In Lehman v. Victoria Fire and Casualty Insurance Company, plaintiff Earl Lehman worked for Halbleib’s Auto Repair shop as an independent contractor providing tow truck services. Halbleib’s owned a 2007 GMC pickup truck which it leased to Lehman for use in his towing business. By agreement with Halbleib’s, Lehman was responsible for the truck’s maintenance and insurance. As such, Lehman purchased a vehicle insurance policy from Victoria Fire and Casualty in October, 2008.

In November 2008, Lehman drove the truck to the wedding of a member of his motorcycle club. By his own admission, Lehman was “totally drunk” by the time he showed up to the wedding and, sometime after the wedding, continued to drink at his motorcycle club’s clubhouse well into the morning. What is unclear is exactly what transpired from the time Lehman left the wedding reception to the time he ended up drinking back at the clubhouse.

Lehman’s initial story was that after the reception he drove to a bar called Spencer’s. He alleged that he was involved in a physical altercation the Spencer’s parking lot and was knocked unconscious. Lehman then alleged that when regained consciousness, his friend Chico drove him to their clubhouse where they continued to drink beer until around 5am.

At his deposition, Lehman stated that it was around this time (5am) that he asked Chico to drive him back to his truck, at which point Chico was said to have told Lehman that he did not see the truck when he found Lehman in the parking lot. Lehman testified (at deposition) that he then asked Chico to drive him home. On the way home, they spotted Lehman’s truck and Lehman testified that he drove his truck back to Halbleib’s parking lot and then walked home. By Lehman’s account, it was not until examining his truck the next morning that he realized his front tire was missing and his fender was damaged. Lehman said that he called the police after making this discovery.

Meanwhile, a Pittsburgh police officer had responded to a report of a hit and run at around 5am on the same morning—just around the time that Lehman would have been driving his truck back to Halbleib’s. At the scene of the hit and run accident, where a Chevy Tahoe and trash cans were sideswiped, was a detached tire—presumably from the hit and run vehicle— and a set of scrape marks that led from the scene of the accident to where Lehman’s truck was parked at Halbleib’s. The tire that was found at the scene of the accident also matched the other tires on Lehman’s truck.

It would turn out that the version of the night’s events recounted at a later deposition differed from the account Lehman gave the day after the accident to the investigating police officer. Lehman told that officer at the initial interview that after the reception he had gone to a bar called Doug’s Den and once inside was knocked unconscious by three bikers. He claimed that Chico woke him up, told him his truck was missing and proceeded to drive him to the clubhouse for more beer drinking.

Two days later, Lehman was interviewed by a detective and gave a different account. This is when he told the version of the story he would later repeat at his deposition—that he was knocked out in Spencer’s—not Doug’s Den— parking lot and returned there later only to find his truck missing, ultimately finding it running idly, abandoned on second avenue.

The detective attempted to verify this account by checking the tapes from Spencer’s security cameras, none of which recorded an altercation of the type described by Lehman.

The owner of the damaged truck, John Halbleib, then submitted a claim to Victoria to cover the truck’s damage. In Lehman’s statement to Victoria’s claim representative, he reiterated that the incident in which he was knocked unconscious occurred in the Spencer’s parking lot.

Victoria then referred the claim to its “Special Investigative Unit” (SIU), whereupon the police told the insurance company’s SIU rep that it did not believe Lehman was telling the truth, as there was no evidence to indicate that there had been a fight in Spencer’s parking lot or a truck stolen or towed from that lot.

Based upon this and other information collected throughout Victoria’s investigation of the claim, the insurer sent Lehman a letter in which it denied coverage pursuant to the policy provision which precluded coverage in cases of misrepresentation, concealment or fraud. Moreover, the State brought criminal charges against Lehman and his friend Chico, charging them with making false reports to the authorities, leaving the scene of an accident and conspiracy to commit insurance fraud.

Ultimately, the criminal charges against the two were dropped but in the intervening period Lehman brought breach of conflict and bad faith claims against Victoria, which the insurer removed to the Western District on diversity grounds.

The Court declined to find any bad faith on the part of Victoria, finding that the insurer’s investigation of the claim was fair, thorough and reasonable based on the information available. The Court recognized that there were some specific actions not taken by the insurer’s investigator but also stated that a defendant insurer in a bad faith claim does not have to show that the investigatory process was flawless or that its methods eliminated all possibilities at odds with its conclusion. Rather, in borrowing from a 1999 opinion of the Eastern District, all an insurance company must do is conduct an investigation which is sufficiently thorough to yield a  reasonable foundation for its action. Cantor v. Equitable Life Assur. Soc’y of the United States, 1999 U.S. Dist LEXIS 4805 (E.D.Pa. April 12, 1999). And the Court concluded that Victoria conducted just such a reasonable investigation in this particular case.

As such, Victoria’s motion for summary judgment on the bad faith claim was granted.

Date of Decision: June 16, 2011

Lehman v. Victoria Fire and Cas. Ins. Co., No. 09-1542, United States District Court for the Western District of Pennsylvania, 2011 U.S. Dist. LEXIS 64212 (June 16, 2011) (Standish, J.)