In Excelsior Insurance Company v. Mitchell, the court was asked to reconsider its prior grant of summary judgment to the insurer. It upheld its prior decision, finding that the insured voided the policy through material misrepresentations and submitted no evidence in support of its bad faith claim against the insurer.
The case relates to benefits the insured sought due to a fire at his business. He included a claim for the cost of replacing his undamaged business sign, for which he submitted a forged damage report. The insurer filed a complaint seeking a declaratory judgment and asserting breach of contract, breach of the implied duty of good faith, common law fraud, and violation of the state Insurance Fraud Act, 18 Pa.C.S.A. § 4117, et seq. The insured subsequently filed in state court for breach of contract and bad faith, and the case was removed to this court and consolidated with the insurer’s case.
The court found that the insured voided his contract with the insurer in two ways: by knowingly submitting a false claim for undamaged property and by knowingly misrepresenting his financial situation at the time of the fire, both of which are material misrepresentations. The court also found the insured to be liable to the insurer under the Insurance Fraud Act as a result of knowingly submitting the false claim for the sign. The insurer’s other assertions were not addressed because the court had already determined that the policy had been voided.
The insured’s claim for bad faith was found to be unsubstantiated because he did not submit any evidence to support it. The court determined that the insurer acted reasonably in investigating and refusing further payment, based upon the insured’s misrepresentations and the insurer’s suspicion of arson. The insured’s other claim, for breach of contract, was barred by the statute of limitations.
The court, therefore, maintained its entry of summary judgment in favor of the insurer.
Date of Decision: December 11, 2008