Farm Bureau’s Denial of Skid Loader Claim “Fairly Debatable” and Therefore Not Bad Faith


SALT LAKE CITY, July 21  — Sufficient evidence existed to establish that a stolen skid loader was not covered by a homeowners policy issued by Farm Bureau Insurance Company, a federal judge ruled on July 18.

Insureds  Naser and Stacy Awadh submitted a claim for a stolen skid loader after it went missing  on or about April 22, 2009. Farm Bureau investigated the theft and made an offer to pay the $2,500 limit for equipment on residential premises “used primarily for any business purpose.”  The insureds rejected the offer.

Mr. Awadh at one time indicated he purchased the loader for his company.  Farm Bureau’s investigation included contact with the Weber County, Utah, Sheriff’s Office, which closed a criminal theft investigation on the loader after determining there was a dispute between Mr. Awadh and a buyer of the loader,  Montalvo,  who claimed he paid the Awwadhs $13,000.00 to purchase it.  Farm Bureau later denied the Awadhs’ claim after uncovering a bill of sale for the loader, corroborating the sale.

The Awadhs then sued Farm Bureau in state court in Utah,  and  Farm Bureau removed the action to the U.S. District Court for the District of Utah.  Following removal it sought ant obtained summary judgment on both the insureds’ breach of contract and bad faith claims.

U.S. District  Judge Dale A. Kimball found “ample evidence to support Farm Bureau’s denial.”  He wrote:

 “Even if it is ultimately established that Montalvo stole the skid loader, there was evidence supporting Farm Bureau’s decision at the time. Based on all the evidence Farm Bureau uncovered in its investigation, it was fairly debatable whether the skid loader was stolen and Farm Bureau acted reasonably in denying Plaintiffs’ claim. Whether the skid loader was actually stolen is irrelevant to the present motion and Farm Bureau’s fairly debatable defense. And, Plaintiffs’ arguments that a fact finder would need to make findings about the intent of Farm Bureau’s agents, representatives, and investigators misses the mark. Plaintiffs have failed to point to any evidence that Farm Bureau’s agents or representatives acted inappropriately. Because it was fairly debatable whether the skid loader was stolen, Farm Bureau’s denial of Plaintiffs’ claim on those grounds cannot be the basis for a bad faith claim. Therefore, the court dismisses Plaintiffs’ bad faith claim.”

Kimball also dismissed the breach of contract claim, finding that Farm Bureau  had record evidence that the loader was business property, and the Awadhs had no corroboration of their claim that the loader was personal property:

“Awadh asserts he initially bought it with a personal account, but he gives no information or records in relation to the account. Awadh testified that he bought the skid loader from his business for one dollar, but again there is no record or documentation of the sale that would be conducted solely for the purpose of changing ownership. Awadh further testified that, at the time the skid loader went missing, he had no business and he was using the skid loader for personal snow removal at his home. But, he claims damages for the loss of rental income from not having the skid loader. While there are several unsupported assertions supporting Plaintiffs position, there is actual evidence supporting Farm Bureau’s position. At the summary judgment stage, Plaintiffs must do more than make unsupported, self-serving assertions. Even if there was a brief hiatus in which the skid loader was not rented out, the evidence demonstrates that the skid loader was ‘primarily’ used for business purposes. The court concludes that no reasonable juror could conclude otherwise. Accordingly, the court concludes that there is no basis for Plaintiffs’ breach of contract claim and Farm Bureau is entitled to summary judgment.”

Naser Awadh, et al. v. Farm Bureau Mutual Insurance Co., No. 13-0145, D. Utah; 2016 U.S. Dist. LEXIS 93369


Author: CJ Haddick

C.J. Haddick is a Director with the law firm of Dickie, McCamey, & Chilcote, PC, based in Pittsburgh, Pa. He has advised and represented insurers in insurance coverage and bad faith litigation for more than three decades, and written and spoken throughout the United States on insurance coverage and bad faith prevention and litigation. He is Managing Director of the firm's Harrisburg, Pa. office. Reach him at or 717-731-4800.

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