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 Pa.C.S. § 4117. Before the court was the insurer’s motion for summary judgment seeking judgment in its favor on the insured’s complaint, along with the insurer’s counterclaim and third party complaint.

The court declined to grant summary judgment for the insurer on the breach of contract claim, finding that genuine issues of material fact existed regarding whether the insured made material misrepresentations that would preclude coverage under the policy.

The court next addressed the insurer’s argument that summary judgment should be granted in its favor with regard to its counterclaim against the insured for insurance fraud. Finding that inconsistencies in the record may have resulted from misconstrued evidence or improperly performed investigations, rather than knowing misrepresentations by the insured, the court declined to grant summary judgment on the insurance fraud counterclaim.

Finally, the court denied summary judgment on the insurer’s third party claim for insurance fraud. The insurer argued that throughout the course of its investigation of the fire loss, the insured’s boyfriend continually assisted the insured in presenting a claim containing false or incomplete information, as well as falsified documents concerning facts of things material to her claim for benefits. However, the court reasoned that the record was replete with genuine issues of material facts as to whether the insured’s boyfriend intentionally and fraudulently misrepresented facts about the alleged loss. Accordingly, the court declined to grant summary judgment to any claim in the case, noting that the evidence created a highly disputed record.

Date of Decision:  December 9, 2015

Reese v. Allstate Vehicle & Prop. Ins., CIVIL ACTION NO. 14-1034, 2015 U.S. Dist. LEXIS 164772 (E.D. Pa. December 9, 2015) (Buckwalter, J.)