Insurer’s Correct Position On Coverage Bars Homeowners’ and Bad Faith Claims

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PITTSBURGH,  Jan. 10 – A federal judge from the Western District of Pa. has dismissed both bad faith and coverage claims in which a homeowner sought coverage for defective workmanship on the home as part of a demolition and rebuild.

In Wehrenberg v. Metro. Prop. & Cas. Ins. Co., No. 14-1477, 2017 U.S. Dist. LEXIS 3242 (W.D. Pa. Jan. 10, 2017), U.S. District Judge Mark R. Hornack granted summary judgment to Metropolitan P&C Insurance Company on both breach of contract and bad faith claims brought by insured homeowner, Wehrenberg.  leased the house to a tenant, Hyatt, and authorized Hyatt to demolish and reconstruct the house.

Hyatt abandoned the house after gutting it, and the house, which had structural problems, was left unfinished.  Wehrenberg  submitted a claim the Metropolitan regarding the condition of the house, calling it “vandalism.”  Metropolitan denied the claim and Wehrenberg filed suit, claiming both breach of contract and bad faith.

Relying on policy language, Metropolitan moved for summary judgment on all claims on the following grounds:  (1) the loss was not “sudden and accidental direct physical loss or damage” under the terms of the Policy, (2) even if the loss is covered, the insured did not timely notify Metropolitan of the loss, and  (3) the damages claimed were explicitly excluded from coverage under the Policy, which did not cover construction related damage, and stated that the insurer was not responsible to pay for vandalism if the property was vacant for more than thirty days.

In granting the motion for Metropolitan, Judge Hornak held:

“First, the Court concludes that Plaintiff cannot, on the record before the Court, meet his burden of proving that his loss is covered by his Policy in the first instance. The Policy specifically provides that Defendant will only cover “sudden and accidental direct physical loss or damage to [Plaintiff’s] property.”. . . Under Pennsylvania law, “sudden and accidental” “mean[], respectively, ‘abrupt’ and ‘unexpected or unintended.'” U.S. Fire Ins. Co. v. Kelman Bottles, 538 F. App’x 175, 181 (3d Cir. 2013).”

The judge also dismissed the bad faith claims made by the insured, holding:

“In this case, as explained, there is no viable breach of contract claim, so the first part of Plaintiff’s bad faith claim cannot succeed. Second, Plaintiff argues that Defendant acted in bad faith by failing to adequately investigate his claim. In his papers, Plaintiff lists a variety of ways in which he asserts Defendant’s investigation was inadequate, including that Defendant did not conduct enough interviews to uncover the facts of the case and that Defendant did not look into allegedly stolen tiles brought into the house. ECF No. 88 at 12. Defendant however, asserts that an adequate investigation was conducted  and that it included an inspection of the house, interviews of Plaintiff and Hyman, consultation with its legal counsel, and the taking of Plaintiff’s Examination Under Oath. ECF No. 82 at 20. Plaintiff’s claim ultimately fails because he has not cited to anything in the record to support his argument—he merely alleges problems existed without providing any record evidence to prove them.”

Wehrenberg v. Metro. Prop. & Cas. Ins. Co., No. 14-1477, 2017 U.S. Dist. LEXIS 3242 (W.D. Pa. Jan. 10, 2017)

 

 

 

 

 

 

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Unsubstantiated Claims of Poor UM/UIM Claims Handling Not Sufficient Bad Faith Pleading, Federal Judge Rules

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PITTSBURGH, Dec. 21 — An insured failed to sufficiently plead bad faith in the handling of his underinsured motorist coverage claim by State Farm Insurance Company,  a federal judge ruled Dec. 21 in granting the insurer’s motion to dismiss without prejudice.

Robert R. Mondron was injured as a passenger in an auto accident, which allegedly caused injuries including head neck and facial injuries and internal injuries.  The driver of the vehicle tendered his full liability limits of $110,000 under his own policy, and Mondron sought UIM benefits from his insurer, State Farm.

According to Mondron, State Farm  “failed to make a reasonable offer of settlement,” sued the insurer in the Allegheny County, Pa., Court of Common Pleas, alleging breach of contract, bad faith,  and violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL).

State Farm moved to dismiss the bad faith claims after removing the case to the  Western District of Pennsylvania.  In granting the motion, U.S. District Judge Cathy Bissoon held that dismissal of the bad faith claim is proper:

 “The gravamen of Plaintiff’s bad faith claim is that the Defendant unreasonably denied UIM [underinsured motorist] benefits to which Plaintiff is entitled under the terms of his parents’ insurance policy.  As noted, he alleges that Defendant ‘unreasonably delayed’ the handling of his claim, ‘inadequately investigated’ the claim, ‘failed to make a reasonable offer of settlement’ and ‘knew of or recklessly disregarded its lack of reasonable basis in evaluating Plaintiff’s underinsured motorist claim.’  These types of conclusory allegations are insufficient to state a plausible basis for relief.”

Judge Bissoon also found that Mondron’s Pennsylvania Unfair Insurance Practices Act (UIPA) claims should also be dismissed, holding “these allegations are nothing more than redundant and conclusory re-assertions of Plaintiff’s prior bad faith  allegations…Plaintiff’s generic invocation of statutory language is insufficient to satisfy his federal pleading burden.” Judge Bissoon stated. She similarly dismissed UTPCPL claims, all without prejudice.

Robert R. Mondron v. State Farm Mutual Automobile Insurance Co., No. 16-412, W.D. Pa.; 2016 U.S. Dist. LEXIS 17604

Low Settlement Offer Not Conclusive Proof of Bad Faith

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A federal district court judge has dismissed a bad faith complaint in which the only allegation against the insurer was that it made a low offer of settlement in a UM/UIM case.  In West v. State Farm, U.S. District Judge John Jones dismissed a bad faith claim in an amended complaint on a motion to dismiss filed by the insurer, but allowed a breach of contract claim to proceed.

In West, the insured was rear-ended in an automobile accident, and filed UM/UIM claim with his insurer, State Farm. The insured submitted medical records and $8,232.00 in medical expenses, in response to which State Farm offered $1,000.00.

In the amended complaint, the insured alleged that the low offer was itself sufficient support for the allegation that State Farm recklessly disregarded a reasonable basis for paying more on the UM/UIM claim.  Judge Jones found the argument to be lacking, finding that the bad faith count of the complaint failed to allege sufficient factual support:

Plaintiff argues that the offer of $1,000 to settle $8,232.00 worth of medical bills shows bad faith. The Court finds that these facts are not sufficient, as a matter of law, to sustain a claim for bad faith. Plaintiff has not presented facts to show that Defendant “knew or recklessly disregarded its lack of reasonable basis in” in offering a “low-ball” offer. A “low-ball” offer alone does not suffice to support a claim for bad faith. “[B]ad faith is not present merely because an insurer makes a low but reasonable estimate of an insured’s damages.” Johnson v. Progressive Ins. Co., 987 A.2d 781, 784 (Pa. Super. Ct. 2009) (citing Condio v. Erie Ins. Exchange, 899 A.2d 1136, 1142 (Pa. Super. 2006)). “[T]he failure to immediately accede to a demand for the policy limit cannot, without more, amount to bad faith.” Smith v. State Farm Mut. Auto. Ins. Co., 506 F. App’x 133, 136 (3d Cir. 2012) (non-precedential).

The Court granted the Plaintiff  an additional thirty days to file a second amended complaint in an attempt to revive the bad faith claim.

West v. State Farm, CIVIL ACTION NO. 16-3185 (E.D. Pa. Aug. 11, 2016)(Jones, J.)