JUNE 2010 BAD FAITH CASES NO BAD FAITH AS A MATTER OF LAW WHEN THERE ARE GENUINE ISSUES OF MATRIAL FACT (Philadelphia Federal)

In Nurpo Industries Corp. v. Lexington Insurance Company, the dispute centered around insurance payments for demolished buildings belonging to the insured.  The insured alleged that the insurer failed to pay the Actual Cash Value for two demolished buildings, failed to pay the insured an amount due for “Extra Expense II,” and failed to pay the expenses the insured accrued in relation to demolishing and attempting to replace another building.

Both parties filed summary judgment motions.  The insured asserted that the insurance policy and two of its specific endorsements provided that the insurer must cover the losses accrued in demolishing the buildings, and that with respect to the attempt to replace the third building, the insurer acted in bad faith by agreeing to cover the cost of demolishing and reconstructing the building but then failed to make payment.  

The insurer, on the other hand, asserted that it did not owe any money because the buildings were demolished only because they were neglected and unsafe rather than because they were subject to fire damage.  Concerning the bad faith claim, it asserted that it withdrew its purported agreement to the reconstruction project and it may not have even agreed to the insured’s plans in the first place.  The court determined that because there were genuine issues of material fact as to interpretations of the passage of events, the insured’s Motion for Summary Judgment with respect for the bad faith claim should be denied.

In a separate opinion, the court denied the insurer’s Motion for Summary Judgment, as the insurer had asserted that the insured failed to bring its claim within the two-year limitations period provided in the contract, but it remained unclear whether the insured could have brought its claim within that period.

Date of Decision:  June 21, 2010

Nupro Indus. Corp. v. Lexington Ins. Co., Civil Action No. 08-4809, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 61693 (June 21, 2010) (Restrepo, U.S.M.J.)

and

Nupro Indus. Corp. v. Lexington Ins. Co., Civil Action No. 08-4809, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 61658 (June 21, 2010) (Restrepo, U.S.M.J.)