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 car stuck, causing Plaintiff’s car to strike the catch fence along the race track. Two individuals were standing on the opposite side of the catch fence at the time of the crash. One individual suffered serious injuries, and the other died as a result of the accident. The injured individual and decedent’s estate brought suit against plaintiff. Plaintiff contacted the insurer, requesting the insurer provide plaintiff with a defense to the claims. The insurer declined coverage for plaintiff.

The insurer alleged the two individuals hit by plaintiff’s race car were “participants” at the time of the accident, and the insurance contract excluded coverage for bodily injury to any participant against another participant. The policy defined participant as including all persons “bearing duly and officially signed credentials and/or guest pit passes for the program.” Through its investigation of the facts, the insurer learned the two injured individuals purchased pit passes, signed releases forms, and wore arm bands designating their right to access the pit area of the Raceway. Based on these facts, it applied the exclusion and denied the claim. The court found this was a reasonable determination, and that plaintiff was not entitled to a defense or coverage under the existing policy issued to the Raceway. The record demonstrated defendant investigated the facts underlying plaintiff’s claims prior to the commencement of the personal injury actions and reasonably concluded there was no coverage for the claims. Therefore, defendant did not breach the contract, nor act in bad faith by refusing to defend plaintiff. The court granted defendant’s motion for summary judgment.

Date of Decision: March 28, 2013.

Lanigan v. T.H.E. Ins. Co., Civil Action No. 11250 of 2010, 2013 Pa. Dist. & Cnty. Dec. LEXIS 168 (Pa. County Ct. March 28, 2013) (Piccione, J.).