment was terminated after a prisoner in his custody died. The officer filed suit against the borough for which he worked, the borough’s liability insurance carrier and two attorneys appointed by the carrier, alleging deprivations of liberty and property under §1983....Read More >>
May 10, 2013
MAY 2013 BAD FAITH CASES: COURT DISMISSES CLASS ACTION COMPLAINT, RULES THAT BAD FAITH CONDUCT BEFORE THE FORMATION OF AN INSURANCE CONTRACT IS NOT ACTIONABLE (Middle District)
In Grudkowski v. Foremost Ins. Co., the court heard a carrier’s motion to dismiss an insured’s amended class action complaint, which alleged breach of contract, unfair trade practices, unjust enrichment, and bad faith claims. The claims arise from a classic car policy that the insured purchased from the carrier. According to the insured, the...Read More >>
May 10, 2013
MAY 2013 BAD FAITH CASES: COURT DENIES INTERLOCUTORY APPEAL BECAUSE INSURED FAILED TO CARRY HER BURDEN IN PROVING BAD FAITH (Philadelphia Federal)
In Davis v. State Farm Ins., the court heard an insured’s motion to amend the court’s opinion granting summary judgment to the carrier (see this post) to permit an Immediate Interlocutory Appeal. This case arose from the denial of coverage over the alleged theft of the insured’s vehicle. The carrier denied coverage after a...Read More >>
April 29, 2013
APRIL 2013 BAD FAITH CASES: THIRD CIRCUIT AFFIRM’S TRIAL COURT’S THRESHOLD FINDING OF NO STANDING TO BRING ASSIGNED BAD FAITH CLAIM OR CONTRACT CLAIM (Third Circuit)
In Feingold v. State Farm Mutual Auto Insurance Company, the Third Circuit, in a non-precedential summary opinion, affirmed the trial court’s decision that an insured could not assign its statutory bad faith claim, and that it was against public policy in this instance to assign the breach of contract claim. The District Court’s decision...Read More >>
April 12, 2013
APRIL 2013 BAD FAITH CASES: COURT DISMISSES VIOLATION OF THE DUTY OF GOOD FAITH AND FAIR DEALING SUIT AS PREEMPTED UNDER FEDERAL ERISA STATUTE (New Jersey Federal)
In MHA, LLC, v. Aetna Health, Inc., a healthcare provider brought ERISA and state law claims against an insurance carrier to recover $39 million in damages after the carrier allegedly underpaid for services that plan beneficiaries had received at one of the healthcare provider’s facilities. Originally, the dispute arose because the carrier continued to...Read More >>
April 12, 2013
APRIL 2013 BAD FAITH CASES: COURT RECOMMENDS AFFIRMANCE OF SUMMARY JUDGMENT IN BAD FAITH CASE BECAUSE INSURED WAS NOT LIVING IN THE INSURED BUILDING (Philadelphia County Common Pleas)
In Anderson v. Ins. Placement Facility of Pennsylvania, an insured sued his homeowner’s insurance carrier for bad faith after the carrier denied coverage for wind damage sustained by the insured’s home. After the insured filed his original claim in March 2010, the carrier sent an adjuster to inspect the damage. The adjuster noticed that...Read More >>
April 12, 2013
APRIL 2013 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT TO CARRIER ON INSURED’S BAD FAITH CLAIM, OBVIATING NEED TO DECIDE CHOICE OF LAW QUESTIONS (Philadelphia Federal)
In Quinn v. Liberty Mut. Group, the court heard an insured’s bad faith claim against its automobile insurance carrier. The suit arose from a car accident with an uninsured motorist in which the insured suffered serious personal injuries. The insured sought uninsured motorist (UM) from the carrier and the parties entered arbitration. However, the...Read More >>
March 25, 2013
MARCH 2013 BAD FAITH CASES: COURT AFFIRMS TRIAL COURT’S SUMMARY JUDGMENT FOR CARRIER IN LIGHT OF INSURED’S MISREPRESENTATIONS ON LIFE INSURANCE POLICY (New Jersey Appellate Division)
In Mi Ja Jae v. Metro. Life Ins. Co., the beneficiary of a life insurance policy sued its carrier for bad faith and benefits under the policy. Before the trial court, the parties filed cross-motions for summary judgment. The carrier asserted that the beneficiary’s deceased husband misrepresented his annual income on the life insurance...Read More >>
March 25, 2013
MARCH 2013 BAD FAITH CASES: COURT STRIKES INSURED’S REQUEST FOR DAMAGES; DISMISSES BAD FAITH SUIT IN THE ABSENCE OF ANSWERING BRIEF FROM INSURED (Middle District)
In Ferguson v. Kemper, the insured filed a six-count suit, including breach of contract and bad faith claims, after its homeowners insurance carrier denied coverage for flood damages sustained during a hurricane. In March 2011, the insureds filed a claim for storm-related flood damage with the carrier. The carrier paid the claim. In June...Read More >>
March 25, 2013
MARCH 2013 BAD FAITH CASES: COURT GRANTS CARRIER’S SUMMARY JUDGMENT MOTION ON INSURED’S BAD FAITH CLAIMS (Middle District)
In Mason v. Travelers Home & Marine Ins. Co., the court heard a carrier’s summary judgment motion filed in response to its insureds’ claims for breach of contract and bad faith. The suit arose from a fire on the insureds’ property which destroyed a building and its contents. The carrier made two payments for...Read More >>
March 25, 2013
MARCH 2013 BAD FAITH CASES: COURT PERMITS BAD FAITH SUIT TO PROCEED AGAINST HOME INSURER, DENIES FLOOD INSURER’S MOTION TO BIFURCATE, AND STRIKES CLAIM FOR PUNITIVE DAMAGES AGAINST HVAC CONTRACTOR (Philadelphia Federal)
In Robinson v. Nationwide Mut. Ins. Co., insured homeowners filed suit against multiple parties after their home sustained damages following two severe storms in August and September 2011. In August 2011, the first storm hit, requiring repairs to the insureds’ water heater and oil tank. A contractor performed work on the units, but failed...Read More >>
March 19, 2013
MARCH 2013 BAD FAITH CASES: COURT AFFIRMS TRIAL COURT’S COORDINATION OF COVERAGE AND DECLARATORY JUDGMENT ACTIONS IN PHILADELPHIA COUNTY (Superior Court)
In Pa. Manufacturers’ Ass’n Ins. Co. v. Pa. State Univ., the insured appealed an order of the trial court that coordinated two simultaneous coverage actions taking place in different Pennsylvania counties. (See this blog). The first suit was a declaratory judgment action in Philadelphia and the second was a breach of contract suit in...Read More >>
March 19, 2013
MARCH 2013 BAD FAITH CASES: COURT GRANTS INSURED’S MOTION TO DISMISS CARRIER’S REVERSE BAD FAITH CLAIM, HOLDS THAT CARRIER MAY SEEK COMPENSATORY DAMAGES IN AMENDED COUNTERCLAIM (Philadelphia Federal)
In Barnes v. Allstate Prop. & Cas. Ins. Co., the court heard an insured’s motion to dismiss its home insurer’s counterclaim under Pennsylvania’s Insurance Fraud statute, which was filed in response to the insured’s breach of contract and bad faith claims against the carrier. The suit arose after the carrier denied coverage over fire...Read More >>
March 17, 2013
MARCH 2013 BAD FAITH CASES: COURT DENIES CARRIER’S MOTION TO DISMISS INSURED’S CLAIMS FOR BAD FAITH, BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING, AND ATTORNEY’S FEES, BUT DISMISSES INSURED’S BREACH OF FIDUCIARY DUTY CLAIMS (Philadelphia Federal)
In Keppol v. State Farm Ins., a carrier moved to dismiss its insured’s suit for declaratory judgment, bad faith, breach of duty of good faith and fair dealing and breach of fiduciary duty. The insured originally filed this action after the carrier denied his claim for wage loss benefits. First, the court permitted the...Read More >>
March 17, 2013
MARCH 2013 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT FOR CARRIER BECAUSE INSURED’S REFUSED TO COMPLY WITH REQUIRED APPRAISAL PROCEDURES (Eastern District)
In Correnti v. Merchs. Preferred Ins. Co., the court granted a carrier’s motion for summary judgment filed in response to the insureds’ suit for bad faith and breach of contract. The insureds originally filed suit after the parties disagreed on the amount of the insured’s loss. However, the insureds refused to comply with an...Read More >>
March 17, 2013
MARCH 2013 BAD FAITH CASES: COURT DENIES MOTION TO DISMISS ASSIGNEE’S BAD FAITH CLAIMS, DESPITE CONTENTION THAT CARRIER IS NOT AN INSURER UNDER PENNSYLVANIA LAW (Middle District)
In Dolph v. Ill. Nat’l Ins. Co., two insurance companies were sued for bad faith and breach of contract by assignees who were initially plaintiffs in an underlying tort suit stemming from injuries they sustained in a car accident. After liability was established in the underlying case against the estate of the defendant-insured in...Read More >>
March 10, 2013
MARCH 2013 BAD FAITH CASES: COURT DISMISSES INSURED’S STATUTORY BAD FAITH CLAIM FOR LACK OF PLEADING FACTUAL BASIS, DISMISSES COMMON LAW BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING UNDER GIST OF THE ACTION DOCTRINE, AND REMANDS BREACH OF CONTRACT ACTION TO STATE COURT (Western District)
In Merrill v. State Farm Fire and Casualty Co., insured homeowners brought suit against their homeowner’s insurance carrier, alleging breach of contract, breach good faith and fair dealing, bad faith, and Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”). The suit was commenced in the Westmoreland County Court of Common Pleas after the...Read More >>
March 10, 2013
MARCH 2013 BAD FAITH CASES: COURT DENIES CLASS CERTIFICATION ON INSURER DECEPTION AND BAD FAITH CLAIMS, BUT PERMITS CLAIMS OF TWO PROPOSED PLAINTIFFS TO CONTINUE (New Jersey Federal)
In Clark v. The Prudential Ins. Co. of America, plaintiffs filed a putative class action complaint alleging fraudulent misrepresentation, fraudulent omissions, breach of the duty of good faith and fair dealing and violation of California’s Unfair Competition Law. The claims arose out of the carrier’s stoppage of the sale of Coordinated Health Insurance Program...Read More >>
March 2, 2013
New Jersey Senate Committee to Consider Proposed Bad Faith Statute on March 4, 2013
On Monday, the New Jersey Senate’s Commerce Committee will be considering legislation providing a private right of action against insurers “for any violation of the provisions of subsection (9) of section 4 of P.L.1947, c.379 (C.17:29B-4), regarding unfair claim settlement practices, notwithstanding that the insurer did not violate any applicable provision with enough frequency...Read More >>
February 19, 2013
FEBRUARY 2013 BAD FAITH CASES:
MAGISTRATE RECOMMENDS DENIAL OF PLAN BENEFICIARY’S BAD FAITH CLAIM AS PREEMPTED BY FEDERAL ERISA STATUTE (Middle District) In Terry v. Northrop Grumman Health Plan, the beneficiary of a life insurance plan, provided to her husband by his former employer, brought an action for bad faith against the plan administrator. The administrator moved to dismiss...Read More >>
February 19, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT DISMISSES CARRIER’S APPEAL BECAUSE ALLEGATIONS OF INSURED’S REVERSE BAD FAITH WERE MOOT IN LIGHT OF UNDERLYING SETTLEMENT (New Jersey Appellate Division)
In Rosen v. Earle, a third-party was injured in an automobile accident. She sued the negligent driver and the driver’s insurance carrier for damages sustained in the accident. The claimant also sought a declaratory judgment that the carrier was obligated to cover her injuries under the policy. The carrier responded by asserting that the...Read More >>
February 19, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT AFFIRMS GRANT OF SUMMARY JUDGMENT TO UMBRELLA INSURER BECAUSE UNDERLYING POLICY WAS NOT EXHAUSTED AND PROFESSIONAL SERVICES EXCLUSION JUSTIFIED DENIAL (Philadelphia Commerce Court)
In Lexington Ins. Co. v. Charter Oak Fire Ins. Co., the court issues an opinion explaining its prior grant of summary judgment to an umbrella insurer, ruling that the carrier’s duty to defend and indemnify were not triggered because underlying policies were not exhausted and the policy excluded coverage over injuries arising from professional...Read More >>
February 18, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT GRANTS CARRIER’S SUMMARY JUDGMENT MOTION ON INSURED’S STATUTORY BAD FAITH CLAIM, BUT NOT ON COMMON LAW BAD FAITH CLAIM (Western District)
In Katta v. GEICO, the court heard a carrier’s motion for summary judgment that was filed in opposition to its insured’s claim for common law and statutory bad faith. The case arose out of a motor vehicle accident during which an uninsured driver caused an accident with the insured’s automobile. The insured filed a...Read More >>
February 18, 2013
FEBRUARY 2013 BAD FAITH CASES: APPELLATE COURT AFFIRMS SUMMARY JUDGMENT TO CARRIER BECAUSE INSUREDS FAILED TO COMPLY WITH CARRIER’S INVESTIGATION EFFORTS (Third Circuit)
In Verdetto v. State Farm Fire & Cas. Co., the insureds appealed the district court’s grant of summary judgment to its rental insurance carrier (see this blog) and the district court’s later denial of the insureds’ motion for reconsideration (see this blog). The court affirmed the district court’s ruling on the insureds’ bad faith...Read More >>
February 18, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT APPLIES TIME ON THE RISK METHOD OF ALLOCATION, AFFIRMS SUMMARY JUDGMENT TO CARRIER (Philadelphia Commerce Court)
In Anheuser-Busch, Inc. v. Ins. Co. of N. Am., an insured corporation being sued by a former employee for exposure to asbestos sought coverage under an excess liability policy. The Commerce Court granted summary judgment to the carrier and the insured corporation appealed. (See also this blog). The Commerce Court opined on several issues...Read More >>
February 18, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT DECLINES TO HOLD THAT ALLEGED “POST-CLAIM UNDERWRITING” IS EVIDENCE OF BAD FAITH, DENIES CARRIER’S SUMMARY JUDGMENT MOTION ON BASIS OF POTENTIAL ESTOPPEL IN UNDERWRITING PROCESS (Lackawanna County Common Pleas)
In AJT Props. v. Lexington Ins. Co., a commercial property owner purchased building and property insurance, which, based on surveys, indicated that the property was not in a special flood hazard area (“SFHA”). Several years later, the property suffered flood damage. The insured filed a claim under its policy and the carrier tendered coverage...Read More >>
February 11, 2013
FEBRUARY 2013 BAD FAITH CASES: FEDERAL COURT DENIES REMOVAL OF BAD FAITH ACTION BECAUSE STATE COURT WRIT WITH ATTACHED LETTER IS INSUFFICIENT FOR JURISDICTION (Middle District)
In Reed v. Allstate Ins. Co., the court addressed a carrier’s notice of removal filed in response to an insured’s state court writ of summons. The district court rejected the carrier’s notice of removal because the insured had not yet filed an initial pleading to establish an Article III case or controversy. The court...Read More >>
February 11, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT DENIES INSURED’S CLAIM BECAUSE FACTUAL BACKGROUND AND INVESTIGATION WERE NOT ENOUGH TO SUPPORT ALLEGATIONS OF BAD FAITH (Philadelphia Federal)
In Davis v. State Farm Ins., the court heard a carrier’s motion for summary judgment that was filed in response to an insured’s claims for breach of contract and bad faith. The insured filed a claim for theft under her car insurance policy, but the carrier denied coverage after an investigation revealed that the...Read More >>
February 6, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT SEVERS UIM AND BAD FAITH CLAIMS, BUT REFUSES TO GRANT STAY OF BAD FAITH ACTION UNTIL UIM CLAIM WAS RESOLVED (Monroe County Court of Common Pleas)
In Orsulak v. Windish, an insurance carrier moved to sever an insured’s underinsured motorist (“UIM”) claims from the accompanying breach of contract and bad faith claims. The court granted the motion for severance, splitting the UIM claim from the insured’s allegations of bad faith and breach of contract. The court granted the carrier’s request...Read More >>
February 6, 2013
FEBRUARY 2013 BAD FAIH CASES: COURT REJECTS INSURED’S OBJECTION TO MAGISTRATE JUDGE’S DENIAL OF LEAVE TO AMEND SECOND MOTION FOR SUMMARY JUDGMENT (New Jersey Federal)
In Sperry Assocs. Fed. Credit Union v. Cumis Ins. Soc’y., Inc., an insured credit union filed an objection to a magistrate judge’s denial of its motion for leave to amend a second motion for summary judgment against an insurance carrier with whom the insured was litigating a breach of contract and bad faith suit....Read More >>
February 5, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM, BUT PERMITS BREACH OF CONTRACT ACTION TO PROCEED (Philadelphia Federal)
In Dixon v. All State Ins. Co., the insured property owner, who worked as an attorney in an office on the property, brought a pro se action against her homeowner’s insurance carrier for breach of contract and bad faith after the carrier denied coverage on certain items following storm damage to the insured’s home....Read More >>
February 2, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT DENIES CARRIER’S SUMMARY JUDGMENT MOTION ON BAD FAITH CLAIM, IN PART, BECAUSE CARRIER RELIED ON POLICE REPORT AND DID NOT SEEK ESTIMATE OF DAMAGES (Western District)
In Schifino v. Geico Gen. Ins. Co., the carrier moved for summary judgment, seeking to dismiss a breach of contract and bad faith claim brought by a third-party insured who was injured as a passenger in a car accident caused by an underinsured motorist (UIM). Following the accident, the third-party insured collected the liability...Read More >>
February 1, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT DENIES BAD FAITH CLAIM BECAUSE CLAIMAINT WAS NOT AN INSURED AND HER UNDERLYING CLAIM FOR EMOTIONAL DISTRESS FAILED (Third Circuit)
In Caserta v. Geico Gen. Ins. Co., the court heard an appeal from the trial court’s directed verdict in favor of the carrier. The case arose after the claimant and her boyfriend, an insured under his mother’s automobile insurance policy, were hit by an unidentified car while walking on the side of the road....Read More >>
February 1, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT DENIES BAD FAITH CLAIM BECAUSE INSURED’S POOR ENGLISH SKILLS DID NOT EQUATE TO DECEPTIVE CONDUCT BY CARRIER, WHICH WOULD REQUIRE COURT TO LOOK BEYOND PLAIN MEANING OF POLICY IN A REASONABLE EXPECTATIONS ANALYSIS (Philadelphia Federal)
In Mabrat v. Allstate Ins. Co., the court heard cross motions for summary judgment filed by an insured and his homeowner’s insurance carrier in a suit for breach of contract and bad faith. The dispute arose after a fire damaged the second floor of a property owned by the insured. The carrier denied coverage...Read More >>
February 1, 2013
FEBRUARY 2013 BAD FAITH CASES: COURT DENIES BAD FAITH CLAIM BECAUSE INSUREDS WERE NOT ENTITLED TO COVERAGE FOR BODILY INJURY UNDER APPLICABLE POLICY (Philadelphia Federal)
In ArcelorMittal Plate, LLC v. Joule Tech. Servs., a steel manufacturer sued a temporary staffing agency and the agency’s general liability insurance carrier for indemnity after a temporary employee provided by the staffing agency was injured at the steel facility and was awarded $1,000,000 in damages against the plaintiff-manufacturer. The manufacturer and the insured...Read More >>
January 25, 2013
JANUARY 2013 BAD FAITH CASES: COURT APPLIES NEW YORK LAW AND DENIES BAD FAITH CLAIM BECAUSE SUCH A CLAIM IN NEW YORK IS BASED IN CONTRACT AND THE BURDEN OF PROOF IS VERY HIGH (Philadelphia Federal)
In Fairsea v. Philadelphia Indemnity Insurance Co., the court heard a carrier’s motion to dismiss an insured’s bad faith claim stemming from the carrier’s denial of benefits under a policy insuring damage to the insured’s property. Because the insured property was located in New York and the carrier was located in Philadelphia, the court...Read More >>
January 24, 2013
JANUARY 2013 BAD FAITH CASES: COURT GRANTS MOTION TO DISMISS, BUT ALLOWS BAD FAITH CLAIM AGAINST HEALTH INSURER, PHYSICIANS, AND PEER REVIEW ORGANIZATION TO PROCEED (New Jersey Federal)
In Skelcy v. Unitedhealth Group, Inc., the administrator of a decedent’s estate brought suit against a health insurer, its parent company, several physicians, and a peer review organization for wrongful death, delay of health insurance benefits, and bad faith, alleging that the defendants’ improper deprivation and delay of medical treatment caused the decedent’s death....Read More >>
January 23, 2013
JANUARY 2013 BAD FAITH CASES: COURT AFFIRMS RES JUDICATA BAR TO ASSERTION OF BAD FAITH BECAUSE CLAIM ACCRUED BEFORE INSUREDS FILED INITIAL UM SUIT (New Jersey Appellate Division)
In Wadeer v. N.J. Mfrs. Ins. Co., the insureds appealed the trial court’s decision to bar their bad faith action as res judicata under the entire controversy doctrine (“ECD”). The claim arose when the carrier refused to provide uninsured motorist (“UM”) coverage to the insureds after an automobile accident. The carrier refused to pay...Read More >>
January 23, 2013
JANUARY 2013 BAD FAITH CASES: COURT REJECTS MAGISTRATE’S R&R, WHICH DENIED HEARING TO EFFECTUATE SETTLEMENT, BUT DID NOT ADDRESS ASSIGNMENT OF BAD FAITH CLAIM (Middle District)
In Lehman v. Diamond Dev. Co., a magistrate judge denied a motion to effectuate a settlement between an insured corporation and an injured party, who brought suit after sustaining injuries in a slip and fall accident. The parties’ agreement contained: (1) an assignment of the insured corporation’s potential bad faith claim against its carrier...Read More >>
January 18, 2013
JANUARY 2013 BAD FAITH CASES: COURT RULES THAT INSURED WAIVED RIGHT TO ARBITRATE BAD FAITH AND COVERAGE ISSUES BECAUSE IT BROUGHT SUIT ON THE SAME POLICY (New Jersey Federal)
The JPMorgan Chase Bank, N.A. v. Republic Mortg. Ins. Co. (see also this blog) case arises from the insured’s coverage, negligence and bad faith actions, initially filed when the carrier rescinded 200 policies covering the insured’s mortgage loans. The court first heard the carrier’s motion to dismiss, which did not address the insured’s bad...Read More >>
January 18, 2013
JANUARY 2013 BAD FAITH CASES: COURT RULES THAT CONSEQUENTIAL DAMAGES FOR DIMINUTION OF VALUE ARE IMPROPER ABSENT A VIABLE CLAIM FOR BAD FAITH (New Jersey Federal)
In Walsh Secs. Inc. v. Cristo Prop. Manamgement, Ltd. (see also this blog), the insured filed a motion for clarification, seeking a ruling that it may pursue damages against the carrier for diminution of the value of its company, allegedly caused by the carrier’s failure to cover damages incurred by the insured after fraud...Read More >>
January 17, 2013
JANUARY 2013 BAD FAITH CASES: COURT DENIES INSUREDS’ BAD FAITH CLAIM BECAUSE TITLE INSURANCE POLICY DOES NOT PROVIDE “GOOD” TITLE, BUT PROTECTS AGAINST TITLE DEFECTS (New Jersey Federal)
In Granelli v. Chi. Title Ins. Co., the court granted the carrier’s summary judgment motion seeking to dismiss the insureds’ breach of contract and bad faith claims stemming from the insureds’ purchase of a title insurance policy from the carrier. After the insureds discovered several boundary disputes with adjacent properties, they contacted the carrier,...Read More >>
January 16, 2013
JANUARY 2013 BAD FAITH CASES: COURT DENIES BAD FAITH CLAIM BECAUSE INSURED WAS NOT ENTITLED TO COVERAGE UNDER POLICY (Western District)
In K2 Settlement, LLC v. Certain Underwriters at Lloyd’s, the court heard a carrier’s motion for summary judgment filed in response to its insured’s suit for breach of contract and bad faith. The carrier had denied coverage over the insured’s claim for benefits under a Special Mortgage Bankers Bond. The claim was prompted by...Read More >>
January 15, 2013
JANUARY 2013 BAD FAITH CASES: COURT REJECTS BAD FAITH CLAIM IN ABSENCE OF CARRIER’S DUTY TO DEFEND AND INDEMNIFY THE INSURED CLAIMAINT (New Jersey Federal)
In Evanston Ins. Co. v. Crocilla, the carrier brought a declaratory judgment action against its insured, seeking a declaration that it did not have a duty to defend the insured masseuse in an underlying state court suit stemming from sexual assault allegations against the insured in her professional capacity. Following the carrier’s denial of...Read More >>
January 15, 2013
JANUARY 2013 BAD FAITH CASES: COURT DENIES INSURED’S THIRD-PARTY COMPLAINT AGAINST CARRIER FOR CONTRIBUTION IN UNDERLYING CONTRACTUAL SUIT (Philadelphia Federal)
In Feingold v. Quinn, the court denied a Rule 14 third-party complaint by an insured, who sought contribution and indemnity from her insurance carrier. The sought-after funds relate to the carrier’s refusal to defend the insured in another suit, necessitating the insured’s hiring of her own attorney, who now seeks payment of his fees....Read More >>
January 15, 2013
JANUARY 2013 BAD FAITH CASES: COURT AFFIRMS DISMISSAL OF BAD FAITH COMPLAINT WHERE CARRIER MERELY FAILED TO SETTLE UPON INSURED’S REQUESTED SUM (Third Circuit)
In Smith v. State Farm Mut. Auto. Ins. Co., the Third Circuit heard an appeal from the district court’s dismissal of an insured’s bad faith complaint. The insured was seriously injured in a car accident and sought underinsured motorist coverage from its carrier, seeking the $45,000 policy limit. The carrier offered $21,000, which the...Read More >>
January 15, 2013
JANUARY 2013 BAD FAITH CASES: COURT REJECTS BAD FAITH CLAIM AGAINST HEALTHCARE CARRIER THAT REPORTED PHYSICIAN FOR DISCIPLINARY MEASURES (Bucks County Common Pleas)
In Ahmad v. Aetna, Inc., a physician sued a healthcare insurance carrier for defamation and tortious interference, alleging that the carrier acted in bad faith by initiating an insurance fraud investigation and reporting the physician for disciplinary action under N.J.S.A. 45:1-35, which immunizes healthcare entities from suit for reporting allegations of physician misconduct. The...Read More >>
January 15, 2013
JANUARY 2013 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT TO CARRIER ON BAD FAITH CLAIM BECAUSE ITS INVESTIGATION WAS COMPLETE AND INSURED’S UNFAIR CLAIMS SETTLEMENT PRACTICES CLAIM WAS INAPPOSITE
In Swan Caterers, Inc. v. Nationwide Mut. Fire Ins. Co., the court heard a carrier’s summary judgment motion in response to its insured’s breach of contract and bad faith claims. The suit arose from direct physical loss and damage that the insured’s place of business sustained as a result of a wind and rainstorm....Read More >>
December 29, 2012
DECEMBER 2012 BAD FAITH CASES: COURT AFFIRMS SUMMARY JUDGMENT OF NO BAD FAITH AS CARRIER’S POSITION BASED ON PRIOR APPELLATE DECISION WAS REASONABLY DEBATABLE (New Jersey Appellate Division)
In Badiali v. New Jersey Mfrs. Ins. Group, the court ruled that a carrier did not act in bad faith by refusing to pay its share of an arbitration award that it was later deemed responsible to pay. In a prior appeal in this case, an appellate panel ruled that the uninsured motorist carrier,...Read More >>
December 29, 2012
DECEMBER 2012 BAD FAITH CASES: COURT PRECLUDES INSURED FROM INTRODUCING INADVERTANTLY DISCLOSED PRIVILEGED DOCUMENTS, IRRELEVANT EXPERT TESTIMONY, AND EVIDENCE OF CARRIER’S NET WORTH, BUT PERMITS INSURED TO INTRODUCE EVIDENCE OF EXPERT BIAS (Western District)
In Smith v. Allstate Ins. Co., the court heard a carrier’s motion in limine seeking to preclude its insured from introducing four types of evidence in coverage litigation regarding injuries the insured suffered in a car accident. First, the carrier sought to preclude the insured from introducing privileged information that was inadvertently disclosed during...Read More >>
December 29, 2012
DECEMBER 2012 BAD FAITH CASES: COURT APPLIES NEW YORK LAW AND GRANTS SUMMARY JUDGMENT FOR CARRIER ON INSURED’S INDEMNITY CLAIM STEMMING FROM UNDERLYING ASBESTOS SUIT (Philadelphia Commerce Court)
In Anheuser-Busch, Inc. v. Ins. Co. of N. Am., the court undertook a conflict of law analysis, reasoning that New York law should apply to a dispute between a carrier and it’s insured regarding the carrier’s duty to indemnify the insured in an underlying asbestos exposure lawsuit. The carrier’s duty to indemnify was triggered...Read More >>
December 29, 2012
DECEMBER 2012 BAD FAITH CASES: COURT GRANTS INSURED’S MOTION TO AMEND COMPLAINT WITH BAD FAITH COUNT, BUT GRANTS PARTIAL PROTECTIVE ORDER TO CARRIER, SHIELDING IT FROM DISCOVERY ON RELATED BAD FAITH CLAIMS (New Jersey Federal)
In Raritan Bay Fed. Credit Union v. CUMIS Ins. Soc’y, Inc., the insured sought discovery and to amend its complaint after its bad faith claims were initially dismissed without prejudice in 2009. (See this case). The carrier objected on several grounds, seeking to: (1) preclude the insured from conducting discovery on the sales and...Read More >>
December 29, 2012
DECEMBER 2012 BAD FAITH CASES: COURT DENIES LEAVE TO AMEND COMPLAINT BECAUSE INSUREDS LACKED STANDING TO BRING COMMON LAW BAD FAITH CLAIM (Western District)
In Norco v. Allstate Ins. Co., the insureds sought to amend their complaint to include common law bad faith claims after the district court previously adopted a magistrate’s Report and Recommendation denying their statutory bad faith claims for lack of standing as guardians at litem. (See this blog). The court also dismissed a statutory...Read More >>
December 21, 2012
DECEMBER 2012 BAD FAITH CASES: COURT FINDS THAT ARBITRATION CLAUSE IS UNENFORCEABLE AS WRITTEN (New Jersey Appellate Division)
In Allied Professionals Ins. Co. v. Jodar, the appellate division heard a carrier’s appeal stemming from the trial court’s reformation of an arbitration clause in the insured’s policy. The insured party, who was defending an underlying medical malpractice claim, previously purchased a policy requiring her to arbitrate any related claims in Orange County, California....Read More >>
December 21, 2012
DECEMBER 2012 BAD FAITH CASES: COURT DENIES CARRIER’S SUMMARY JUDGMENT MOTION ON TWO BAD FAITH COUNTS, CITING DISPUTED MATERIAL FACTS AS TO THE INVESTIGATION OF AND MOTIVE FOR DENIAL OF INSURED’S CLAIM (Western District)
In Hall v. Nationwide Mut. Ins. Co., the court heard a carrier’s partial summary judgment motion on the insured’s two bad faith allegations. The case arose after the insured suffered serious injuries in a car accident and sought coverage for personal injuries and damage to his automobile. Upon notifying the carrier of this claim,...Read More >>
December 8, 2012
DECEMBER 2012 BAD FAITH CASES: COURT RULES THAT ROVA FARMS PROVIDES A CONTRACTUAL CLAIM AT LAW TO WHICH THE RIGHT TO TRIAL BY JURY ATTACHES (New Jersey Supreme Court)
In Wood v. New Jersey Mfrs. Ins. Co., the New Jersey Supreme Court granted certification to settle an issue of first impression regarding the question of whether a claim brought under Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474 (N.J. 1974), is to be decided by judge or jury. The dispute...Read More >>
December 8, 2012
DECEMBER 2012 BAD FAITH CASES: COURT REJECTS INSURED’S BAD FAITH CLAIM BECAUSE ITS COVERAGE ACTION WAS DENIED UNDER CARRIER’S “DISCOVERY” AFFIRMATIVE DEFENSE (New Jersey Federal)
In Diebold, Inc. v. Cont’l Cas. Co., the insured party, a servicer of automated teller machines (“ATM”), brought an action against its carrier for coverage under the parties’ “Commercial Crime Policy” and bad faith. The loss at issue originated when one of the insured’s subcontractors, hired to replenish cash at various ATM’s owned by...Read More >>
December 8, 2012
DECEMBER 2012 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM BECAUSE DENIAL OF CLAIM ALONE DOES NOT AMOUNT TO LIABILITY; COURT ALSO RULES THAT ATTORNEYS FEES ARE IMPROPER WHERE DISPUTED POLICY IS A FIRST-PARTY SURETY CONTRACT OR BOND (New Jersey Federal)
In Raritan Bay Fed. Credit Union v. CUMIS Ins. Soc’y, Inc., the court heard a carrier’s motion to dismiss its insured’s claim for bad faith and strike a request for attorney’s fees and punitive damages. The case arose from a coverage dispute over an “Employee or Director Dishonesty” policy purchased by the insured from...Read More >>
November 23, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT DISMISSES INSURED’S SUIT BECAUSE CARRIER’S CONDUCT DID NOT RISE TO THE LEVEL OF ACTIONABLE BAD FAITH AND THE INSURED’S UNDERLYING CONTRACTUAL ALLEGATIONS FAILED TO ALLEGE COVERAGE (Western District)
In Hamm v. Allstate Prop. & Cas. Ins. Co., the court heard the insureds’ suit for breach of contract and bad faith. Pending was the carrier’s motion to dismiss the insureds’ claims. The dispute arose from the carrier’s denial of coverage for damage to a rear stone veneer outside of the insureds’ home. The...Read More >>
November 16, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT AFFIRMS DENIAL OF BAD FAITH CLAIM BECAUSE CARRIER PROPERLY DENIED BENEFITS AFTER INSURED SUBMITTED PROOF OF LOSS AFTER THE TIME PERMITTED BY HIS POLICY (New Jersey Appellate Division)
In Heller v. First UNUM Life Ins. Co., the Appellate Division heard an insured’s appeal from the trial court’s denial of his cross-motion for summary judgment. The motion sought a ruling that the carrier acted in bad faith by denying the insured’s claim for disability benefits. The injuries that lead to the insured’s claim...Read More >>
November 16, 2012
NOVEMBER 2012 BAD FAITH CASES:COURT GRANTS SUMMARY JUDGMENT TO CARRIER BECAUSE INSURED WAS ALLEGEDLY INVOLVED IN FRAUDULENT ACTIVITIES AND INSURER COULD PROPERLY INVESTIGATE THAT ALLEGATION (New Jersey Federal)
In Walsh Secs., Inc. v. Cristo Prop. Mgmt., the court heard cross-summary judgment motions in an insurance coverage dispute stemming from a title insurer’s denial of its insured’s claim for benefits. The situation arose from a mortgage fraud scheme that impacted the insured’s mortgage lending business. The insured was a lender who would package...Read More >>
November 16, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT AFFIRMS TRIAL COURTS RULING THAT PREJUDICE TO CARRIER WARRANTED FORFEITURE OF COVERAGE BY INSURED (New Jersey Appellate Division)
In Demasi v. Lexington Ins. Co., an insured appealed the trial court’s grant of summary judgment to its carrier in a coverage and bad faith suit brought by the insurer. The dispute stemmed from a fire at a property owned by the insured. After discovering the fire, the insured made a claim for benefits...Read More >>
November 16, 2012
NOVEMBER 2012 BAD FAITH CASES:COURT AFFIRMS DISMISSAL OF BAD FAITH CLAIM BECAUSE UNDERLYING JUDGMENT WAS NOT EXECUTED AGAINST ASSIGNOR’S ESTATE PRIOR TO DEATH (New Jersey Appellate Division)
In Nieves v. Allstate Ins. Co., the court heard an assignee’s appeal from the dismissal of her bad faith claim against the decedent insured-assignor’s carrier. The dispute arose from a car accident in which an individual driving the assignor’s automobile injured the assignee. After a $185,000 jury verdict in the assignee’s favor, the assignor-insured’s...Read More >>
November 16, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT DISMISSES INSURED’S BAD FAITH CLAIM BECAUSE UNDERLYING ALLEGATION ABOUT CARRIER’S IMPROPER UNILATERAL RECISSION OF POLICY WAS DENIED (New Jersey Federal)
In JPMorgan Chase Bank, N.A. v. Republic Mortg. Ins. Co., the court heard a carrier’s motion to dismiss its insured’s amended complaint and cross-motion for summary judgment. The dispute arose from a mortgage insurance policy that the insured purchased to cover defaults on residential loans issued by the insured. The policy contained a unilateral...Read More >>
November 16, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT DENIES BAD FAITH CLAIM BECAUSE UNDERLYING COVERAGE ACTION FAILED (District of New Jersey)
In Wojciechowski v. State Farm Fire & Cas. Co., the court heard a carrier’s summary judgment motion stemming from a coverage dispute and bad faith claim alleged by its insureds. The dispute arose from a broken pipe in the insureds’ home. To discover the broken pipe, a plumber had to rip up carpet and...Read More >>
November 13, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT GRANTS INSURED’S MOTION TO AMEND IN ORDER TO INCLUDE CAUSE OF ACTION FOR BAD FAITH AGAINST CARRIER ON ALLEGED OMISSIONS OF COVERED DAMAGE FACTORS IN REPORT (New Jersey Federal)
In Dawn Rest., Inc. v. Penn Millers Ins. Co., the court heard an insured’s motion to amend its complaint for breach of contract to include bad faith allegations. The insured was a restaurant that discovered damage to its roof and initiated repairs. After alerting its carrier of the loss, coverage was denied. The carrier’s...Read More >>
November 12, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT DENIES BAD FAITH CLAIM BECAUSE CARRIER’S DELAY WAS VALID IN LIGHT OF THE INSURED’S ALLEGED MISREPRESENTATIONS OF FACT (District of New Jersey)
In Certain Underwriters at Lloyd’s of London v. Alesi, the court heard an insurer’s declaratory judgment action seeking a determination of its liability for damages alleged by its insured under a homeowner’s policy. The insured counterclaimed for breach of contract and bad faith damages, to which the carrier responded by filing a motion for...Read More >>
November 12, 2012
NOVEMBER 2012 BAD FAITH CASES: APPELLATE COURT AFFIRMS DENIAL OF INSURED’S BAD FAITH CLAIM, DESPITE FACT THAT TRIAL COURT SHOULD HAVE PERMITTED INSURED’S EXPERT TO TESTIFY REGARDING CARRIER’S ITPA VIOLATIONS WHICH ARE RELEVANT EVIDENCE TO BAD FAITH CASES (New Jersey Appellate Division)
In Lydon v. Chubb Group of Ins. Cos., the appellate court heard an appeal from the dismissal of an insured’s claim for bad faith damages in relation to its carrier’s denial of benefits under a homeowner’s policy. Specifically, the insured argued that the trial court erred in dismissing its claim for bad faith because...Read More >>
November 12, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT RULES THAT SERVICE UPON CARRIER’S STATUTORY AGENT DOES NOT COMMENCE THIRTY-DAY PERIOD FOR REMOVAL (New Jersey Federal)
In Tucci v. Hartford Fin. Servs. Group, Inc., the court heard an insured’s motion to remand a coverage dispute with its carrier to state court. The insured had served its complaint upon the carrier’s statutory agent in New Jersey, the Commissioner of Banking and Insurance. The Commissioner subsequently mailed the complaint to the carrier....Read More >>
November 12, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT UPHOLDS BAD FAITH AWARD, AND JUDGE’S AWARD OF NEARLY $200,000 IN ATTORNEY’S FEES AND LEGAL COSTS, REJECTING CARRIER’S CONTENTION THAT JURY’S FACTUAL DETERMINATION WAS IMPROPER (New Jersey Appellate Division)
In Bello v. Merrimack Mut. Fire Ins. Co., the appellate court heard an appeal from a jury verdict that awarded an insured damages for bad faith stemming from its carrier’s denial of benefits under a policy covering a retaining wall on the insured’s multi-unit residential property. Following a wind storm in 2008, the insured’s...Read More >>
November 8, 2012
NOVEMBER 2012 BAD FAITH CASES: NO BAD FAITH WHERE TWO REASONABLE INTERPRETATIONS OF POLICY PROVISION AND DEARTH OF CASE LAW GIVING GUIDANCE, EVEN WHERE INSURED PREVAILS; NO PRIVATE RIGHT OF ACTION UNDER NEW JERSEY’S INSURANCE TRADE PRACTICES ACT (New Jersey Federal)
In Rothschild v. Foremost Ins. Co., the court was faced with the basic issue of interpreting what the carrier was required to pay for a property loss in light of an “other insurance” provision. The two insurers agreed that the defendant insurer’s pro rata share, based on total available insurance between the two was...Read More >>
November 8, 2012
NOVEMBER 2012 BAD FAITH CASES: NO BAD FAITH UNDER REASONABLY DEBATABLE STANDARD OR REASONABLE MINDS STANDARD IN UM FAILURE TO SETTLE CASE (New Jersey Appellate Division)
In Williams v. State Farm Indem. Co., the insured driver was injured. Four months after the accident, he reported to the police there was another driver that had caused the accident and fled the scene. He sought uninsured motorist coverage from his carrier. The carrier refused to settle the claim, questioning whether there was...Read More >>
November 7, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT FINDS NO BAD FAITH IN ASSIGNEES ASSERTION THAT IT WAS NOT PAID PIP CLAIM WHERE LIMITS WERE EXHAUSTED DURING PENDENCY OF ARBITRATION WHERE BAD FAITH LAW INAPPLICABLE TO AWARD CONSEQUENTIAL DAMAGES IN PIP CONTEXT, AND IN ANY EVENT ARBITRATOR’S AWARD THAT WAS FRACTION OF SUM SOUGHT SHOWED CLAIM WAS FAIRLY DEBATABLE (New Jersey Appellate Division)
In Endo Surgical Ctr. v. Allstate N.J. Ins. Co., the injured insured assigned its PIP claims to her chiropractors. They brought arbitration claims against the carrier, which disputed whether the treatments were necessary and the sums sought should be paid. During the pendency of the arbitration, the PIP benefits were exhausted. The chiropractors prevailed...Read More >>
November 7, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT REJECTS BAD FAITH CLAIM WHERE FACTUAL ISSUES ARE “HOTLY CONTESTED”, GRANTS SUMMARY JUDGMENT ON PUNITIVE DAMAGES WHERE NO EGREGIOUS CONDUCT; AND DENIES ATTORNEYS’ FEES CLAIM UNDER RULE ONLY APPLICABLE TO THIRD PARTY CLAIMS, NOT DIRECT CLAIMS AGAINST INSURERS (New Jersey Federal)
In Laverde v. Sirius American Insurance Company, there was a fire at the insured’s business and it made a claim for business personal property loss and lost income under a businessowner’s policy. The policy had a coverage limit of $150,000 for the property loss (which the claim exceeded) and covered lost net income. The...Read More >>
November 7, 2012
NOVEMBER 2012 BAD FAITH CASES: ONLY PLEADING ELEMENTS OF BAD FAITH CAUSE OF ACTION IN CONCLUSORY MANNER RESULTS IN DISMISSAL WITHOUT PREJUDICE (New Jersey Federal)
In YAPAK, LLC v. Massachusetts Bay Insurance Co., the insured alleged bad faith against its insurer. The court dismissed the Complaint, without prejudice, as the plaintiff merely alleged the elements of a cause of action in a conclusory manner, and thus failed to adequately set forth a cause of action. Date of Decision: October...Read More >>
November 7, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT REFUSES MOTION TO AMEND ON BAD FAITH COUNT WHERE ALLEGED FRAUD WENT TO PROCUREMENT OF POLICY AND NOT DENIAL OF CLAIM, AND THERE WAS DISPUTE OF MATERIAL FACT ON COVERAGE (New Jersey Federal)
In American General Life Ins. Co. v. Ellman Savings Irrevocable Trust, the insured was seeking leave to amend its counterclaim to allege additional facts concerning its fraud and insurance bad faith claims. While the court found the amendments as to fraud were permitted since amendment would not be futile, it reached the opposite result...Read More >>
November 5, 2012
EXPANSION OF BAD FAITH CASE BLOG TO INCLUDE NEW JERSEY CASES: NOVEMBER 2012
As of November 2012, we will now be expanding the Bad Faith Blog to include case law on bad faith claims based on New Jersey Law. The Blog will now be known as the PENNSYLVANIA AND NEW JERSEY INSURANCE BAD FAITH CASE LAW BLOG. You will not only be able to find the blog...Read More >>
November 5, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT STRIKES INSURED’S DEMAND FOR ATTORNEY’S FEES UNDER THE COMPLAINT’S BREACH OF CONTRACT CLAIM AND COMPENSATORY DAMAGES UNDER THE BAD FAITH COUNT (Western District)
In Getz v. State Farm Ins. Co., the carrier moved to strike two claims for damages under the insured’s suit for breach of contract and bad faith. The dispute arose from a UIM claim that the insured brought against its automobile carrier. After it was unable to settle, the insured filed suit in state...Read More >>
November 5, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT STRIKES BAD FAITH CLAIM AND PREVENTS IT FROM MOVING TO A DE NOVO TRIAL BECAUSE THE INSURED FAILED TO MEANINGFULLY PARTICIPATE IN ARBITRATION PROCEEDINGS AS TO THAT COUNT OF ITS COMPLAINT; DENIES DISMISSAL FOR SPOLIATION ON REMAINING CLAIM (Philadelphia Federal)
In Rogers v. Allstate Ins. Co., the court heard a carrier’s motion to strike its insured’s request for Trial De Novo. The case was originally assigned for arbitration pursuant to Local Rule 53.2(3)(A) because it involved less than $150,000. However, during the arbitration, the insured’s attorney only presented evidence with respect to the breach...Read More >>
November 5, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT TO CARRIER ON BAD FAITH CLAIM BECAUSE INSURED AND INTERVENOR FAILED TO OPPOSE MOTION (Western District)
In Selective Ins. Co. v. Ferguson, the court heard two motions filed by the carrier of a comprehensive general liability (CGL) policy purchased by the owner of a tree removal business. First, the court addressed the carrier’s Motion for Leave to Amend Complaint and second, the carrier’s Motion for Summary Judgment. The court also...Read More >>
November 5, 2012
NOVEMBER 2012 BAD FAITH CASES: INSURED ADDUCES DISPUTED FACT WITH REPSECT TO CARRIER’S ALLEGED BAD FAITH TRAINING OF CLAIMS ADJUSTER AND PROVIDING IMPROPER STANDARD TO INDEPENDENT MEDICAL ADJUSTER; COURT ALLOWS FOR EMOTIONAL DISTRESS DAMAGES POTENTIAL IN CONTRACTUAL BAD FAITH SETTING (Western District)
In Smith v. Allstate Ins. Co., the court head a carrier’s summary judgment motion stemming from its insured’s claims for contractual bad faith and statutory bad faith. The dispute arose from the carrier’s denial of an underinsured motorist claim (UIM) made by the insured after she was severely injured in an automobile accident. The...Read More >>
November 5, 2012
NOVEMBER 2012 BAD CASES: COURT DENIES SUMMARY JUDGMENT ON BAD FAITH CLAIM BECAUSE OF DISPUTED FACTS WITH REGARD TO THE CAUSE OF DAMAGE TO INSURED’S HOME (Middle District)
In Pinkhasov v. Allstate Prop. & Cas. Co., the court heard an insured’s breach of contract and bad faith claims stemming from the carrier’s denial of a claim for benefits he made under the insured’s homeowner’s policy. In early 2010, the insured purchased a policy from the carrier that covered “sudden and accidental direct...Read More >>
November 5, 2012
NOVEMBER 2012 BAD FAITH CASES: COURT GRANTS CARRIER’S MOTION FOR JUDGMENT ON THE PLEADINGS BECAUSE CARRIER’S REINSTATEMENT OF INSURED’S APPLICATION FOR REIMBURSEMENT, AFTER THE INITIAL DENIAL OF BENEFITS, DID NOT INITIATE A NEW LIMITATION PERIOD (Middle District)
In Cozzone v. Axa Equitable Life Ins. Society, the carrier filed a motion for judgment on the pleadings in a breach of contract and bad faith claim brought by its insured. The dispute started after the carrier denied the insured’s application for overhead expense coverage as a part of its disability policy. The insured...Read More >>
November 5, 2012
November 2012 Bad Faith Cases: Failure to Bring Bad Faith Claim in UIM Proceeding Results in Bar Under Entire Controversey Doctrine (Third Circuit – NJ Law)
In Reid v. Transportation Ins. Co., the Third Circuit affirmed a district court ruling granting summary judgment to the defendant (“the carrier”) in plaintiff’s action alleging bad faith based on the carrier’s failure to negotiate a settlement in an underlying underinsured motorist action. On October 1, 1999, plaintiff was involved in a serious accident...Read More >>
October 22, 2012
OCTOBER 2012 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT TO CARRIER ON BAD FAITH CLAIM BECAUSE IT DEFENDED INSUREDS UNDER A RESERVATION OF RIGHTS AND RECOMMENDED THAT THE INSURED HIRE PERSONAL COUNSEL (Philadelphia Federal)
In Clunie-Haskins v. State Farm Fire & Cas. Co., the court heard a carrier’s motion for summary judgment that was filed in response to a breach of contract and bad faith suit filed by an insured’s assignees. This case stemmed from a sexual assault perpetrated by the insureds. In 2000, the two individuals allegedly...Read More >>
October 11, 2012
OCTOBER 2012 BAD FAITH CASES: COURT REFUSES TO DISMISS INSURED’S BAD FAITH CLAIM ON UIM SUIT (Western District)
In Morosky v. Allstate Ins. Co., a carrier moved to dismiss its insured’s breach of contract claim, arguing (1) that the insured’s first claim should be captioned as an underinsured motorist (“UIM”) claim and (2) that the second count was sufficient to establish a cause of action for bad faith. As to the first...Read More >>
October 9, 2012
OCTOBER 2012 BAD FAITH CASES: COURT GRANTS TWENTY-ONE DAYS TO AMEND CARRIER’S NOTICE OF REMOVAL BECAUSE IT FAILED TO ALLEGE INSURED’S DOMICILE (Middle District)
In Grudkowski v. Foremost Ins. Co., the court addressed a putative class action complaint filed by an insured alleging consumer protection and bad faith violations against its insurance carrier. After the insured filed its complaint in Luzerne County, the carrier removed to federal court on the basis of diversity jurisdiction. However, the carrier failed...Read More >>
October 9, 2012
OCTOBER 2012 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM AS BARRED BY THE STATUTE OF LIMITATIONS, BECAUSE DISCOVERY VIOLATIONS DO NOT GIVE RISE TO AN INDEPENDENT ACT OF BAD FAITH (Philadelphia Federal)
In Am. Collision & Auto. Ctr., Inc. v. Windsor-Mt. Joy Mut. Ins. Co., the court heard a carrier’s motion to dismiss a breach of contract and bad faith claim brought by the owner of a damaged boat that sought benefits under its policy. In 2006, the insured’s father bought a boat through his business,...Read More >>
October 9, 2012
OCTOBER 2012 BAD FAITH CASES: COURT REJECTS INSURED’S DISCOVERY REQUEST BECAUSE CARRIER’S ACTIONS AMOUNTED TO “PURE DISCOVERY VIOLATION” RATHER THAN A BAD FAITH EFFORT TO OBSTRUCT LITIGATION (Western District)
In Mine Safety Appliances Co. v. North River Ins. Co., a Special Discovery Master heard a discovery dispute that arose from questions regarding “the appropriate trigger of coverage for underlying claims involving coal-worker’s pneumoconiosis” that developed during his employment in the insured’s mine. In April 2012, a Special Discovery Master undertook an analysis of...Read More >>
September 29, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT TO CARRIER BECAUSE CONDUCTING AN IN PERSON INSPECTION OF DAMAGED HOME IS SUFFICIENT GROUNDS TO DENY INSURED’S CLAIM (Philadelphia Federal)
In Capriotti v. Allstate Prop. & Cas. Ins. Co., the court heard a motion for summary judgment filed by a carrier against its insureds’ claims for breach of contract and bad faith. The insureds possessed a homeowner’s policy with the carrier that covered “sudden and accidental direct physical loss to property.” However, the policy...Read More >>
September 29, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT REMANDS BAD FAITH CASE WHICH WAS DESIGNATED FOR COMPULSORY ARBITRATION AND CAPPED AT $50,000 IN DAMAGES (Philadelphia Federal)
In Coates v. Nationwide Ins. Co., the court heard a motion to remand in an action for bad faith and breach of contract brought by an insured party that was severely injured in a car accident. The insured’s policy provided only $100,000 in coverage, which her expenses exceeded. She therefore requested UIM benefits under...Read More >>
September 25, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT RULES THAT LIMITATIONS PERIOD FOR COMMON-LAW BAD FAITH CLAIM STARTS WHEN VERDICT IN UNDERLYING CLAIM IS RENDERED, NOT WHEN THE RIGHT TO INSTITUTE A SUIT AGAINST CARRIER ARISES, AND THEN REJECTS CLAIM AS CARRIER HAD REASONABLE BASIS NOT TO SETTLE (Philadelphia Federal)
In Katzenmoyer v. Allstate Ins. Co., the court heard cross-motions for summary judgment stemming from an insurance dispute. A person was injured while driving with the insured in his ATV. Suit was brought and a jury verdict was entered against the insured. The insured eventually assigned his claims against his homeowners insurance carrier to...Read More >>
September 25, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT ADOPTS MAGISTRATE’S R&R AND REITERATES THAT, IN THE CONTEXT OF A THIRD-PARTY NEGLIGENCE SUIT, STATUTORY BAD FAITH CLAIMS MUST BE PREDICATED UPON CARRIER’S DUTY TO DEFEND OR INDEMNIFY (Western District)
In Norco v. Allstate Ins. Co., the court heard a dispute over insurance coverage under an automobile policy provided by the carrier to an insured whose negligent driving caused the third-party insured in this action to sustain severe injuries. The third-party insured is the infant minor son of the allegedly negligent driver, who brought...Read More >>
September 25, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT RULES THAT EXCESS CARRIER DID NOT ACT IN BAD FAITH BECAUSE IT OWED NO DUTY TO DEFEND AND THE INSURED’S CLAIM WAS EXCLUDED BY THE POLICY (Philadelphia Commerce Court)
In Lexington Ins. Co. v. Charter Oak Fire Ins. Co., the court heard a complex insurance coverage dispute stemming from an underlying personal injury action. In late 2005, the Philadelphia Water Department entered into a contract with the insured, who agreed to provide various engineering and design services for a construction project. The contract...Read More >>
September 25, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT GRANTS CARRIER LEAVE TO AMEND DEFECTIVE NOTICE OF REMOVAL TO PROPERLY PLEAD PLACE OF DOMICILE (Middle District)
In White v. Combined Ins. Co., the insured parties filed claims against their insurance carrier for breach of contract and bad faith. The insureds originally filed their suit in the Court of Common Pleas for Schuylkill County, but the carrier moved to remove the action to federal court. However, the carrier failed to properly...Read More >>
September 25, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT RULES THAT COORDINATED BAD FAITH AND COVERAGE ACTIONS SHOULD REMAIN IN LOCALITY OF UNDERLYING PERSONAL INJURY (Philadelphia Commerce Court)
In Pennsylvania Manufacturers Association Ins. Co. v. Pennsylvania State University, the trial court issued an opinion in support of its order granting an insurer’s motion to coordinate (1) a coverage case the insurer had filed and (2) a bad faith claim filed by insured. The court agreed to transfer the coordinated cases to be...Read More >>
September 2, 2012
SEPTEMBER 2012 BAD FAITH CASES: CARRIER MAY ASSERT SUIT LIMITATION CLAUSE AS A DEFENSE TO BAD FAITH CLAIM WHERE SUIT IS NOT BASED ON CARRIER’S DECEPTION AS TO THE APPLICABILITY OF THOSE LIMITATIONS; USE OF EXPERT NOT BAD FAITH (Western District)
In Palmisano v. State Farm Fire & Cas. Co., the court heard a carrier’s motion to dismiss the insureds’ complaint alleging breach of contract and bad faith damages. The claim stemmed from the carrier’s refusal to cover damages sustained to the foundation of the insureds’ home. In October of 2010, the insureds noticed damage...Read More >>
September 2, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT DENIES CARRIER’S POST-TRIAL MOTION SEEKING NEW TRIAL ON INSUREDS’ BAD FAITH CLAIM (Philadelphia Court of Common Pleas)
In Egan v. USI Mid-Atlantic, Inc., the court heard post-trial motions filed by parties to an ongoing insurance fraud suit. With respect to the bad faith issue, the carrier, a holding company and insurer, argued that the Court erred by denying a directed verdict on the insured’s claim for delay in receiving stacked benefits...Read More >>
September 2, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT CONSTRUES AMBIGUOUS CHOICE OF UIM BENEFITS IN FAVOR OF INSURED, BUT RULES THAT CARRIER’S TENDER OF LOWER AMOUNT WAS NOT IN BAD FAITH BECAUSE OF THE INSURED’S UNCLEAR RESPONSE ON POLICY SELECTION FORM (Philadelphia Federal)
In Olender v. Nat’l Cas. Co., the court heard cross-motions for summary judgment stemming from the carrier’s denial of benefits under the insured’s under insured motorist (“UIM”) policy. The insured was the owner of an automotive garage and purchased a UIM policy through his company. However, when originally selecting his desired UIM coverage on...Read More >>
September 2, 2012
SEPTEMBER 2012 BAD FAITH CASES: COURT DISMISSES INSURED’S BAD FAITH CLAIM BECAUSE CARRIER’S EXPLANATION OF DAMAGES AND “INDEPENDENT ADJUSTER” TITLE GIVEN TO CARRIER’S EMPLOYEE DID NOT AMOUNT TO BAD FAITH (Western District)
In Timothy v. State Farm Fire & Cas. Co., the court heard a carrier’s motion to dismiss several of its insureds’ claims stemming from a dispute over damages caused to the insureds’ home by a wind and hail storm. After being notified of the damage, the carrier sent its Independent Adjuster to inspect the...Read More >>
August 22, 2012
AUGUST 2012 BAD FAITH CASES: COURT REFUSES TO BIFURCATE BREACH OF CONTRACT AND BAD FAITH PROCEEDINGS DUE TO CONSIDERABLE OVERLAP BETWEEN CAUSES OF ACTION (Western District)
In Craker v. State Farm Mut. Auto. Ins. Co., the court heard the carrier’s motion in limine to bifurcate the insured’s breach of contract and bad faith actions. This case stemmed from the carrier’s denial of the insured’s claim for Underinsured Motorist (“UIM”) benefits under its policy. The court had already denied the carrier’s...Read More >>
August 22, 2012
AUGUST 2012 BAD FAITH CASES: COURT REJECTS MOTION FOR RECONSIDERATION (Philadelphia Federal)
In A.P. Pino & Assocs. v. Utica Mut. Ins. Co., the court heard an insured’s motion to reconsider the court’s denial of its declaratory judgment, policy reformation and bad faith claims against its insurance carrier, which denied coverage under the insured’s Errors and Omissions (E&O) policy. A summary of that case and the relevant...Read More >>
August 20, 2012
AUGUST 2012 BAD FAITH CASES: COURT ADOPTS MAGISTRATE R&R, HOLDING THAT LIMITATIONS PERIOD CONTAINED IN POLICY CONTROLS AND THAT SUIT WAS TIME-BARRED, DESPITE PA STATE LAW PROVIDING LONGER TIME PERIOD (Middle District)
In Estate of Gorg v. Great Am. Ins. Co., the parties disputed whether a provision in an insurance policy requiring that a claim under the insured’s policy must be brought within three years is controlling, despite a four-year Pennsylvania statute of limitations for breach of contract suits. This dispute arose as a part of...Read More >>
August 20, 2012
AUGUST 2012 BAD FAITH CASES: CARRIER’S MOTION TO DISMISS DENIED BECAUSE SUIT ULTIMATELY WENT BEYOND SOLELY AN APPRAISAL (Philadelphia Federal)
In Bernstein v. Nationwide Mut. Fire Ins. Co., the court heard a carrier’s motion to dismiss filed in response to an insured’s initial action for appraisal. The suit stemmed from a windstorm that severely damaged the insured’s property. A public adjuster valued the damage at $199,279.94, but the carrier sent the insured a check...Read More >>
August 20, 2012
AUGUST 2012 BAD FAITH CASES: COURT VIEWS BAD FAITH CLAIM AS SEPARATE FROM BREACH OF CONTRACT CLAIM ON BASIS OF DUTY TO INVESTIGATE EVEN IF NO COVERAGE DUE UNDER CONTRACT (Philadelphia Federal)
In Gold v. State Farm Fire & Cas. Co., the court heard a carrier’s motion to dismiss its insureds’ complaint for breach of contract and bad faith. The case arose out of two claims for benefits that the insureds’ filed after their home suffered water damage in 2009 and 2010. After the 2009 occurrence,...Read More >>
August 20, 2012
AUGUST 2012 BAD FAITH CASES: THIRD CIRCUIT AFFIRMS DENIAL OF BAD FAITH DAMAGES, DESPITE UPHOLDING BREACH OF CONTRACT AWARD, BECAUSE THE CARRIER’S INVESTIGATION AND SUBSEQUENT DENIAL OF COVERAGE WERE REASONABLE (Third Circuit)
In Post v. St. Paul Travelers Ins. Co., the court heard cross-appeals stemming from the District Court’s partial grant of summary judgment in which it denied the insured’s bad faith claim, but simultaneously awarded the insured damages for breach of contract. The facts of this case are complex and discussed comprehensively in the Third...Read More >>
August 7, 2012
AUGUST 2012 BAD FAITH CASES: COURT PERMITS BAD FAITH CLAIM TO PROCEED SOLELY AS TO THEORY THAT CARRIER MADE UNNECESSARY DOCUMENT REQUESTS TO DELAY THE PAYMENT OF INSURED’S UIM BENEFITS (Middle District)
In Schlegel v. State Farm Mut. Auto. Ins. Co., the court heard a carrier’s motion to dismiss an amended complaint by which an insured couple sought to compel the payment of Underinsured Motorist (“UIM”) benefits under its policy. The insureds in this case sustained injuries after an uninsured motorist crossed in front of them...Read More >>
August 7, 2012
AUGUST 2012 BAD FAITH CASES: MIDDLE DISTRICT REJECTS RECENT EASTERN DISTRICT HOLDING THAT BAD FAITH CLAIMS ARE NOT ASSIGNABLE AND PERMITS ASSIGNMENT OF BAD FAITH CLAIMS TO RECOVER PUNITIVE DAMAGES, COUNSEL FEES AND INTEREST UNDER §8371 (Middle District)
In Wolfe v. Allstate Prop. & Cas. Ins. Co., the court heard a carrier’s motion to dismiss filed in opposition to an assignee’s bad faith and Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) suit. The case arose from a car accident caused by the carrier’s insured, who was under the influence at the...Read More >>
August 3, 2012
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...Read More >>
August 1, 2012
AUGUST 2012 BAD FAITH CASES: COURT GRANTS CARRIER’S MOTION TO PRECLUDE EVIDENCE OF POLICY’S UIM LIMITS AND CLAIMS HANDLING BECAUSE INSURED’S UIM SUIT DID NOT INCLUDE BAD FAITH COUNT (Western District)
In Schwendinger-Roy v. State Farm Mut. Auto. Ins. Co., the court heard a carrier’s motion in limine in connection with an underinsured motorist (“UIM”) benefits claim. The underlying case resulted from a car accident in which the insureds’ daughter was injured. After recovering the limits of the negligent driver’s policy, the insureds sought additional...Read More >>
August 1, 2012
AUGUST 2012 BAD FAITH CASES: COURT RULES THAT INSURED’S BAD FAITH AND BREACH OF CONTRACT CLAIMS ARE PRECLUDED BECAUSE DEFAULT JUDGMENT WAS PREVIOUSLY ENTERED IN UTAH COURT (Philadelphia Federal)
In Lara v. INEX, the court heard a carrier’s motion for summary judgment in opposition to bad faith and breach of contract claims filed by the insured’s assignee. The claim arose from an underlying suit stemming from a car accident in which the assignee was injured by a driver who left the insured’s nightclub...Read More >>
July 30, 2012
JULY 2012 BAD FAITH CASES: COURT RULES THAT BAD FAITH COUNT SHOULD NOT PROCEED TO DISCOVERY BECAUSE CARRIER WAS NOT REQUIRED TO INDEMNIFY INSUREDS (Middle District)
In Borough of Moosic v. Darwin Prof’l Underwriters, Inc., the court heard a carrier’s motion to dismiss filed in response to an insured’s complaint seeking declaratory judgment and bad faith damages. The case stemmed from an underlying civil rights action between an aggrieved couple and the Pennsylvania municipality that allegedly violated their freedom of...Read More >>
July 26, 2012
JULY 2012 BAD FAITH CASES: COURT PERMITS CHIROPRACTOR’S DEFAMATION COUNT TO PROCEED, BUT DECLINES TO ASSERT SUPPLIMENTAL JURISDICTION OVER BAD FAITH CLAIM (Philadelphia Federal)
In Schatzberg v. State Farm Mut. Auto. Ins. Co., the court heard a carrier’s motion to dismiss a chiropractor’s six-count complaint, which alleged (1) defamation; (2) invasion of privacy; (3) violations of the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”); (4) bad faith; and (5)–(6) RICO violations. The case stemmed from a series of...Read More >>
July 25, 2012
JULY 2012 BAD FAITH CASES: COURT RULES THAT POLICY LANGUAGE, NOT CARRIER’S INITIAL REACTION TO A CLAIM PRIOR TO INVESTIGATION, CONTROLS THE INSURED’S BAD FAITH CLAIM; SUBCONTRACTOR WORK SUBJECT TO EXCLUSION AS WELL (Philadelphia Federal)
In Neshaminy Constructors, Inc. v. Fed. Ins. Co., the court heard cross motions for summary judgment filed by an insured general contractor and its insurance carrier. The insured claims that the carrier breached its contract and denied coverage under the policy in bad faith. The case stems from bridge work performed by the insured’s...Read More >>
July 25, 2012
JULY 2012 BAD FAITH CASES: NO BAD FAITH WHERE PRIOR ACTS POLICY DID NOT COVER INSURED’S ACTIONS BEFORE RETROACTIVE DATE IN POLICY; REASONABLE EXPECTATIONS DOCTRINE NOT APPLICABLE TO COMMERCIAL INSURED (Philadelphia Federal)
In A.P. Pino & Assocs. v. Utica Mut. Ins. Co., the court heard a carrier’s motion for summary judgment filed in response to an insured’s claims for declaratory judgment, reformation of its policy and bad faith in connection with its carrier’s handling of coverage under an errors and omissions (“E&O”) policy. The insured is...Read More >>
July 23, 2012
JULY 2012 BAD FAITH CASES: ATTEMPT TO NEGOTIATE A LOWER COST WITH THE INSURED’S GENERAL CONTRACTOR WAS NOT IN BAD FAITH ALTHOUGH IT DELAYED THE RESOLUTION OF THE INSURED’S CLAIM (Middle District)
In Dameshek v. Encompass Ins. Co. of Am., the court heard a carrier’s motion for summary judgment. The case stemmed from a fire in the insureds’ home. After the incident, the insureds sought coverage under their policy with the carrier. The policy provided for Additional Living Expenses (“ALE”) to compensate the insureds for living...Read More >>
July 20, 2012
JULY 2012 BAD FAITH CASES: COURT STAYS BAD FAITH CLAIMS PENDING UIM CLAIM (Philadelphia Federal)
In Moninghoff v. Tillet, the court heard a carrier’s motion to stay an insured’s bad faith claims until the accompanying underinsured motorist (“UIM”) claims were disposed. The court granted the carrier’s motion and stayed the insured’s bad faith claims until the UIM claim was addressed. Specifically, the court reasoned that UIM claims require a...Read More >>
July 18, 2012
JULY 2012 BAD FAITH CASES: COURT DISMISSES SUBROGEE’S BAD FAITH ACTION AS TIME-BARRED, BUT ALLOWS BREACH OF CONTRACT ACTION TO PROCEED BECAUSE THE INSURED HAD NO DUTY TO ALERT CARRIER OF LAWSUIT AFTER ITS CARRIER DISCLAIMED COVERAGE (Philadelphia Federal)
In Lloyd’s London v. United Fin. Cas. Co., the court heard a carrier’s motion to dismiss a bad faith and breach of contract action brought by an insurer acting (1) as the assignee of the assignor-insured and (2) the subrogee of an insured shipping company whose goods were damaged in the underlying accident. The...Read More >>
July 18, 2012
JULY 2012 BAD FAITH CASES: COURT DISMISSES INSURED’S SECOND SUIT FOR BAD FAITH UNDER DOCTRINE OF RES JUDICATA (Philadelphia Federal)
In D’Orazio v. Hartford Underwriters Ins. Co., the court heard the carrier’s motion to dismiss the insured’s suit for breach of contract and bad faith. The suit arose from the carrier’s denial of first-party injury coverage under the insured’s automobile policy. The insured previously filed a similar suit against the carrier for bad faith...Read More >>
July 18, 2012
JULY 2012 BAD FAITH CASES: COURT GRANTS CARRIER’S MOTION TO RECONSIDER DISCOVERY ORDER IN FAVOR OF INSURED BECAUSE THE THIRD CIRCUIT DISFAVORS DISCOVERY OF SIMILAR CLAIMS EVIDENCE IN BAD FAITH LITIGATION (Western District)
In Zettle v. American National Property & Casualty Co., the court ruled on a motion to reconsider part of the court’s May 7, 2012 order which directed the carrier to produce to the insured certain claims files relating to underinsured and uninsured motorist claims. The motion arose from a bad faith action that the...Read More >>
July 17, 2012
JULY 2012 BAD FAITH CASES: COURT DISMISSES BAD FAITH COMPLAINT AS CONCLUSORY AND REMANDS CASE FOR LACK OF PROPER AMOUNT IN CONTROVERSY (Middle District)
In Sypeck v. State Farm Mut. Auto. Ins. Co., the court heard a carrier’s motion to dismiss an insured’s claim for bad faith and breach of contract. The suit stemmed from a 2007 car accident which left the insured severely and permanently injured. The negligent driver who caused the accident had a $100,000 bodily...Read More >>
July 13, 2012
JULY 2012 BAD FAITH CASES: COURT DISMISSES BAD FAITH ACTION WITH PREJUDICE AFTER INSUREDS FAILED TO JOIN NECESSARY PARTY (Philadelphia Federal)
In Cummings v. Allstate Ins. Co., the court heard a carrier’s motion to dismiss an action for breach of contract and bad faith alleged by its insured. The case stemmed from an injury that the decedent-insured sustained after the carrier denied benefits for a damaged floor, which was later repaired by the insureds’ nephew....Read More >>
July 10, 2012
JULY 2012 BAD FAITH CASES: COURT DISMISSES BAD FAITH COUNTERCLAIM AFTER GRANTING SUMMARY JUDGMENT TO CARRIER ON COVERAGE ISSUES (Philadelphia Federal)
In Markel Insurance Company v. Young, the court heard cross-motions for summary judgment stemming from an underlying negligence claim against the insured day care facility. The underlying suit arose when an employee of the insured was injured at work. When the insured filed a claim for indemnification and defense, the carrier refused and filed...Read More >>
July 10, 2012
JULY 2012 BAD FAITH CASES: COURT DENIES LEAVE TO AMEND PLEADINGS BECAUSE ATTORNEY THAT ALLEGEDLY ACTED IN BAD FAITH WAS NOT AN “INSURER” (Philadelphia Federal)
In Zenith Ins. Co. v. Wells Fargo Ins. Servs. of Pa., Inc., the court heard a motion by the insured party, co-defendant Glasbern, Inc., for leave to file an amended answer and counterclaim against its workers’ compensation policy carrier, the original claimant. This motion arose within a suit filed by the carrier against the...Read More >>
July 6, 2012
JULY 2012 BAD FAITH CASES: COURT RULES THAT CARRIER’S ALLEGED MISREPRESENTATION OF POLICY LIMITS WARRANTS DENIAL OF ITS MOTION TO DISMISS (Middle District)
In Stricker v. State Farm Mut. Auto. Ins. Co., a carrier filed a motion to dismiss its insured’s claim for the alleged bad faith denial of insurance benefits. The case arose from an accident involving a car in which the insured was a passenger. After sustaining injuries as a result of the accident, the...Read More >>
July 6, 2012
JULY 2012 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT TO CARRIER WHERE DELAY WAS ATTRIBUTABLE TO INSURED’S ATTORNEY AND NOT CARRIER (Philadelphia Federal)
In Chemij v. Allstate Insurance Company, the court heard competing motions for summary judgment arising from allegations of bad faith in the handling of the insured’s underinsured motorist claim (“UIM”). The insured’s claim began when she was injured by a school bus operated by a local school district. After several attempts to return to...Read More >>
July 6, 2012
JULY 2012 BAD FAITH CASES: COURT GRANTS INSURED LEAVE TO AMEND CONCLUSORY ALLEGATIONS CONTAINED IN BAD FAITH COMPLAINT (Middle District)
In Cacciavillano v. Nationwide Ins. Co. of Am., the insured brought bad faith and breach of contract claims against its carrier after the insurer denied coverage for the insured’s allegedly stolen motorcycle. The carrier moved to dismiss the complaint as conclusory because the insured did not provide any support for its claim of bad...Read More >>
June 29, 2012
JUNE 2012 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT TO CARRIER BECAUSE SUBMISSION OF CLAIMS TO A PEER REVIEWER AND USE OF MULTIPLE ATTORNEYS DOES NOT AMOUNT TO BAD FAITH CONDUCT (Philadelphia Federal)
In Watson v. Nationwide Mut. Ins. Co. of N. Am., the court heard a carrier’s motion for summary judgment after its insured sued for breach of contract and bad faith. The insured originally filed suit in the Lancaster County Court of Common Pleas, but the carrier removed and filed a motion to dismiss, which...Read More >>
June 29, 2012
JUNE 2012 BAD FAITH CASES: COURT REFUSES TO ADOPT PARTIES’ CONTENTIONS DUE TO FACTUAL DISPUTE WITH RESPECT TO VALUE OF INSUREDS’ DAMAGES AND BAD FAITH CLAIMS (Middle District)
In Boyer v. First Am. Title Ins. Co., the insureds filed a motion for summary judgment against their title insurance carrier from which the insureds had purchased a policy to cover a Tioga County property. The suit stemmed from a 2008 natural gas lease through which the insureds permitted the exploration and extraction of...Read More >>
June 14, 2012
JUNE 2012 BAD FAITH CASES: APPELLATE COURT AFFIRMS SUMMARY JUDGMENT TO CARRIER BECAUSE ENTRUSTMENT EXCLUSION APPLIES TO REAL PROPERTY (Third Circuit)
In 3039 B St. Assocs. v. Lexington Ins. Co., the Third Circuit heard an appeal from the district court’s grant of summary judgment to the carrier in a dispute over the coverage of stolen property. The case arose from the theft of several radiators from the insured’s warehouse. After the carrier denied coverage on...Read More >>
June 14, 2012
JUNE 2012 BAD FAITH CASES:COURT DENIES CARRIER’S SUMMARY JUDGMENT WITH RESPECT TO DELAY IN INVESTIGATING INSURED’S AVAILABLE FIRST-PARTY BENEFITS, THE ABSENCE OF WHICH TRIGGERED AWARD OF PIP BENEFITS TO INSURED (Philadelphia Federal)
In Platt v. Fireman’s Fund Ins. Co., the carrier filed a motion for summary judgment seeking to resolve allegations of bad faith and breach of contract in its handling of a claim against its named insured. The suit stemmed from a car accident in which the carrier’s named insured struck a woman with his...Read More >>
June 14, 2012
JUNE 2012 BAD FAITH CASES: SERVING RULE TO FILE A COMPLAINT ON WRIT OF SUMMONS NOT BAD FAITH; CLAIMS HANDLING NOT UNREASONABLE UNDER CIRCUMSTANCES (Middle District)
In Fabrikant v. State Farm Fire & Casualty Co., the court ruled for a carrier that had filed a motion for summary judgment in opposition to the insured’s breach of contract, bad faith, and Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) claims. The insured originally filed his complaint in the Lackawanna County Court...Read More >>
June 14, 2012
JUNE 2012 BAD FAITH CASES: STATUTE OF LIMITATIONS DID NOT COMMENCE WHEN CARRIER SENT RESERVATION OF RIGHTS, BUT WHEN CARRIER TENDERED UNEQUIVOCAL DENIAL OF COVERAGE TO THE INSURED (Western District)
In Wiseman Oil Co. v. TIG Ins. Co., the insured brought suit against its carrier seeking a declaratory judgment as to the carrier’s duty to defend, alleging breach of contract claims and statutory bad faith. The carrier thereafter filed a motion for judgment on the pleadings. The original suit arose from the government’s 1997...Read More >>
June 14, 2012
JUNE 2012 BAD FAITH CASES: COURT RULES THAT STATE BAD FAITH CLAIMS ARE PREEMPTED BY THE FEDERAL EMPLOYEES HEALTH BENEFITS ACT (“FEHBA”) (Middle District)
In Pellicano v. Blue Cross Blue Shield Ass’n, the insured, a retired federal employee, filed objections to the Magistrate’s Report and Recommendation (“R&R”), which granted a motion to dismiss to the insurer and the U.S. office of Personnel Management (“OPM”). The insured’s bad faith claim arose from the processing of his application for medical...Read More >>
June 14, 2012
JUNE 2012 BAD FAITH CASES: COURT GRANTS CARRIER’S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF CLAIMS HANDLING IN BREACH OF CONTRACT BECAUSE INSURED’S BAD FAITH CLAIM WAS DENIED ON SUMMARY JUDGMENT (Western District)
In Seto v. State Farm Ins. Co., the court heard a carrier’s motion in limine to exclude evidence of its bad faith, including its claims-handling, investigations and handling of coverage. The suit arose after two fires destroyed the insureds’ home in 2009. After the insured parties sued the carrier, alleging bad faith and breach...Read More >>
June 14, 2012
JUNE 2012 BAD FAITH CASES: BAD FAITH CLAIM CAN PROCEED WHERE INFERENCE OF FAILURE TO INVESTIGATE; PARTY CONSIDERED INSURER EVEN THOUGH NOT PRIMARILY NAMED AS INSURER ON POLICY (Philadelphia Federal)
In Simmons v. Trumbull Ins. Co., the court addressed an insured’s breach of contract and bad faith claims stemming from the denial of benefits under her automobile policy. The case arose from a car fire that caused substantial damage to the insured’s car. After promptly reporting her loss to the carriers, the insured’s claim...Read More >>
June 14, 2012
JUNE 2012 BAD FAITH CASES: COURT RULES THAT CARRIER’S DENIAL OF CLAIM BASED ON UPON SINGLE MEDICAL EXPERT RAISES INFERENCE OF BAD FAITH SUFFICIENT TO DEFEAT MOTION TO DISMISS (Middle District)
In Goshorn v. Westfield Ins. Co., the insured brought breach of contract and bad faith allegations against her automobile insurer for denying underinsured motorist (“UIM”) benefits. In 2009, the insured was involved in a car accident with a third party, sustaining injuries that required surgery to correct. The insured settled with the third party...Read More >>
May 31, 2012
MAY 2012 BAD FAITH CASES: COURT DISMISSES CLAIMS AGAINST PARENT OF CARRIER, BUT DECLINES COLORADO RIVER ABSTENTION BECAUSE INSURED’S FEDERAL AND STATE CLAIMS DIFFER (Middle District)
In Hyjurick v. Commonwealth Land Title Insurance Co. and Fidelity National Financial, Inc., the court heard a carriers’ motion to dismiss bad faith and consumer protection claims brought by the insured party. The case stemmed from the carriers’ conduct in delaying affirmation or denial of the insured’s claim, which arose from issues related to...Read More >>
May 31, 2012
MAY 2012 BAD FAITH CASES: BAD FAITH CLAIM DISMISSED WITHOUT PREJUDICE, SUGGESTING IF INSURED IS AWARDED DAMAGES FOR BREACH OF CONTRACT, SHE IS UNLIKELY HAVE OTHERS CLAIMS AGAINST THE CARRIER (Philadelphia Federal)
In Cobb v. State Farm Ins. Co., the court heard a carrier’s motion to dismiss the insured’s amended complaint. The complaint alleged breach of contract and bad faith against the carrier. The breach of contract count actually detailed a claim for violation of the carrier’s covenant of good faith and fair dealing, prompting the...Read More >>
May 28, 2012
MAY 2012 BAD FAITH CASES: CONTRACT BAD FAITH CLAIM DISMISSSED, BUT STATUTORY CLAIM STILL VIABLE, AND COURT PERMITS IMPLIED WARRANTY CLAIMS (Philadelphia Federal)
In Nova Financial Holdings, Inc. v. Bancinsure, Inc., the court heard a carrier’s motion to dismiss several allegations related to its denial of the insured’s claim. The suit stemmed from a series of illegal transactions undertaken by the insured’s employees in 2009 and 2010. The insured argued that its policy with the carrier covered...Read More >>
May 28, 2012
MAY 2012 BAD FAITH CASES: COURT DISMISSES BAD FAITH COMPLAINT AS CONCLUSORY, ABSENT FACTUAL ALLEGATIONS INDICATING A LACK OF REASONABLE BASIS FOR CLAIM DENIAL (Philadelphia Federal)
In Miracle Temple Christian Academy v. Church Mutual Insurance Co., the court heard a carrier’s motion to dismiss the complaint of a religious institution that brought suit for breach of contract, bad faith, and common law fraud. The case stems from wind and water damage sustained by the insured party in early 2010. When...Read More >>
May 18, 2012
MAY 2012 BAD FAITH CASES: BAD FAITH CLAIM CANNOT BE RAISED AGAINST THIRD PARTY ADMINISTRATOR WHICH DID NOT TAKE ON ROLE OF AN INSURER (Philadelphia Federal)
In McLaren v. AIG Domestic Claims, Inc., the court dismissed an insured’s bad faith and breach of contract claims. The suit arose from an underlying negligence claim against the insured party, a nurse. She was insured by National Union Fire Insurance Company (NUFI). Although insured by NUFI, the claim against her was administered by...Read More >>
May 18, 2012
MAY 2012 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT FOR CARRIER WHERE “INHERENT RISK” EXCLUSION APPLIED TO FURNACE CONTAINING DEFECT KNOWN TO INSURED (Western District)
In U.S. Fire Ins. Co. v. Kelman Bottles, the court heard cross-summary judgment motions between an insured glass-maker and its two carriers to determine the scope of coverage. While the insured asserted breach of contract claims against both carriers, it alleged bad faith conduct against its “all-risk” insurer for denying coverage. The insured is...Read More >>
May 18, 2012
MAY 2012 BAD FAITH CASES: COURT REJECTS BURFORD ABSENTION AS BASIS FOR REMAND IN LIGHT OF CLAIMS SEEKING MONEY DAMAGES (Philadelphia Federal)
In Borough of Catasauqua v. Darwin Nat’l Assur. Co., the Eastern District of Pennsylvania court addressed an insured borough’s motion to remand, motion for declaratory judgment of rights under its policy, and allegations of bad faith against its carrier. The case stems from underlying copyright infringement litigation between an engineering firm and its builder...Read More >>
May 16, 2012
MAY 2012 BAD FAITH CASES: COURT CAN CONSIDER OTHER STATUTES IN FINDING BAD FAITH, CLAIMS HANDLING DELAYS IN BENEFIT CANNOT BE OBVIATED BY LATER PAYMENT, MANUAL ON LITIGATION AND LEGAL FEES ADMISSIBLE AND COURT NEEDS TO CONDUCT IN CAMERA REVIEW (Superior Court)
In Berg v. Nationwide Mut. Ins. Co., the Superior Court reversed the trial court’s grant of a directed verdict to the carrier on the insured’s bad faith claim. This was a first party claim against an insurer under Pennsylvania’s bad faith statute, among other claims. The suit stemmed from faulty repairs to the insured...Read More >>
May 7, 2012
MAY 2012 BAD FAITH CASES: COURT DENIES INSURED’S MOTION TO REMAND BASED ON REQUEST TO ABSTAIN FROM HEARING DECLARATORY JUDGMENT (Western District)
In Ackerman v. Geico General Insurance Company, the court heard the insured’s petition for remand after its carrier removed a declaratory judgment action to federal court. The case arose from a 2008 car accident during which the insured was serious injured. In January 2011, the insured allegedly requested that the carrier pay $100,000 in...Read More >>
May 1, 2012
MAY 2012 BAD FAITH CASES: COURT REMANDS FOR LACK OF JURISDICTION ON BASIS THAT CLAIMS CANNOT BE AGGREGATED AND CONCERN WITH A “REMOVE AND DISMISS” APPROACH BY THE CARRIER (Philadelphia Federal)
In Cruz v. State Farm Insurance Company, the court denied the carrier’s motion to dismiss and remanded the insureds’ bad faith claims to state court. The case was initially filed in Lehigh County’s Court of Common Pleas as a suit for underinsured motorist benefits by two accident victims insured by the carrier. The carrier...Read More >>
May 1, 2012
MAY 2012 BAD FAITH CASES: COURT RULES THAT BAD FAITH CLAIM MAY NOT BE PREDICATED UPON CARRIER’S CONDUCT IN DRAFTING AN INSURANCE POLICY, BUT REQUIRES DENIAL OF BENEFITS AFTER ISSUANCE OF THE POLICY (Middle District)
In Sewell v. Liberty Life Insurance Company, the court heard a motion to file an amended complaint by the executrix of the insured’s estate. The case arose from an accidental house fire that killed the insured party, prompting his estate to file suit when the carrier denied benefits under the insured’s accidental death insurance...Read More >>
May 1, 2012
MAY 2012 BAD FAITH CASES: THIRD CIRCUIT AFFIRMS RECISSION OF INSURANCE POLICY WHERE THE INSURED’S APPLICATION CONTAINED FRAUDULENT STATEMENTS, AND NO BAD FAITH IN CLAIMS HANDLING OR IN REASONABLENESS OF DENIAL (Third Circuit)
In Sadel v. Berkshire Life Insurance Company of America, the insured appealed a decision from the district court, which granted summary judgment to the carrier and rescinded the insured’s disability insurance policies. The original suit arose from bad faith allegations against the carrier stemming from its failure to pay benefits to the insured. The...Read More >>
May 1, 2012
MAY 2012 BAD FAITH CASES: COURT RULES THAT BAD FAITH DOES NOT EXIST IF CARRIER PREMISES DENIAL OF CLAIMS ON A LAPSE IN PAYMENT OF POLICY PREMIUMS, BUT LATER PAYS THE LIMITS OF THE POLICY PLUS INTEREST (Philadelphia Federal)
In Sicherman v. Nationwide Life Insurance Company, the court granted the carrier’s motion to dismiss the insured’s suit for violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), bad faith and breach of contract. The suit stemmed from the carrier’s initial denial of life insurance benefits under a policy held by...Read More >>
May 1, 2012
MAY 2012 BAD FAITH CASES: COURT RULES THAT BECAUSE FAULTY CONSTRUCTION WAS NOT AN “OCCURRENCE” TRIGGERING INSURED’S POLICY, BAD FAITH CLAIM WAS NOT POSSIBLE (Philadelphia Federal)
In Roman Mosaic and Tile Company v. Liberty Mutual Insurance Company, the court granted a carrier’s motion for summary judgment. The case arose from alleged faulty construction performed by the insured, a subcontractor. After his apartment sustained water damage in June 2011, the property owner received benefits from its insurer, which subsequently brought a...Read More >>
May 1, 2012
MAY 2012 BAD FAITH CASES: BAD FAITH CLAIM CANNOT BE ASSGINED, CONTINGENT FEE ATTORNEY NOT THIRD PARTY BENEFICIARY, CONTRACT CLAIM ASSIGNABLE BUT AGAINST PUBLIC POLICY TO DO SO (Philadelphia Federal)
In Feingold v. State Farm Mutual Auto Insurance Company, the court partially granted the carrier’s motion to dismiss a breach of contract and bad faith suit brought by the insured and his alleged assignee, who was his prior case but had been subsequently disbarred. The case stems from a motor vehicle accident that occurred...Read More >>
April 30, 2012
APRIL 2012 BAD FAITH CASES: COURT STRIKES INSURED’S BAD FAITH LIABILITY EXPERT REPORT AS UNTIMELY, BUT DENIES SUMMARY JUDGMENT ON BAD FAITH WHERE MATERIAL ISSUE ON WHETHER CLAIMS UNDERVALUED (Western District)
In Craker v. State Farm Mutual Auto Insurance Company, the court heard the carrier’s motion for summary judgment on the insureds’ bad faith claims. The original suit arose from a 2007 car accident in which the insureds were injured. After the carrier refused to pay an additional $200,000 in underinsured motorist coverage (“UIM”), offering...Read More >>
April 6, 2012
APRIL 2012 BAD FAITH CASES: COURT DENIES INSURED’S MOTION FOR RECONSIDERATION, WHICH REPEATED ARGUMENTS FROM THE PARTIES’ MOTION OPPOSING SUMMARY JUDGMENT (Middle District)
In Verdetto v. State Farm Fire and Casualty Company, the insured parties’ filed a motion for reconsideration of the court’s granting of the carrier’s motion for summary judgment. The action arose out of a coverage dispute between the insureds and their carrier after a fire at the insureds’ rental property. In 2008, the insureds...Read More >>
April 5, 2012
APRIL 2012 BAD FAITH CASES: COURT GRANTS CARRIER’S MOTION FOR SUMMARY JUDGMENT BECAUSE ISSUE PRECLUSION BLOCKED ASSIGNEES’ UNDERLYING BREACH OF CONTRACT CLAIM AND THERE WAS NO BREACH OF COMMON LAW DUTY OF GOOD FAITH AND FAIR DEALING (Philadelphia Federal)
In Grant v. State Farm Fire & Casualty, the court granted the carrier’s motion for summary judgment stemming from a breach of contract, breach of duty of good faith and fair dealing and fraud claims assigned by the putative insureds to the underlying plaintiff. The original suit arose from a sexual assault that occurred...Read More >>
March 19, 2012
MARCH 2012 BAD FAITH CASES: FEDERAL DISTRICT COURT RULES THAT BAD FAITH CLAIMS NOT ASSIGNABLE TO THIRD PARTIES
In Feingold v. Liberty Mutual Group, the court issued an opinion of potentially broad impact. On what appears as an unfavorable factual scenario for the assignee of a statutory bad faith claim, the court held that as a general rule bad faith claims under 42 Pa.C.S. § 8371 are not assignable by the insured....Read More >>
March 18, 2012
MARCH 2012 BAD FAITH CASES: COURT REFUSES TO REMAND EVEN WHERE PLAINTIFF STIPULATES HER CLAIM WOULD NOT EXCEED $75,000 (Philadelphia Federal)
In Morris v. Banker’s Life & Casualty Company, the court heard an insured’s motion to remand her action to state court. The motion stemmed from a breach of contract and bad faith action brought after the carrier failed to pay life insurance benefits pursuant to the insured’s policy. After filing the suit in the...Read More >>
March 18, 2012
MARCH 2012 BAD FAITH CASES: COURT PERMITS CONSUMER PROTECTION CLAIM FOR MISFEASANCE TO PROCEED IN ABSENCE OF BAD FAITH CLAIM (Western District)
In Leary v. State Farm Fire & Casualty, the insureds brought a claim against their home insurance carrier under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), to which the carrier responded with a motion to dismiss. The claim stemmed from a fire that damaged the insureds’ residence in 2006. The damaged incurred...Read More >>
February 28, 2012
FEBRUARY 2012 BAD FAITH CASES: INSURED MAY RECOVER ATTORNEY’S FEES INCURRED IN DECLARATORY JUDGMENT ACTION ONLY IF IT CAN PROVE THAT THE CARRIER REFUSED TO DEFEND IN BAD FAITH (Western District)
In UPS Freight v. National Union Fire Insurance Co. and C.C. Eastern, Inc., the magistrate judge issued a report and recommendation (“R&R”) in a declaratory judgment action by an insured against its carrier. The action stemmed from an underlying negligence suit in state court. Specifically, the insured sought a declaration against both defendant carriers...Read More >>
February 28, 2012
FEBRUARY 2012 BAD FAITH CASES: FEDERAL COURT WILL NOT CONSIDER UIPA VIOLATIONS IN EVALUATION BAD FAITH OR UTPCPL CLAIMS (CONTRA THE SUPERIOR COURT) (Philadelphia Federal)
In Purcell v. State Farm Mutual Automobile Insurance Company, the court faced an insurance carrier’s motion to dismiss a complaint alleging bad faith and violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) brought by its insured. The claim stemmed from a car accident in which one of the insured claimants was...Read More >>
February 28, 2012
FEBRUARY 2012 BAD FAITH CASES: COURT REFUSES REMAND; DISMISSES BAD FAITH ALLEGATIONS AS CONCLUSORY, WITH LEAVE TO AMEND COMPLAINT (Middle District)
In Schlegel v. State Farm Mutual Automobile Insurance Company, the court ruled upon a carrier’s motion to dismiss a complaint that seeks to compel underinsured motorist (“UIM”) benefits pursuant to the insureds’ auto insurance contract. The complaint also alleged violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) and bad faith on...Read More >>
February 25, 2012
FEBRUARY 2012 BAD FAITH CASES: COURT DENIES CLASS CERTIFICATION IN BREACH OF CONTRACT CASE, PREVENTING CLASS-WIDE BAD FAITH ACTION, BUT PERMITS BAD FAITH ACTIONS TO PROCEED INDIVIDUALLY (Western District)
In West v. Cuna Mutual Insurance Society, the court decided a carrier’s motion to dismiss its insured’s complaint that alleged breach of contract and bad faith and sought class certification for both counts. The insured parties brought this action alleging wrongful denial and termination of credit disability benefits under policies held by the carrier....Read More >>
February 25, 2012
FEBRUARY 2012 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM GROUNDED IN CONCLUSORY ALLEGATIONS OF “LOW-BALLING”; REMANDS BREACH OF CONTRACT CLAIM (Philadelphia Federal)
In Smith v. State Farm Mutual Automobile Insurance Company, an insured driver sued her carrier for not adequately paying under her policy’s underinsured motorist provision (“UIM”). The suit alleged bad faith, violations of Pennsylvania’s consumer protection law and breach of contract. The carrier moved to dismiss all claims, except for the contract claim relating...Read More >>
February 25, 2012
FEBRUARY 2012 BAD FAITH CASES: COURT ALLOWS INSURED TO AMEND BAD FAITH COMPLAINT IN ORDER TO PLEAD THE EXISTENCE OF DIVERSITY JURISDICTION (Middle District)
In Kile v. Progressive Insurance Corporation, an insured brought suit against her carrier for breach of contract and bad faith in its handling of the insured’s underinsured motorist claim. However, the insured did not allege the court’s basis for jurisdiction over her claims. Additionally, the complaint did not allege claims pursuant to federal law...Read More >>
February 18, 2012
FEBRUARY 2012 BAD FAITH CASES: FEDERAL COURT DENIES NON-PARTY (INSURER) OBJECTIONS TO REINSURER’S RULE 45 SUBPOENA ISSUED IN CONNECTION WITH OUT OF STATE BAD FAITH CASE (Middle District)
In Allied World Assurance Company v. Lincoln General Insurance Company, the court addressed a subpoena requesting documents relating to a bad faith case proceeding in the Middle District of Florida. The underlying bad faith action was brought by the guardian of an accident victim, who was hit by a driver during the scope of...Read More >>
February 5, 2012
FEBRUARY 2012 BAD FAITH CASES: COURT RULES THAT COMPLAINT ALLEGES PLAUSIBILE MISREPRESENTATION AND BREACH OF FIDUCIARY DUTY CLAIMS (Middle District)
In Jones v. South Williamsport School District, the court examined a carrier’s motion to dismiss. After a failed appeal for health insurance coverage under an employer-sponsored insurance policy, the insured party filed suit for misrepresentation and breach of fiduciary duty against the carrier, who moved to dismiss the action. The court ruled that dismissal...Read More >>
February 1, 2012
FEBRUARY 2012 BAD FAITH CASES: COURT DISMISSES INSURED’S BAD FAITH CLAIM WITHOUT PREJUDICE, BUT ALLOWS SUIT TO PROCEED TO DISCOVERY ON BREACH OF CONTRACT COUNT (Philadelphia Federal)
In Blasetti v. Allstate Insurance Company, the court ruled upon a carrier’s motion for judgment on the pleadings in an action for breach of contract and bad faith. The suit stemmed from the carrier’s denial of insurance benefits under the insureds’ homeowner’s policy, after the insureds’ home sustained storm damages. Prior to alerting the...Read More >>
January 30, 2012
JANUARY 2012 BAD FAITH CASES: JUDGMENT GRANTED TO INSURANCE AGENTS BECAUSE INSURED FAILED TO PRODUCE AN EXPERT REPORT AND COULD NOT ESTABLISH WHAT DUTY WAS OWED AND BREACHED (Philadelphia)
In Randazzo v. National Penn Insurance Company, the court granted summary judgment to the defendants on the insured’s professional negligence and negligent misrepresentation claims. When the insured appealed, the court issued this opinion. It is not wholly clear from the recitation of the facts pleaded whether both sets of defendants were insurance agents and/or...Read More >>
January 22, 2012
JANUARY 2012 BAD FAITH CASES: BREACH OF FIDUCIARY DUTY CLAIM REDUNDANT WITH INSURED’S BAD FAITH AND BREACH OF CONTRACT CLAIMS;NEGLIGENCE CLAIM BARRED BY GIST OF ACTION DOCTRINE (Western District)
In Krugh v. State Farm Insurance Company, the court considered a carrier’s motion to dismiss an insured’s complaint. The complaint alleged bad faith, violations of the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), breach of contract, breach of fiduciary duty of good faith and fair dealing, and negligence. Addressing each count individually, the...Read More >>
January 17, 2012
JANUARY 2012 BAD FAITH CASES: FEDERAL COURT REFUSES TO REMAND BECAUSE THE INSURED COULD NOT PROVE WITH LEGAL CERTAINTY THAT THE AMOUNT IN CONTROVERSY WOULD NOT EXCEED $75,000 (Western District)
In Vinski v. State Farm Mutual Automobile Insurance Company, the court examined an insured’s motion to remand to state court for lack of subject matter jurisdiction. The case stemmed from the insured’s claim for under-insured motorist (“UIM”) benefits after a car accident. After the insured filed suit in state court, for the UIM benefits...Read More >>
January 16, 2012
JANUARY 2012 BAD FAITH CASES: NAMED CARIER NOT PROPER PARTY BECAUSE DID NOT UNDERWRITE POLICY; FAULTY WORKMANSHIP IS NOT AN “OCCURRENCE” SUFFICIENT TO TRIGGER COVERAGE (Middle District)
In L.R. Costanzo Company v. American Fire and Casualty Insurance Company, the court heard a defendant’s motion for summary judgment on the issue of whether it was a proper party to the suit. The suit commenced after the insured was sued for property damage upon conclusion of a project. As a result, the insured...Read More >>
January 16, 2012
JANUARY 2012 BAD FAITH CASES: SUMMARY JUDGMENT GRANTED BECAUSE ESTIMATES WERE OBJECTIVELY REASONABLE AND INSURED’S EXPERT REPORT NOT COMPETENT (Western District)
In Seto v. State Farm Insurance Company, the court heard a carrier’s motion for summary judgment in response to an insured’s claim for breach of contract and bad faith. The case arose from two fires that destroyed the insured’s home. The insured sought to recover under its homeowner’s insurance policy. After a year of...Read More >>
January 3, 2012
JANUARY 2012 BAD FAITH CASES: COURT PROVIDES WORK PRODUCT PROTECTION TO ADJUSTER’S MENTAL IMPRESSIONS, CONCLUSIONS AND OPINIONS (LACKAWANNA)
In Church of the Forgotten Souls v. NGM Insurance Company, the insured brought breach of contract and bad faith claims. At issue in this opinion is the insured’s seeking discovery of the insurer’s adjustment agent’s mental impressions, conclusions or opinions and whether this was protected from discovery under Pa.R.C.P. 4003.3. The issue was whether...Read More >>
January 3, 2012
JANUARY 2012 BAD FAITH CASES: CONTRACT STATUTE OF LIMITATIONS APPLIES UNLESS APPLICABLE CLAUSES IN A DISPUTED CONTRACT PROVIDE DIFFERENTLY (Philadelphia Federal)
In Leporace v. New York Life & Annuity, the court was faced with a carrier’s motion to dismiss an insured’s suit for breach of contract, declaratory judgment, and bad faith. In 1995, the insured purchased an insurance policy from the carrier. In early 1996, he suffered a traumatic event that caused emotional and mental...Read More >>
January 2, 2012
JANUARY 2012 BAD FAITH CASES: COURT DENIES MOTION TO DISMISS FOR FAILURE TO JOIN A NECESSARY PARTY, BUT RULES THAT PARTY MUST BE JOINED (Philadelphia Federal)
In Cummings v. Allstate Insurance Company, the court was faced with a carrier’s motion to dismiss for failing to join a necessary party. The case was brought by the estate of a decedent insured that died following surgery needed to correct injuries caused by a faulty floor. The insured alleges that a faulty floor,...Read More >>
January 2, 2012
JANUARY 2012 BAD FAITH CASES: MOTION TO COMPEL DISCOVERY OF RESERVE INFORMATION GRANTED, BUT REQUEST FOR DOCUMENTS RELATING TO COUNSEL DENIED (Western District)
In Craker v. State Farm Mutual Automobile Insurance Company, the court heard a motion to compel discovery related to an insured’s claim for underinsured motorist benefits (“UIM”). Specifically, the insured moves to compel the carrier to release documents related to reserve information and information regarding the attorney actions as an insurance adjuster. The court...Read More >>
January 2, 2012
JANUARY 2012 BAD FAITH CASES: MOTION TO DISQUALIFY DEFENSE COUNSEL DENIED – COUNSEL DID NOT RECEIVE INFORMATION RELATED TO BAD FAITH LITIGATION (Philadelphia Federal)
In Feingold v. Liberty Mutual Group, a bad faith action was raised in federal district court. The present issue is plaintiff’s motion to disqualify defense counsel in the federal action. The motion to disqualify had its roots in a claim made by the decedent-insured’s estate for uninsured motorist (“UM”) benefits under a policy with...Read More >>
December 30, 2011
DECEMBER 2011 BAD FAITH CASES SUPERIOR COURT AFFIRMS DENIAL OF BAD FAITH BECAUSE CARRIER RIGHTFULLY DELAYED INVESTIGATING CLAIM UNTIL KEY TESTIMONY AVAILABLE (Superior Court)
In Portside Investors, L.P. v. Northern Insurance Company, the Superior Court heard cross appeals from the Court of Common Pleas of Philadelphia County, which awarded the insured $1.2 million dollars following a non-jury trial. The insured argued that the court erred by finding for the carrier on its bad faith claim. The carrier’s cross-appeal...Read More >>
December 1, 2011
DECEMBER 2011 BAD FAITH CASES NO BAD FAITH WHERE MATERIAL BREACHES OF COOPERATION OBLIGATIONS AND REASONABLE TO INVESTIGATE ARSON (Middle District)
In Verdetto v. State Farm Fire and Casualty Company, the court was faced with a carrier’s motion for summary judgment on an insured’s breach of contract and bad faith claims. The suit arose from a fire that occurred at a property rented by the insured. At the time of the incident, the insured had...Read More >>
November 30, 2011
NOVEMBER 2011 BAD FAITH CASES JUDGMENT WHERE INSURED DID NOT SEND PREUMIUM DURING LIFETIME & MISREPRESENTED HEALTH INFORMATION ON APPLICATION (Middle District)
In Estate of Genovese v. AAA Life Insurance Company, the court was faced with a carrier’s motion for summary judgment to dispose of an insured’s claim seeking benefits under a life insurance policy. The case arises from a life insurance policy purchased by the decedent insured. In 2010, the carrier sent the insured a...Read More >>
November 29, 2011
NOVEMBER 2011 BAD FAITH CASES CARRIER’S CLAIMS MANUAL IS DISCOVERABLE AS IT IS PERTINENT TO INSURED’S BAD FAITH CLAIM (Philadelphia Federal)
In Platt v. Fireman’s Insurance Fund Company, the court was faced with an insured’s motion to overrule the carrier’s objection to discovery requests. Specifically, the insured sought to discover manuals that the carrier used to process its claims. The carrier objected on grounds that the discovery request was overly broad, burdensome, and irrelevant to...Read More >>
November 22, 2011
NOVEMBER 2011 BAD FAITH CASES BREACH OF CONTRACT AND BAD FAITH DISMISSED BECAUSE CARRIER HAD ALREADY PAID POLICY LIMITS (Philadelphia Federal)
In Holy Ghost Church of the Eastern Rite of Phoenixville, PA v. Church Mutual Insurance Company, the court was faced with a set of facts stemming from an insured’s duty to defend a claim against its carrier. The carrier moved to dismiss the action and the district court granted the motion, holding that the...Read More >>
November 21, 2011
NOVEMBER 2011 BAD FAITH CASES 3d CIRCUIT AFFIRMS DISMISSAL, FINDING THAT POLICY OCCURRENCE LIMITS ARE GOVERNED BY AGGREGATE MONETARY LIMITS WITHIN A GIVEN POLICY PERIOD (Third Circuit)
In Yellowbird Bus Company v. Lexington Insurance Company, the Third Circuit heard an appeal from the district court’s dismissal of an insured’s complaint. The insured is a transportation company whose bus collided with a tractor in July 2006. The numerous personal injury claims stemming from the incident have been resolved. This instant action involves...Read More >>
November 7, 2011
NOVEMBER 2011 BAD FAITH CASES THIRD CIRCUIT REVERSE ON CHOICE OF LAW RULES, & APPLIES PENNSYLVANIA LAW PROVIDE INSURED BENEFIT OF STACKING UNDERINSURED MOTORIST BENEFITS (Third Circuit)
In Amica Mutual Insurance Company v. Fogel, the Third Circuit faced an insured’s appeal from the Middle District of Pennsylvania.  The district court had granted summary judgment to the carrier on a bad faith claim and choice of law dispute, applying New Jersey law to the insured’s policy. In 2007, the insured purchased a...Read More >>
November 4, 2011
NOVEMBER 2011 BAD FAITH CASES BAD FAITH COULD EXIST EVEN IF SETTLEMENT OFFER MADE, THOUGH NOT IN THIS CASE; DISCUSSIONS WITH UNREPRESENTED WITNESS WERE NOT IMPROPER(Philadelphia Federal)
In CarCarey v. GEICO General Insurance Company, the court considered a carrier’s motion for summary judgment to dispose of an insured’s claim for breach of contract and bad faith.  The suit stemmed from an automobile accident in which the insured’s son was struck and killed by an unidentified driver while walking on the side...Read More >>
November 3, 2011
NOVEMBER 2011 BAD FAITH CASES AMBIGUOUS POLICY LANGUAGE AND CARRIER’S TWO MONTH DELAY IN PAYMENT OF CLAIMS ARE NOT ACTIONABLE FOR BAD FAITH (Philadelphia Federal)
In Mitch’s Auto Service Center v. State Automobile Mutual Insurance Company, the court adjudicated a carrier’s motion for summary judgment that sought to dispose of an insured’s breach of contract and bad faith claims.  The suit relates to a claim that the insured submitted under a commercial insurance policy after a vehicle at its...Read More >>
October 28, 2011
OCTOBER 2011 BAD FAITH CASES COURT DENIES AND GRANTS PORTIONS OF MOTION TO DISMISS BAD FAITH CLAIMS IN UM/UIM CONTEXT (Western District)
In Flaherty v. Allstate Property & Casualty Insurance Company, the court ruled upon a carrier’s motion to dismiss an insured’s breach of contract and bad faith claims.  The action stemmed from a 2008 car accident, during which the insured passenger suffered several injuries.  After the accident, the insured was unable to recall who was...Read More >>
October 25, 2011
OCTOBER 2011 BAD FAITH CASES NO MVFRL PREEMPTION; EMOTIONAL DISTRESS NOT ACTIONABLE (Philadelphia Federal)
In Watson v. Nationwide Mutual Insurance Company, the court was faced with a carrier’s motion to dismiss and strike an insured’s breach of contract and bad faith claims.  The suit arose from injuries sustained in a car accident that required medical treatment from several physicians.  The insured claimed that, under its policy, the carrier...Read More >>
October 25, 2011
OCTOBER 2011 BAD FAITH CASES VIOLATIONS OF THE PENNSYLVANIA UNFAIR INSURANCE PRACTICES ACT CANNOT SUPPORT BAD FAITH CLAIM (Philadelphia Federal)
In Watson v. Nationwide Mutual Insurance Company, the court was faced with a carrier’s motion to dismiss and strike an insured’s breach of contract and bad faith claims.  The suit arose from injuries sustained in a car accident that required medical treatment from several physicians.  The insured claimed that, under its policy, the carrier...Read More >>
October 17, 2011
OCTOBER 2011 BAD FAITH CASES COURT DENIES CARRIER’S MOTION TO DISMISS AND PERMITS DISCOVERY ON BAD FAITH CLAIMS, WHICH REQUIRE A FACT-INTENSIVE INQUIRY (Middle District)
In Zimmerman v. State Farm Mutual Automobile Insurance Company, the court was faced with a carrier’s motion to dismiss an insured’s bad faith allegations.  The case stems from a May 2010 car accident that caused the insured to suffer serious personal injuries, including a fractured fibula.   At the time of the accident, the insured...Read More >>
October 13, 2011
OCTOBER 2011 BAD FAITH CASES BAD FAITH STATUTE DOES NOT INCLUDE COMPENSATORY DAMAGES; COVENANT OF GOOD FAITH AND FAIR DEALING CLAIM NOT DISTINCT FROM CONTRACT CLAIMS (Philadelphia Federal)
In Cummings v. Allstate Insurance Co., the court granted the carrier’s motion to dismiss stemming from a claim that the insured sustained damages to its home and incurred consequential losses from its inability to use the property.  The insured also alleged bad faith and breach of covenant of good faith and fair dealing. In...Read More >>
October 12, 2011
OCTOBER 2011 BAD FAITH CASES THIRD CIRCUIT AFFIRMS DISMISSAL OF BREACH OF CONTRACT AND BAD FAITH ACTION, RELYING UPON POLICY’S EMPLOYEE EXCLUSION CLAUSE (Third Circuit)
In Brewer v. United States Fire Insurance Company, the Third Circuit heard an appeal from the district court’s dismissal of a breach of contract and bad faith action brought by an assignee of the insured.  The original suit stemmed from a 2006 car accident, during which the assignee, an employee of a delivery company,...Read More >>
October 11, 2011
OCTOBER 2011 BAD FAITH CASES COURT TREATS MOTION TO SEVER AND STAY AS A MOTION TO PHASE DISCOVERY; ADDRESSES DISCOVERY ON INSURER’S UIM FILE (Western District)
In Craker v. State Farm Mutual Automobile Insurance Company, the court was presented with an insured’s motion to compel discovery and a carrier’s motion to sever and stay a bad faith claim.  The parties were engaged in discovery during the pendency of these motions, which stem from a dispute over $200,000 in alleged underinsured...Read More >>
October 11, 2011
OCTOBER 2011 BAD FAITH CASES COURT ADDRESSES DISCOVERY ON INSURER’S UIM FILE, INCLUDING PRIVILEGE, WORK PRODUCT, ADVISE OF COUNSEL, LOGS (Western District)
In Craker v. State Farm Mutual Automobile Insurance Company, the court was presented with an insured’s motion to compel discovery and a carrier’s motion to sever and stay a bad faith claim.  The parties were engaged in discovery during the pendency of these motions, which stem from a dispute over $200,000 in alleged underinsured...Read More >>
October 10, 2011
OCTOBER 2011 BAD FAITH CASES APPEALS COURT UPHOLDS DAMAGES AWARD(Third Circuit)
In Spector v. Fireman’s Fund Insurance Co., the Third Circuit addressed the carrier’s appeal stemming from the district court’s award of damages to the insured.  The carrier had earlier won dismissal of the bad faith claim, as discussed in an earlier blog entry, which was not appealed by the insured. In 2000, the insured...Read More >>
October 4, 2011
SEPTEMBER 2011 BAD FAITH CASES COURT REJECTS CARRIER’S MOTION TO DISMISS BECAUSE ITS DENIAL OF DELAY DAMAGES WAS IMPROPER (Philadelphia Federal)
In Heebner v. Nationwide Insurance Enterprise, the court was faced with a carrier’s motion to dismiss, hinging upon whether insurance coverage for compensatory damages, provided under an uninsured/underinsured (UM/UIM) policy, includes delay damages. The case stems from a car accident that occurred in 1997 between the insured and a UM/UIM motorist.  The insured sued...Read More >>
October 3, 2011
SEPTEMBER 2011 BAD FAITH CASES COURT DENIES MOTION TO DISMISS AS INSURED SUFFICIENTLY ALLEGED IMPROPER DENIAL OF COVERAGE ON BASIS THAT SHE FAILED TO DISCLOSE MEDICAL CONDITION (Middle District)
In Wasko v. Coventry Health & Life Insurance Company, the court was faced with a carrier’s motion to dismiss, or in the alternative, for a more definite statement.  The case stemmed from the carrier’s denial of coverage for the insured’s back surgery.  In August 2008, the insured applied for health insurance.  The carrier issued...Read More >>
September 27, 2011
SEPTEMBER 2011 BAD FAITH CASES COURT MAINTAINS THAT INDEPENDENT CONTRACTOR’S ALLEGATIONS DO NOT STATE CAUSE OF ACTION UNDER PA BAD FAITH STATUTE (Philadelphia)
In Nantieh v. First Keystone Risk Retention Group, Inc., the trial judge trial issued an opinion to support his December 2, 2010 decision, which has been appealed.  The case stems from an accident that occurred in 2009, when a driver, operating a taxi as an independent contractor, suffered personal injuries in a car accident....Read More >>
September 26, 2011
SEPTEMBER 2011 BAD FAITH CASES COURT REJECTS INSURED’S CLAIM THAT CARRIER WAS ADVERSARIAL IN ITS INVESTIGATION (WESTERN DISTRICT)
In Schmitt v. State Farm Insurance Company, the Magistrate Judge’s Report and Recommendation was adopted by the District Court. The case arose in June 2008 from a water leak caused by a broken water pressure gauge in the insured’s basement.  After submitting its claim to the carrier, the insured began to move damaged items...Read More >>
September 25, 2011
SEPTEMBER 2011 BAD FAITH CASES BAD FAITH CLAIM DISMISSED BECAUSE CARRIER PROPERLY RELIED UPON LAWYER’S POTENTIAL LIABILITY TO DENY COVERAGE (WESTERN DISTRICT)
In Foster v. Westchester Fire Insurance Co., the court was faced with cross summary judgment motions stemming from the carrier’s denial of professional liability coverage.  The insured brought declaratory judgment, breach of contract, and bad faith claims against its carrier after being denied coverage for its alleged professional misconduct. In 1995, the insured drafted...Read More >>
September 24, 2011
SEPTEMBER 2011 BAD FAITH CASES COURT UPHOLDS SUMMARY JUDGMENT TO CARRIER BECAUSE IT THOROUGHLY INVESTIGATED A QUESTIONABLE INSURANCE CLAIM (THIRD CIRCUIT)
In 3039 B Street Associates, Inc. v. Lexington Insurance Co., the Third Circuit was faced with an appeal from the district court’s grant of summary judgment to the carrier.  In the initial action, the insured sought damages for bad faith after the carrier waited over a year to contact the insured’s maintenance employee in...Read More >>
September 20, 2011
SEPTEMBER 2011 BAD FAITH CASES COURT REJECTS EFFORT TO BIND EMPLOYER’S CARRIER TO COVER EMPLOYEE’S OTHERWISE UNCOVERED ACTS UNDER RESPONDEAT SUPERIOR THEORY (THIRD CIRCUIT)
In Kelly v. National Liability & Fire Insurance Company, the Third Circuit was faced with an appeal from the district court’s grant of summary judgment to the carrier.  In 2005, the claimant was involved in a car accident with a physical therapist employed by a home care company.  The employee was driving a personally...Read More >>
September 14, 2011
SEPTEMBER 2011 BAD FAITH CASES COURT REQUIRES COMMON LAW BAD FAITH CLAIM TO BE PLEADED AS PART OF BREACH OF CONTRACT CLAIM (Western District)
In Cicco v. State Farm Fire & Casualty Co., the court ruled upon a partial motion to dismiss by the carrier, which claimed that two counts of the insured’s three-count bad faith claim were redundant.  The insured originally sued the carrier for breach of contract, contractual bad faith, and statutory bad faith under Pennsylvania...Read More >>
September 6, 2011
SEPTEMBER 2011 BAD FAITH CASES COURT RULES FOR INSURED ON BREACH OF CONTRACT CLAIM, BUT FINDS THAT CARRIER’S NEGLIGENCE WAS NOT BAD FAITH (Philadelphia Federal)
In Moore’s Home Improvement, Inc. v. Nationwide Property & Casualty Insurance Co., the court was faced with breach of contract and bad faith claims that arose from the carrier’s denial of coverage for property damage at the insured’s place of business.  In early 2008, the insured returned to one of his warehouses to find...Read More >>
September 3, 2011
SEPTEMBER 2011 BAD FAITH CASES NO COVERAGE WHERE INSURED DID NOT RESIDE IN HOME; NO REASONABLE EXPECTATION OF COVERAGE WHERE INSURED MISLDED CARRIER (Philadelphia Federal)
In Mu’min v. Allstate Property & Casualty Insurance Co., the court was faced with cross-summary judgment motions stemming from the carrier’s alleged breach of contract and bad faith.  During 2009, the insured obtained a homeowner’s insurance policy for a newly purchased property.  At the time of purchase, the insured informed the carrier’s agent that...Read More >>
September 2, 2011
SEPTEMBER 2011 BAD FAITH CASES APPELLATE COURT AFFIRMS AWARD OF ATTORNEY’S FEES UNDER SECTION 1797 OF PENNSYLVANIA’S MOTOR VEHICLE FINANCIAL RESPONSIBILITY LAW (Superior Cout)
In Herd Chiropractic Clinic, P.C. v. State Farm Mutual Automobile Insurance Company, the court was faced with a carrier’s appeal from the trial court’s award of attorney’s fees to a chiropractor that had treated the insured.  The insured suffered injuries following a car accident and sought medical care, including chiropractic treatment.  Pursuant to §...Read More >>
September 2, 2011
SEPTEMBER 2011 BAD FAITH CASES INSURER’S MOTION TO DISMISS DENIED BECAUSE THE UNDERLYING TORT ALLEGATIONS FALL WITHIN THE SCOPE OF THE INSURED’S POLICY COVERAGE (PHILADELPHIA FEDERAL)
In Jager Management, Inc. v. Columbia Casualty, Co., the court was faced with declaratory judgment, breach of contract, and bad faith claims by an insured against its carrier, which denied its duty to defend the insured in an underlying negligence action.  The carrier moved the court to dismiss the insured’s claims. The insured is...Read More >>
August 31, 2011
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...Read More >>
August 30, 2011
AUGUST 2011 BAD FAITH CASESSTATE LAW BAD FAITH CLAIM PREEMPTED BY FEDERAL LAW UNDER ERISA (Western District)
In Harding v. Provident Life and Accident Insurance Company and Unum Group, the court was faced with the issue of whether a long-term disability plan qualified as an ERISA plan under federal law and therefore preempted the employee’s breach of contract, bad faith and unfair trade practices state law claims.  The insurer filed a...Read More >>
August 29, 2011
AUGUST 2011 BAD FAITH CASES COURT DISMISSED BAD FAITH CLAIM ON GROUNDS OF LACK OF PERSONAL JURISDICTION (Philadelphia Federal)
In Ryan v. Union Mutual Fire Insurance Company, the court was presented with a breach of contract and bad faith claim stemming from the insurer’s alleged underpayment of the carrier’s underinsured motorist claim.  The insurer, which is located in Vermont and only insures customers in Vermont, sought dismissal on the grounds of improper venue...Read More >>
August 28, 2011
AUGUST 2011 BAD FAITH CASES BAD FAITH CLAIM CAN PROCEED WHERE ISSUE OF INTENTIONAL NATURE OF INSURED’S ACT NOT CONCLUSIVELY ESTABLISHED BY COMPLAINT OR ASSAULT CONVICTION (Philadelphia Federal)
In Liberty Insurance Corp. v. Keck, the court was faced with competing motions stemming from an assault that occurred during a concert at Lincoln Financial Field.  On June 29, 2009, Keck was assaulted by the insured, Hickey, while attending a concert.  She sustained serious injuries.  She initially sued Hickey, the stadium operator, and the...Read More >>
August 21, 2011
AUGUST 2011 BAD FAITH CASES COURT REFUSED TO DISMISS BAD FAITH CLAIMED BASED UPON UIM COVERAGE IN COMMERCIAL FLEET POLICY; ALSO FINDING NONCOMFORMING WAIVER (Middle District)
In Douglas v. Discover Property & Casualty Insurance, the court was faced with cross summary judgment motions stemming from the injured party’s attempt to obtain underinsured motorist (“UIM”) benefits from the insurer.  The injured party was involved in a 2005 car accident and subsequently settled a claim with the third-party tortfeasor. At the time...Read More >>
August 16, 2011
August 2011 BAD FAITH CASES COURT FOUND THAT ISSUES WERE DISPUTED AND THUS SUBJECT TO DISCOVERY (Western District)
In Liberty Insurance Corporation v. PGT Trucking, Inc., and Sudbury Express, Inc., the court was faced with cross-motions stemming from a dispute over the insurer’s claims handling process and the insured’s self-administration of worker’s compensation claims.  The insurer initially challenged the insured’s practice of forcing its employees to sign conditional employment agreements and sought...Read More >>
August 15, 2011
AUGUST 2011 BAD FAITH CASES COURT FINDS ABSENCE OF BAD FAITH WHERE REASONABLE INVESTIGATION, EVEN AFTER FINDING INSURER’S COVERAGE POSITION WAS CORRECT TO BEGIN WITH (Philadelphia Federal)
In Enwereji v. State Farm Fire and Casualty Company, the insured brought a claim alleging that the insurer acted in bad faith by breaching its duty to pay benefits for a loss covered under the insured’s policy.  The policy covered “damaged ” of the insured’s property with “materials commonly used by the building trades...Read More >>
August 14, 2011
AUGUST 2011 BAD FAITH CASES THERE CAN BE NO BAD FAITH WHERE NO BENEFITS WERE DUE TO PLAINTIFF UNDER THE POLICY (Philadelphia Federal)
In Avicolli v. Government Employees Insurance Company, the court had determined that the insurance carrier had no duty to pay the plaintiff first party benefits under the insurance policy or Pennsylvania’s Motor Vehicle Financial Responsibility Law.  The plaintiff was a pedestrian and the defendants driver/owner had a New Jersey insurance policy.  That “lack of...Read More >>
August 13, 2011
AUGUST 2011 BAD FAITH CASES BRINGING DECLARATORY JUDGMENT ACTION NOT STATUTORY OR COMMON LAW CONTRACTUAL BAD FAITH (Philadelphia Federal)
In Principal Life Insurance Company v. Weiss, the insurer brought a declaratory judgment action seeking a ruling that life insurance policies were void or voidable.  The insured filed counterclaims, including a section 8371 bad faith claim and a contract based breach of the duty of good faith and fair dealing. While the court recognized...Read More >>
August 11, 2011
AUGUST 2011 BAD FAITH CASES THIRD CIRCUIT SAYS NO BAD FAITH POSSIBLE WHERE SOLE BASIS FOR CLAIM IS DENIAL OF COVERAGE AND CARRIER WAS CORRECT IN DENYING COVERAGE (THIRD CIRCUIT)
In Cozza v. State Farm Fire & Casualty Company, the carrier denied a claim under a homeowner’s policy based upon a subsurface water exclusion.  The insured alleged breach of contract and bad faith, asserting that a leak from the home’s plumbing system was not subject to the subsurface water exclusion.  The court found that...Read More >>
August 10, 2011
AUGUST 2011 BAD FAITH CASES MVFRL PREEMPTS BAD FAITH CLAIMS WHERE FACTS ALLEGE FALL WITHIN NARROW PURVIEW OF ITS TREATMENT SECTION, 1797(Philadelphia Federal)
In McWalters v. State Farm Mutual Insurance Company, the court was faced with the issue of whether Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL) pre-empted the plaintiffs’ bad faith claim under 42 Pa.C.S. § 8371.  After a thorough analysis addressing extensive case law on the subject, the court concluded that section 1797 of the...Read More >>
August 8, 2011
AUGUST 2011 BAD FAITH CASES UNSUPPORTED CONCLUSIONS PLEADED BY COUNSEL CANNOT MEET CLEAR AND CONVINCING STANDARD ON SUMMARY JUDGMENT (Philadelphia Commerce Court)
In Dawson v. Utica First Insurance Company, plaintiff’s seventh amended complaint included a statutory bad faith count.  The carrier brought a summary judgment motion.  The court observed that bad faith conduct required that plaintiff prove her case with clear and convincing evidence.  In this case, plaintiff offered no evidence, but rather relied upon the...Read More >>
August 6, 2011
AUGUST 2011 BAD FAITH CASES BAD FAITH CLAIM SUFFICIENT UNDER TWOMBLY TO WITHSTAND DISMISSAL; EXISTENCE OF BAD FAITH CLAIMS DOES NOT PRECLUDE RECOVERY OF COMPENSATORY DAMAGES (Western District)
In Pavlick v. Encompass Indemnity Insurance Company, the plaintiff was the wife and executrix of John Pavlick’s estate.  Defendant insurers sold the late Mr. Pavlick polices which included underinsured motorist (UIM) coverage. The decedent was killed when a car struck him in his front yard. The driver of that car lacked the personal assets...Read More >>
August 5, 2011
AUGUST 2011 BAD FAITH CASES INSURER’S MOTION TO DISMISS GRANTED, AS INSURED’S BAD FAITH CLAIM NOT SUFFICIENTLY FACTUAL TO CLEAR TWOMBLY THRESHOLD(Western District)
In Pfister v. State Farm Fire and Casualty Company, plaintiffs’ home suffered physical and structural damage due to a blocked shower drain. When they turned to State Farm, seeking coverage under their homeowners’ insurance policy, the insurer accepted the claim and issued the insured a payment of just over $16,000. Plaintiffs’ however made repeated...Read More >>
August 4, 2011
AUGUST 2011 BAD FAITH CASES NO BAD FAITH (1) WHERE DEFENSE NOT PROVIDED PENDING DECISION TO MEDIATE; (2) FOR BRING DECLARATORY JUDGMENT; OR (3) FOR RESERVING RIGHTS (Philadelphia Federal)
In MP III Holdings, Inc. v. The Hartford Casualty Insurance Company, the Eastern court granted Hartford’s motion for summary judgment with respect to the insured’s statutory claim of bad faith, finding that the insurer’s position with respect to indemnifying the insured from underlying lawsuits was reasonable. The insured sought such indemnification when it became...Read More >>
August 3, 2011
AUGUST 2011 BAD FAITH CASESJUDGE ORDERS IN CAMERA REVIEW OF INSURER’S LOSS RESERVES DOCUMENTATION AS POTENTIALLY RELEVANT TO INSURED’S BAD FAITH CLAIM (Philadelphia Federal)
In Mirarchi v. Seneca Specialty Insurance Company, the insured filed a claim with the defendant insurer after a fire damaged his pizzeria. After Seneca denied coverage, plaintiff sought to compel the insurer to produce un-redacted documentation of its claim investigation. Specifically, the information sought by the plaintiff concerned the defendant’s setting of loss reserves,...Read More >>
August 2, 2011
AUGUST 2011 BAD FAITH CASES COMPENSATORY DAMAGES NOT RECOVERABLE UNDER STATUTORY BAD FAITH CLAIM BUT ARE RECOVERABLE UNDER A BREACH OF CONTRACT BAD FAITH CLAIM (Philadelphia Federal)
In Cummings v. Allstate Insurance Company, the plaintiff, Barry Cummings, experienced a flood in his home, causing his floor to collapse. Cummings, who held a home owners insurance policy with Allstate, promptly alerted the insurer of the damage. Allstate sent out an adjuster to assess the extent of the insured’s loss and decided to...Read More >>
July 28, 2011
JULY 2011 BAD FAITH CASESPLAINTIFF ALLEGES TERMINATION OF LIFE INSURANCE CONSTITUTED BAD FAITH, BUT COURT DOES NOT GET TO MERITS AS CLAIM TIME BARRED (Middle District)
In Bariski v. Reassure America Life Insurance Company, a widowed plaintiff, Janice Bariski, brought a bad faith claim against the insurer after it terminated her late husband’s life insurance policy. The insurance policy was issued to plaintiff’s husband in 1990 and provided for a thirty day grace period in which late payments could be...Read More >>
July 27, 2011
JULY 2011 BAD FAITH CASESINSURED’S BAD FAITH CLAIM NOT PRE-EMPTED BY MOTOR VEHICLE FINANCIAL RESPONSIBILITY LAW WHERE THE REASONABLENESS OF THE INSURED’S MEDICAL TREATMENT NOT IN DISPUTE (Philadelphia Federal)
In Richter v. GEICO Indemnity Company, the plaintiff was involved in a car accident, totaling his Honda truck. He held an insurance policy with GEICO and submitted a claim for coverage of both the damage to his vehicle and his personal medical expenses. GEICO, however, denied the claim on the grounds that the particular...