OCTOBER 2006 BAD FAITH CASES FACTUAL ISSUES REMAINING IN BREACH OF CONTRACT CLAIM, SUBJECT TO FLORIDA LAW, PRECLUDE SUMMARY JUDGMENT ON PENNSYLVANIA BAD FAITH CLAIM (Western District)

In Trunzo v. Allstate Insurance Company, Plaintiff claimed breach of contract and bad faith against Allstate resulting from Allstate’s refusal to defend or indemnify Plaintiff for claims arising from a car accident.  Plaintiff’s parked car was hit by an insured’s daughter, who had no driver’s license and was not permitted to drive her father’s car.  Plaintiff brought suit, alleging Defendant, the father’s insurance company, wrongfully and in bad faith refused to defend or indemnify the daughter for claims resulting from the accident.  Defendant contended that it was entitled to summary judgment on the grounds that the daughter was not an “insured person” under the policy and that, even if she was, the vehicle that she negligently operated was not an “insured auto” under the policy.  The United States District Court for the Western District of Pennsylvania concluded that the applicable language in the policy was ambiguous and left the interpretation of the insurance contract up to the finder of fact.  Florida law applied to the contract’s interpretation, but Pennsylvania law applied to the statutory bad  faith claim.  The Court then looked to Pennsylvania’s bad faith standard, namely that to recover under a claim of bad faith, the Plaintiff must show that the Defendant did not have a reasonable basis for denying benefits under the policy and that defendant knew or recklessly disregarded its lack of reasonable basis in denying the claim.  Having determined that Plaintiff’s breach of contract claim could not be resolved at the summary judgment state, the Court concluded that the bad faith issue must be analyzed independently by the fact finder in accordance with Pennsylvania law.

Date of Decision:  September 25, 2006

Trunzo v. Allstate Ins. Co., United States District Court for the Western District of Pennsylvania, No CV-04-1789, 2006 U.S. Dist. LEXIS 68566 (W.D. Pa. Sept. 25, 2006), (Conti, J.).