In Pinkhasov v. Allstate Prop. & Cas. Co., the court heard an insured’s breach of contract and bad faith claims stemming from the carrier’s denial of a claim for benefits he made under the insured’s homeowner’s policy. In early 2010, the insured purchased a policy from the carrier that covered “sudden and accidental direct physical loss” sustained to the insured’s home.
The policy specifically covered “water . . . that escapes from a plumbing, heating or air conditioning system . . . or from a household appliance due to accidental discharge.” The policy excluded coverage for “seepage” from “plumbing, heating, air conditioning . . . or other fixtures designed for the use of water.” The policy also excluded coverage for losses “caused by . . . [w]ater or any other substance on or below the surface.”
In September of 2012, the insured reported a claim to the carrier, who assigned the matter to an adjuster. The carrier insists that the adjuster’s notes reflect that the insured stated that he had a leak in his basement that started in May of 2009 and caused damage to his home. The carrier also asserts that the insured had claimed that his water bill increased dramatically around that time. The insured denied these contentions and claimed that he first called his utility provider to complain in August of 2012. His phone records corroborate this claim. The insured eventually filed suit in state court and the carrier removed, filing a summary judgment motion as well.
With respect to the insured’s breach of contract claim, the court found that the record was unclear because of the parties’ competing contentions of fact. Although the carrier’s notes did reflect the fact that the insured make claims regarding a 2009 flood, the court found this was not sufficient. The court held that the evidence does not convincingly prove either one of two causal nexuses: (1) that the damage was the result of a slow leak, which would be excluded under the policy; or (2) whether the damage was caused by a sudden and catastrophic episode in August of 2012. As such, the court denied the carrier’s motion.
For substantially the same reasons, the court also denied the carrier’s motion with respect to the insured’s bad faith claim, reasoning that the lingering factual issues were best suited for determination by a jury.
Date of Decision: October 19, 2012
Pinkhasov v. Allstate Prop. & Cas. Co., 3:11-cv-0171, 2012 U.S. Dist. LEXIS 151048, U.S. District Court for the Middle District of Pennsylvania (M.D. Pa. Oct. 19, 2012) (Mariani, J.)