UM/UIM Plaintiff Fails to State Bad Faith Claim, Federal Judge Rules

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Philadelphia, Sept. 6 – A Pennsylvania federal judge has ruled that a UM/UIM insured has failed to state a bad faith claim against State Farm Insurance arising out of the handling of her UIM claim.  In Myers v.  State Farm Automobile Insurance Company, federal judge R. Barclay Surrick granted State Farm’s 12(b)(6) motion to the complaint, but granted the insured plaintiff leave to file an amended complaint.

The insured filed a UIM claim with her insurer after sustaining injuries in an auto accident.  After failing to reach agreement on the settlement of her UIM claim, the insured filed breach of contract and bad faith claims against State Farm in Philadelphia County Common Pleas Court.   In the complaint, the insured alleged State Farm’s failure to act with reasonable promptness or to act with reasonable fairness, as well as the failure to conduct a proper investigation.

State Farm removed the action to the Eastern District of Pa., and filed a motion to dismiss  the bad faith claim pursuant to Federal Rule of Civil Procedure 12(b)(6).  Judge Surrick, in granting the motion, observed that “[t]o survive a motion to dismiss, [the insured’s] complaint must include factual allegations from which the Court may plausibly infer the unreasonable and intentional or reckless denial of benefits.”  The judge found the plaintiff’s allegations to be conclusory at best, observing that the complaint failed to describe the ways and means in which the insurer allegedly failed to properly investigate her claim.  The complaint also, Judge Surrick observed, failed to cite to any specific transactions or contact between the insured and the insurer which would factually make out a bad faith claim.

The Court concluded that even if it took the averments  the insured’s complaint as true, it was unable to  “plausibly infer from those facts that [insurer] acted unreasonably and intentionally or recklessly in denying benefits to [the insured].”  The Plaintiff was granted leave to attempt to amend her complaint to allege sufficient factual support for her bad faith claims.

Myers v. State Farm Mutual Automobile Ins. Co.,  No. 17-3509, 2017 U.S. Dist. LEXIS 143794 (E.D. Pa. Sept. 6, 2017) (Surrick, J.)

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Judge Rules No Bad Faith In Insurer’s Low But Reasonable Valuation of UM/UIM Claim

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PHILADELPHIA, Aug. 17 – A Pennsylvania state court judge has granted summary judgment in favor of Travco Insurance Company, ruling that a $25,000.00 offer in a UIM claim which later ended in a $45,000.00 arbitration award was not so unreasonably low as to constitute bad faith.

In Boleslavksy v. Travco Insurance Co., Travco offered its insured $25,000.00 to settle a UIM claim in response to the insured’s  policy limits demand of $50,000.00.  After reviewing some additional information on the claim, Travco increased the valuation of the claim to $28,000.00 but did not change it’s offer in light of the policy limits demand.

The UIM case went to arbitration where the insured won an award of $45,000.00.  The insured thereafter  filed sued Travco for bad faith in the Philadelphia County Court of Common Pleas, arguing first  that insurer’s final settlement offer of $25,000 was inadequately low in light of the ultimate arbitration award, and second that Travco never notified the insured of the valuation increase.

Travco filed a motion for summary judgment, arguing that its offer and claims conduct were reasonable as a matter of law.  The Court agreed with the insurer, granted the motion and found Travco’s offer to be low but reasonable, and therefore not in bad faith.  The Court also found that Travco continued to reasonably evaluate information concerning the claim, and that offers of settlement which were made in the context of that information were not without basis.

Finally, the court ruled Travco had no obligation to increase its offer to $28,000.00 because the insured had unambiguously hewed to a policy limits demand, signaling no desire to negotiate.

Boleslavksy v. Travco Insurance Co., No. 151000886, 2017 Phila. Ct. Com. Pl. LEXIS 257 (Phila. C.C.P. Aug. 17, 2017) (Anders, J.)

Faulty Workmanship Not Occurrence, Travelers No Duty to Defend / Indemnify Real Estate Investment Companies, Federal Judge Rules

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PHILADELPHIA,  September 1 — A Pennsylvania federal judge granted summary judgment Travelers Insurance last week, ruling it had no duty to defend insured real estate developers who were sued for claims of defective community living infrastructure construction.

In the breach of contract suit over coverage (bad faith claims had been dismissed earlier in the case), U.S. District Judge Mitchell Goldberg said that no coverage existed under the applicable Travelers insurance policies because the defective workmanship issues were not “occurrences” under well-established Pennsylvania precedent.

The insured plaintiffs, Northridge Village LP and Hastings Investment Co. Inc., bought and subdivided lots in Chester County, Pa., subsequently selling them to a builder.   Northridge built roads, storm water and runoff  management and other infrastructure for the planned community.

The community  association alleged defects with the construction of roads, drainage ponds, utility boxes, and other items, later suing Northridge and Hastings in Pennsylvania state court in 2013.  Northridge and Hastings then sought defense and indemnity for the suits under a commercial general liability policy with a $1 million occurrence limit, $2 million aggregate limit and $2 million products-completed-operations aggregate limit, as well as excess coverage of $2 million.  When Travelers denied the claims, Northridge and Hastings brought a coverage and bad faith suit against Travelers  in 2015.

Judge Goldberg dismissed the coverage suit, relying on what he called well-settled precedent stemming from a 2006 case, Kvaerner Metals Div. v. Commercial Union Ins. Co., 908 A.2d 888 (Pa. 2006).  Judge Goldberg held that under Kvaerner, construction workmanship issues did not constitute “occurrences”‘ within the meaning of the CGL policies, as they were not accidental, fortuitous events which the instrument of insurance is designed to cover:

 “Courts in this circuit have consistently applied Kvaerner and held that claims based upon faulty workmanship do not amount to an ‘occurrence,’ and thus do not trigger an insurer’s duty to defend … The same conclusion has been reached in this circuit in cases where the faulty workmanship results in foreseeable damage to property other than the insured’s work product…Given the weight of Pennsylvania and Third Circuit precedent, I conclude that the term ‘occurrence’ in defendants’ CGL policies and excess policies does not include faulty workmanship. Further, the definition of ‘occurrence’ excludes negligence claims premised on faulty workmanship.”

Judge Goldberg further held that even if a duty to defend were potentially triggered, that was mooted by a ‘Real Estate Development Activities’ exclusion which also appeared in the applicable policies.

Northridge Village LP and Hastings Investment Co. Inc. v. Travelers Indemnity Co. of Connecticut et al., (E.D. Pa 2:15-cv-01947)(Goldberg., J.)