In Dunn v. Scottsdale Ins. Co., plaintiff brought suit alleging breach of contract, statutory bad faith, and unjust enrichment against its insurer for denying a claim for water damage to plaintiff’s property. Plaintiffs alleged the interior water damage to their property was caused by severe storm conditions, which would be covered under the policy, while the insurer contended the damage was caused by poor craftsmanship in sealing the roof, which was not covered by the policy. To evaluate the claim, the insurer hired an independent adjuster, determined the damage was caused by a poorly installed roof which had opened around the seams, allowing water into the interior of the building. Based on the independent adjuster’s analysis, the insurer denied the claim for damages. Plaintiffs then informed the insurer they intended to dispute the denial. At that time, the insurer hired an engineer who also inspected the property. The engineer also determined the poor condition of the roof allowed the water to enter the interior of the building. Plaintiffs produced an expert report which cited storm damage as the cause of the poor condition of the roof, creating a question of material fact as to the cause of the damage. As such, the court denied defendant’s motion for summary judgment as to the breach of contract and unjust enrichment claims. In response to the bad faith claim, however, the court found the insurer had based its denial first on the independent adjuster’s report, and then affirmed the denial based on the engineer’s report. Furthermore, plaintiff had not alleged either of the expert reports were unfounded or in some way unsound. Based on these findings, the court found plaintiffs could not establish the insurer lacked a reasonable basis for denying benefits, and granted the insurer’s motion for summary judgment with respect to the bad faith claim.
Date of Decision: August 1, 2013
Dunn v. Scottsdale Ins. Co., No. 3:11-0976, 2013 U.S. Dist. LEXIS 107984 (M.D. Pa. Aug. 1, 2013) (Mannion, J.).