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 sought summary judgment on the grandparents’ breach of contract and bad faith claims.

The grandfather provided an affidavit setting forth details as to why his grandson was not a member of the household, but rather was a boarder in the house, because the grandson: paid for his room in cash and bartered work; did not have access to significant parts of the house; was not permitted to use his grandparents’ car; provided his own food and ate his meals separately from his grandparents; did not join his grandparents’ health insurance plan but went without coverage; and was not permitted to bring anyone into the residence.  The insurer’s only argument in response was apparently that the grandson had emotional ties to his grandparents, but the court did not find this created an issue of material fact.  Rather, the court found that by failing to dispute any of the material facts that related to the circumstances of the grandson’s arrangement for living in the grandparents’ house as a boarder, the insurer failed to carry its burden of showing that the policy exclusion applied. As to the bad faith claim, the insurer “failed to provide any information that would tend to show [the grandson] was, in fact, a member of the … household (either through his deposition, another’s affidavit, or other valid evidence).”  Thus, the grandparent insureds “sufficiently raised a genuine issue of material fact as to whether [the insurer] had any basis — let alone a reasonable one — for concluding that the policy exclusion applied.” Date of Decision:  November 25, 2014

Ripley v. Brethren Mut. Ins. Co., CIVIL ACTION NO. 14-4763, 2014 U.S. Dist. LEXIS 165448 (E.D. Pa. November 25, 2014) (Dalzell, J.)