JANUARY 2009 BAD FAITH CASES MOTION TO DISMISS DENIED WHERE REASONABLE BASIS TO SUPPORT EXISTANCE OF INSURANCE CONTRACT (Middle District)

In Derocher v. Zurich American Insurance Company,  a bad faith claim arose after an employee of the insured  (“plaintiff”) was injured in an automobile accident while driving a vehicle owned by her employer, the insured.  The insured employer had  an auto insurance policy with  Universal.  This policy provided for underinsured or uninsured motorist benefits in the amount of one million dollars. The insurer also provided workers compensation coverage for the insured.  Sometime after the execution of this policy, Zurich (“insurer”) assumed control of Universal and began adjusting claims under Universal’s policies. 

The plaintiff was injured in an automobile accident  while driving a vehicle owned by her employer, the insured. The plaintiff suffered back injuries and had undergone numerous medical procedures in an effort to correct her injuries.  The other vehicle and driver  involved in the accident was uninsured.  The plaintiff pursued uninsured motorist benefits in accordance with the insured’s policy.

Following the accident, the insurer conducted an investigation of the plaintiff’s claims.  On September 2, 2004, the plaintiff proposed settlement of her claim for $375,000.  The insurer made no offer in return until October 30, 2006, when they offered $150,000.  In November 2006, the parties proceeded to arbitration and on November 10, 2006, the arbitrators entered a decision awarding $600,000 to the plaintiff.  The insurer withheld payment of this award when the plaintiff  refused to sign and return a waiver releasing the insurer from any future claims

The plaintiff filed a breach of contract and bad faith complaint and then an amended complaint against the insurer.  The plaintiff alleged that due to the insurer’s conduct, she was deprived the use of funds from the time she presented her claim until December 21, 2006 and that she incurred significant expenses when obtaining counsel, naming an arbitrator, and otherwise pursing her claim against the insurer. The insurer filed a motion to dismiss the plaintiff’s complaint.  The insurer moved to dismiss plaintiff’s bad faith claim on the basis that no insurance contract existed between the plaintiff and the insurer.  The court found that allegations in the Plaintiff’s amended complaint along with Disclosure statements filed by the insurer presented a reasonable expectation that discovery would reveal evidence of an insurance contract between the plaintiff and the insurer.  Therefore the court denied the insurer’s motion to dismiss the plaintiff’s bad faith claim. 

Date of Decision : October 16, 2008

Derocher v. Zurich Am. Ins. Co., No. 3:08-CV-0797, 2008 U.S. Dist. LEXIS 83481 (M.D. Pa. Oct. 16, 2008)( Caputo, J.). 

 

J.M.A.