May 2010 BAD FAITH CASES A BAD FAITH CLAIM CAN ONLY BE BROUGHT AGAINST AN INSURER, NOT AN INSURANCE ADJUSTER (Western District)

In Allegrino v. Conway E & S, Inc., the insured was the primary stockholder and president of Liberty, a company that owned a rental apartment building.  Liberty was a policyholder of two insurance policies that provided coverage for commercial, building and personal property for the building.  Between late 2007 and 2009, the insured asserted that he incurred significant losses due to vandalism, windstorms, and the demolition of the property adjacent to the apartment building.

The insured promptly filed claims against the policies with the various insurers, but he claimed that the insurers had not adjusted these claims.  He filed a suit containing 11 claims against 11 defendants.  One of the claims pled a cause of action for bad faith under 42 Pa. C.S. § 8371, asserting that defendants had no reasonable basis for delaying payments on his claims.

One of the defendants, an investigative claim service, filed a Motion to Dismiss the claims against it, and the court addressed this motion.  In addressing the bad faith claim, the judge noted that a claim for bad faith under 42 Pa. C.S. § 8371 can only be brought against an insurer, not an insurance adjuster.  In determining who is an insurer, courts have focused on (1) the extent to which the company was identified as the insurer on the policy documents, and (2) the extent to which the company acted as an insurer.

After evaluating these factors, the court held that the insured had not set out an actionable claim that the defendant had issued the insurance policies, assumed any risks or contractual obligations under the policies, or was licensed to conduct insurance business in Pennsylvania.  Therefore, the insured’s bad faith claim against the adjuster defendant was dismissed.

Date of Decision: April 26, 2010

Allegrino v. Conway E & S, Inc., United States District Court for the Western District of Pennsylvania, 2010 U.S. Dist. LEXIS 43859 (W.D. Pa. Apr. 26, 2010) (Fischer, J.).