In Seto v. State Farm Ins. Co., the court heard a carrier’s motion in limine to exclude evidence of its bad faith, including its claims-handling, investigations and handling of coverage. The suit arose after two fires destroyed the insureds’ home in 2009. After the insured parties sued the carrier, alleging bad faith and breach of contract, the court ruled for the carrier on summary judgment, finding that it had not acted in bad faith. (See this Blog post). Since the only remaining issue for trial was the insureds’ breach of contract claim, the carrier moved to exclude evidence relating to its alleged bad faith, pursuant to Fed. R. Evid. 401, 402, and 403.
First, the court ruled that all evidence of the carrier’s alleged bad faith should not be admissible because it was not relevant to determining whether the insureds were entitled to additional benefits under the terms of its policy. As such, all evidence related to the carrier’s investigation and claims-handling was not permitted.
Second, the court turned to the carrier’s motion to preclude evidence of the insureds’ request for additional living expenses (“ALE”) under its policy. After their home was destroyed, the insureds moved to Florida for a year. The only documentation they submitted regarding costs incurred during that period was part of an unsigned lease and deposit slips with no information identifying them as the payers of the deposited amounts. Because the issue of whether the insureds submitted sufficient documentation was not decided at summary judgment, the court denied the carrier’s motion with respect to this issue. However, the court excluded all documentary evidence relating to the ALE that had yet to be produced.
Third, the carrier moved to exclude evidence of replacement cost damages allegedly incurred by the insureds. As a part of their breach of contract claim, the insureds alleged that they are owed replacement cost damages under a part of the policy providing reimbursement for the replacement of a destroyed dwelling. The carrier had already paid $384,000.00 to the insureds, $190,980.00 of which was the estimated actual cash value (“ACV”) of the home. The carrier refused to pay more because the insureds had yet to replace or rebuild their home. The insureds argued that they could not replace the home without first receiving money to do so, the amount of which was in dispute.
The court reasoned that the carrier’s actions were proper because they had actually guaranteed conditional replacement benefits to the insured. To receive the benefits, however, the insureds needed to demonstrate that they had replaced or repaired the property. The policy stated that, until they replace their home, the insureds were limited to recovering the ACV only. Accordingly, the court found that the insureds were not entitled to replacement costs, precluding related evidence at trial.
In sum, the court granted the carrier’s motion, except for evidence as to whether the insureds submitted sufficient documentation related to their request for ALE.
Date of Decision: May 21, 2012
Seto v. State Farm Ins. Co., No. 2:10-cv-005052012 U.S. Dist. LEXIS 70263 (W.D. Pa. May 21, 2012) (McVerry, J.)