July 2016 Bad Faith Cases: No Bad Faith Because of Exclusion On Some Claims, And No Facts Of Bad Faith Claims Handling On Others (Middle District)

Myerski v. First Acceptance Ins. Co., involved the most common form of bad faith litigation, UM/UIM claims, as well as other claims. There was an issue in the case about whether the injured driver was excluded under his mother’s policy because he lived in the same house and/or used her car frequently. The record showed the insurer reasonably asserted the exclusion’s application.

The court then looked at the claims handling. There was no bad faith in the back and forth between the insured’s counsel and the carrier, with the court going through the details of each communication; the rapidity in which suit was filed; and the ongoing nature of the investigation. The court then stated: “The question remains whether bad faith may be found in Defendants’ initial handling of the case.” The above cited exclusion did not apply to either PIP or UM/UIM claims. The plaintiff argued that the insurer had “arbitrarily denied coverage without any justification and delayed in allegedly opening a pip claim until 4 months after the accident,” and had “made verbal affirmations that they were denying all of the Plaintiff’s claims based on an exclusion which does not apply to such claims and cannot be relied upon by the Defendants to deny coverage.” However, under the facts of record, the case did not “support the conclusion that any refusal to pay the property damage claim constituted bad faith.

After another detailed analysis, the court further rejected the insured’s argument to have stated a claim for wrongful refusal to pay claims for first party medical benefits and uninsured motorist benefits. However, the communications from the insured to the insurer did not establish a clear and convincing case that demand had been made specifically on these two issues and then been denied in bad faith.

Finally, the court denied a distinct breach of the contractual covenant of good faith and bad dealing claim, as “Plaintiff’s claim for a breach of the covenant of good faith and fair dealing is properly dismissed because Plaintiff also asserts a breach of contract claim seeking PIP and UM benefits.”

Date of Decision: June 10, 2016

Myerski v. First Acceptance Ins. Co., 3:16-CV-488, 2016 U.S. Dist. LEXIS 76201 (M.D. Pa. June 10, 2016) (Conaboy, J.)

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