In Bomgardner v. State Farm Fire & Casualty, the insured was in the business of performing “concrete-related services.” He had business liability insurance coverage under a “Contractor’s Policy” with the insurer. The policy stated that the insurer would pay the insured if he became legally obligated to pay damages due to property damage caused by an occurrence in the coverage territory.
In February, 2009, the insured was notified that there were problems with a floor he had installed at a residence approximately three months earlier. The general contractor for the project sent the insured a bill for over $25,000, who proceeded to request coverage from the insurer for this amount. The insurer’s investigators notified the insurer that the concrete floor defects were are result of “improper workmanship” and not an “occurrence” as required by the policy. The insurer therefore denied payment to the insured, who then brought an action against the insurer with claims for breach of contract and bad faith.
The court first held that the facts clearly showed that the damages were caused by faulty workmanship and were not an “occurrence” under the policy. It thus determined that the insured could not proceed with his breach of contract claim.
Central to the insured’s bad faith allegation was the assertion that after the insured was initially denied coverage, he sent a letter to the insurer requesting a copy of the investigation report. According to the insured, the insurer did not reply to him for three months, and once it did respond, it refused to provide him with the report. The court, however, determined that the insured’s claim for bad faith offered “little more than legal conclusions and bare allegations of wrongdoing with insufficient factual support.” Simply denying a claim, refusing to turn over documents such as investigation reports before a lawsuit is filed, and taking a few months to respond to a request do not amount to violations of the Pennsylvania Bad Faith Statute, the court said. Because the insured failed to allege a bad faith violation, the court granted the insurer’s motion to dismiss both the breach of contract and bad faith claims.
Date of Decision: September 14, 2010
Bomgardner v. State Farm Fire & Cas., Civil Action No. 10-1287, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 96379 (Sept. 14, 2010) (McLaughlin, J.)