Re-Purposing The Free Initial Consultation For The Benefit of Insurers and Corporate Clients

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Alternative fee arrangements are out of the bag by now.  They are being tried and used by insurers as part of ongoing efforts to bring cost-certainty to outside legal fees.  Badfaithadvisor.com has a complete survey of alternative fee options here.

But that is not the end of the leverage in favor of  insurers and corporate clients.  And to that end,  I am going to let you all in on a very big secret.  Not only that, I am going to invite — no — I’m going to dare, you to take advantage of it, and here it is:   I would rather my clients and prospects talk to me for free about matters of concern to them ,  than to let them  talk to any of my competitors.  Under any terms.

And so, the free initial consultation, long a staple of the plaintiff’s bar, has been co-opted and re-purposed for my insurance company and other corporate clients.

Insurance and corporate clients, and prospective clients who are interested in testing the waters, are given  free initial consultations of anywhere from 30 minutes to 2 hours (and sometimes more)  to review documents, and to discuss cases they are considering assigning to outside counsel.  But I offer the same thing to the same clients and the same prospects who are actually looking to AVOID sending a matter to outside counsel, too.  This provides value to them in the form of an informal first or second opinion which will give them early clarity on a matter, and peace of mind on potential action plans for handling those claims or matters.

The free initial document review / consultation is a win – win for clients and prospects.  If they do decide to retain me, on either en alternative or conventional fee basis, they have familiarized me with the matter they will be assigning and brought me up to speed at no cost to them, thereby reducing their overall legal expense on the matter.   If they decide to keep the matter in-house, they have received the value of an outside look for free, and I have hopefully created good will my clients will remember when the next matter comes up for consideration.

There are and will always be major coverage matters and bet-the-company litigation which insurers and corporate clients on which clients will seek outside representation.  Free initial consultations on both these matters and matters which clients never assign to outside counsel is another way to provide value to clients in business environments encouraging the limitation and reduction of outside legal expense.

C.J. Haddick

Water, Water Everywhere: Water Damage Exclusion Bars Coverage, Florida Judge Rules

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MIAMI, March 28 — A commercial property insurance policy’s water exclusion barred recovery for water related damage and  repair costs arising from a backed up pipe, a Florida judge has ruled.

In Ken Cameron and Michelle Cameron v. Scottsdale Insurance Co., No. 16-21704, S.D. Fla., 2017 U.S. Dist. LEXIS 45474, U.S. District Judge Marcia Cooke  granted Scottsdale’s motion for summary judgment in a coverage suit filed by the Camerons.  Scottsdale had previously denied coverage on a claim the Camerons made under a commercial property policy insuring their apartment complex after a pipe collapsed in the internal plumbing system and caused water and property damage.

Ken and Michelle Cameron originally filed suit in the 11th Judicial Circuit Court for Miami-Dade County, Fla., against Scottsdale Insurance Co., seeking a declaration that coverage was owed for water damage which occurred on one of their apartment properties. Scottsdale removed the action to federal court, and after losing an initial motion to dismiss, prevailed on a motion for summary judgment.

According to the suit, a  plumber found an “acute pipe failure” when the pipe collapsed.  Scottsdale denied coverage pursuant to an exclusion  for water – related losses.   Scottsdale argued that the policy in question did not cover damage from water originating from a drain.  The exclusion applied to  “water that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment.”

The Camerons opposed the summary judgment motion claiming that the exclusion applied only to water backups or overflows deriving outside their property’s premises.
Judge Cooke held that the policy contained no definition of “drain” but that the term ordinarily refers to a “conduit for draining liquid, as a ditch or a pipe.”  She further held:

“Though the parties dispute whether the collapsed pipe was a ‘sewer’ and refer to the pipe by different names—a ‘sewer line’ for Respondent, a ‘sanitary line’ for Petitioners—it was, at the very least, a ‘drain.’  Parties do not seriously dispute this point or that there was a back up and overflow from the pipe.  More importantly, the [water exclusion] does not differentiate between drains found inside or outside the Petitioners’ property line or their plumbing system.  By its very terms, then, the [water exclusion] bars payment for the water damage and other repairs stemming from the Petitioners’ collapsed and backed up pipe… Because I find the [water exclusion] bars recovery for Petitioners in this case, it is unnecessary to analyze the other Policy provisions parties raise.  The lack of coverage for underground pipe damage is inconsequential, since it does not cover any purported water damage Petitioners allege.  The water damage exception does not impinge on the [water exclusion], as discussed above.  And I need not analyze the deterioration exclusion since the [water exclusion] undergirds my decision.”

Ken Cameron and Michelle Cameron v. Scottsdale Insurance Co., No. 16-21704, S.D. Fla., 2017 U.S. Dist. LEXIS 45474

No Bad Faith Claim Where UIM Claim Not Covered Under Antique Auto Policy

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PITTSBURGH, March 13 – U.S. District Magistrate Judge Cynthia Reed Eddy has dismissed both a bad faith and breach of contract claim against an issuer  of an antique auto policy where the alleged injury occurred in a vehicle not covered under the UM/UIM portion of the policy.

Bish v. Am. Collectors Insurance, Inc., et. al., (W.D. Pa., March 13, 2017)(Eddy, U.S.D.M.J.)

Disagreement Over ACV Estimate Insufficient To Support Bad Faith Claim, Judge Rules

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PITTSBURGH, March 2  —  An ACV basis estimate upon which a homeowners’ claims offer was made by State Farm Insurance  did not lack a reasonable basis, a federal judge ruled in dismissing the homeowners bad faith claim.  In Randy Gowton v. State Farm Fire and Casualty Co., U.S. District Judge Cathy Bissoon dismissed Gowton’s bad faith claim against State Farm, finding that the  insured  failed to show that his insurer’s offer to settle “was not supported by a thorough and even-handed investigation.”

Gowton sustained damage to his home in a fire, and submitted an estimate from his contractor to State Farm for a replacement cost benefit of $293,911.80.  After performing its own inspection, State Farm offered just $112,694.50, based on a replacement cost estimate of $187,874.50, less  depreciation of $75,180.15.  Gowton’s policy was payable on an “actual cash value benefits” basis.

Gowton sued State Farm in the Fayette County Court of Common Pleas, and after removing the case to federal court, State Farm moved to dismiss the bad faith count.  A breach of contract count had previously been dismissed by Judge Bissoon on statute of limitations grounds.

Judge Bissoon held that mere disagreement on the value of a claim following a reasonable investigation could not support a claim for bad faith:

“Gowton has failed to allege any facts to suggest that State Farm’s settlement offer lacked a reasonable basis or was not supported by a thorough and even-handed investigation… Significantly, Gowton’s response brief reiterates that he is not alleging that State Farm was dilatory, failed to communicate, performed an unsatisfactory or biased investigation or unreasonably delayed in considering his claim.  Rather, Gowton simply alleges that State Farm’s estimate was per se unreasonable for no other reason than that it differed from his own.. In the absence of any supporting facts from which it might be inferred that the company’s investigation was biased or unreasonable, this type of disagreement in an insurance case is ‘not unusual,’ and ‘cannot, without more, amount to bad faith.”

“This conclusion is bolstered by an examination of the exhibits referenced throughout Gowton’s Amended Complaint.  State Farm performed an initial inspection of the property only two days after the damage occurred and provided a detailed, 38-page estimate within a month thereafter.  State Farm’s estimate contains a room-by-room assessment of the damage; detailed measurements; design drawings; materials analysis; and line by line estimates of the cost and depreciation of the construction materials necessary to rebuild the home.  This is precisely the type of thorough and adequate investigation that vitiates a claim of bad faith.”

Randy Gowton v. State Farm Fire and Casualty Co., et al., No. 15-1164, W.D. Pa., 2017 U.S. Dist. LEXIS 29390 (Bissoon, J.)

UM/UIM Rejection Form Need Not Comply Verbatim With Statute, State High Court Rules

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HARRISBURG, Feb.22 – In a 5-2 decision, the Pennsylvania Supreme Court ruled that a UM/UIM rejection form which did not comply verbatim with the statutory requirements for rejection was valid, finding the differences between the form and the statutorily required language “inconsequential.”

In Ford v. Am. States,  the Plaintiff rejected UM/UIM coverage in her auto policy by signing a form which, according to the opinion, was identical to the statutorily required waiver in 75 Pa.C.S.A. sec. 1731 except for the following:  1.) the form referenced “motorists” instead of “motorist” in its title line and first sentence, and 2.) it injected the word “motorists” between  Underinsured” and “coverage” in the second sentence.

The American States form read, therefore, as follows:

REJECTION OF UNDERINSURED MOTORISTS PROTECTION

By signing this waiver I am rejecting underinsured motorists coverage under this policy, for myself and all relatives residing in my household. Underinsured motorists coverage protects me and relatives living in my household for losses and damages suffered if injury is caused by the negligence of a driver who does not have enough insurance to pay for all losses and damages. I knowingly and voluntarily reject this coverage.

In affirming summary judgment in favor of American States, Justice Max Baer rejected Ford’s argument that the form she signed violated Section 1731, and cited to Robinson V. Travelers Indemnity Co., 520 Fed. Appx. 85 (3d Cir. 2013).  In Robinson, the identical language used by American States was found to be in compliance with the Pa.M.V.F.R.L.:

“the Third Circuit observed that the MVFRL does not define the phrase “specifically comply” and that courts have not been uniform in their treatment of UIM coverage rejection forms that add language to the statutory form. Robinson, 520 Fed.Appx. at 88. As to the specific circumstances in the case, the court reasoned that the addition of the word “motorists” into the rejection form did not introduce any ambiguity and, in fact, made the form consistent with the rest of the MVFRL. Id. While the court opined that it is a better practice for  insurance companies not to supplement the statutory language of the MVFRL’s rejection form, the court nonetheless concluded that the insurer’s rejection form was valid because: it included the entirety of the statutory text; the addition of the word “motorists” did not introduce ambiguity into the form and did not alter the scope of the coverage.”. .  when a UIM rejection form differs from the statutory form in an inconsequential manner, the form will be construed to specifically comply with Section 1731 of the MVFRL.”

Justice Baer did caution, however, that the safer practice for insurers was to replicate the statutory language to avoid any question of non-compliance of UM/UIM rejection forms.

Ford. v. American States Ins. Co. (Pa., Feb. 22, 2017) (Baer, J.)

Pennsylvania Federal Judge Finds Condo Policy Vacancy Exclusion Ambiguous; Rules Cincinnati Insurance Owes Water Loss

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SCRANTON, Pa., Feb. 10 — A Pennsylvania federal judge ruled Feb. 10 that a vacancy exclusion in a policy was ambiguous, and obligated Cincinnati insurance to reimburse its insured for water related losses.

In Village Heights Condominium Association v. The Cincinnati Insurance Co., No. 16-554, M.D. Pa., 2017,  U.S. Middle District John Jones granted the Condominium Association’s motion for summary judgment, holding that the sum total of the Condominium’s buildings were more than 31% occupied, and therefore not vacant within the meaning of the vacancy exclusion in the Cincinnati policy, and exclusion which the Court found ambiguous.

The Village Heights is  a community comprising 50 units consisting of stand-alone homes, and apartment units. Mr. and Mrs. Herb Graves, owners of  stand-alone Unit 205 were not living in their unit and had it up for sale.  In March 2015, while on vacation, a pipe burst occurred inside the Graves unit causing significant water damage to common areas owned by the Condominium Association.

Cincinnati declined coverage, claiming that the “Vacancy Provision,” precluded indemnity because the Graves’ unit was vacant for more than 60 days.  The Association filed suit against Cincinnati, and the case was removed to the U.S. District Court for the Middle District of Pennsylvania.

The parties in their cross-motions for summary judgment disputed whether “the policy was intended to insure the separate buildings, apart and distinct from each other, or whether the Policy meant to cover the nineteen buildings as one, making up a single ‘blanket building.’”  The policy defined a building as vacant “unless at least 31% of its square footage” is rented or used.

In finding for the Association, Judge Jones held that the exclusion was ambiguous on the issue of whether the policy provided blanket building coverage to the condominium association as a unified building or as separate buildings:

 “‘Simply put, the Policy’s Declarations do not define any terms, they merely identify the coverages available under the Policy.  Thus, the Declarations do not define a “Blanket Building,” but rather indicate that the Policy provides Blanket Building Coverage.  . . .’  Finally, the Vacancy Provision, which appears in Section Six (6) of the Policy, appears to contain its own separate definitions of the term ‘building,’ which differ according to whether the Covered Property is owned by an owner or general lessee, or is leased to a tenant and is with respect to that tenant’s interest in the property.  Where, as here, the Policy is issued to an owner, the Vacancy Provision defines ‘building’ as ‘entire building.’  In a subsequent paragraph, the Vacancy Provision then refers to “the building where ‘loss’ occurs” to further specify its terms, including a requirement that the building be vacant for sixty (60) days.”

Editor’s Note:  The Court’s ruling points to a potentially unintended exposure for property and casualty insurers.  Caution should be exercised by insurers regarding both  the wording of vacancy exclusions, and how units and buildings are defined when the policy in question insures Homeowners and Condominium Associations, as opposed to individual home or unit owners.

For a copy of  the opinion in Village Heights Condominium Association v. The Cincinnati Insurance Co., No. 16-554, M.D. Pa., 2017 (Jones, J.), email me at chaddick@dmclaw.com.

 

 

 

National Union Tail Coverage On Liability Policy Insufficient, New York Judge Finds

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New York, Feb. 28 – A New York state judge has ruled that a 60-day Extended Reporting Period (ERP) Endorsement requiring that both the claim be made against the insured, and the insured’s report to the insurer take place only within the 60-day extended reporting period violates New York Insurance Regulations covering minimum ERP requirements.

The insured, New York Institute of Technology (NYIT)  sought defense and indemnity for an underlying defamation suit which was filed against it during the end of the  policy period. NYIT did not notify National Union of the claim, however, until after the polkcy expired but within the liability policy’s 60 day “tail” ERP.

National Union denied coverage on the ground that  the policy’s ERP provision only extended coverage for claims both made against the insured and reported within the 60-day tail period.   NYIT sued National Union in New York state court to compel defense and indemnity.   National Union then filed a motion to dismiss based on the language of the ERP.

New York State Trial Judge Barbara Jaffe denied the insurer’s dismissal motion, finding that National Union’s ERP provision was unenforceable, because it fell short of minimum requirements for extended reporting periods, also known as “tail coverage,” under applicable  New York insurance regulations.  She wrote:

“Pursuant to the applicable regulation, the policy should have afforded plaintiff an additional 60 days at the end of the policy term to provide defendant notice of the claim ‘for injury or damage that occurred,’ as it did here, ‘during the policy term,’ notwithstanding that plaintiff did not first receive notice of the claim against it during the ERP.”

Judge Jaffe found National Union policy’s ERP provision  was unambiguous.  She also found, however, that the ERP was invalid under New York Law.  Judge Jaffe found that as written, the National Union ERP imposed an “additional obstacle to coverage,”  and created a gap in coverage, excluding a class of claims for which the New York insurance regulations required coverage, i.e., claims made against the insured within the policy period, but not reported to the insurer until the tail period.

New York Institute of Technology vs. National Fire Union Ins. Co. of Pittsburgh, Inc. (New York County, New York, Feb. 23, 2017, Jaffe J.)

Cybercrime Insurance Outlook 2017: Man vs. Machine

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HARRISBURG, Feb. 17 – As 2017 unfolds, it remains to be seen whether an emerging trend of stricter readings of cybercrime insurance policies to limit or exclude the reach of computer fraud  crimes protection coverage will continue.  One case decided late last year illustrates the trend, and the view that whether or not computer fraud coverage applies will be based in large part on the degree of human involvement in bringing about the criminal losses.

In Apache Corp. v. Great American Ins. Co, No. 15-20499, 2016 WL 6090901 (5th Cir. Oct. 18, 2016),  the Fifth Circuit Court of Appeals ruled that a policy covering losses arising out of computer fraud did not apply to a fraudulent financial transfer “that was the result of other events and not directly by the computer use.”

Of interest to the appeals court in Apache was that the crime started with a telephone  call from the thief, posing as a vendor to the insured, requesting a change of bank wiring instructions through which the insured paid the vendor.  Pursuant to Apache’s request  for the change of wiring instructions in writing, the thief provided the instructions via email, although the email address did not match the vendor’s email domain on file.  After a telephone call made by Apache following up the email , however, Apache instructed its bank to change the wiring instructions.

Apache discovered that the wiring change was ultimately fraudulent,  resulting in net losses of $2.4 million. Apache filed a claim with Great American under its crime protection insurance policy which included computer fraud coverage. The insuring agreement in the Great American policy provided for payment of losses “resulting directly from the use of any computer to fraudulently cause a transfer of [such money] from inside the premises or banking premises … to a place outside those premises.”

Great American denied the claim on the grounds that the losses did not result directly from the use of a computer, but rather human error.  Apache sued Great American for coverage in Texas state court,  and the case was removed to the U.S. District Court for the Southern District of Texas, after which both parties cross – moved for summary judgment. The federal district court granted the insured’s motion for summary judgment in favor of coverage,  and denied the insurer’s motion for summary judgment, but refused to impose statutory penalties on the insurer.

Following appeal by both parties to the U.S. Court of Appeals for the Fifth Circuit, the appeals court reversed judgment for Apache, relieving Great American of its indemnity obligations.  A three-judge panel held that that numerous intervening non-computer actions were taken between the digital actions of the posing vendor’s email and the computer bank transfer of funds.  Such non-computer acts, the court noted, included telephone calls, approval of the change in wiring instructions by Apache’s management, the receipt and processing of invoices by Apache, and Apache’s approval of invoices for payment.  The court finally found that Apache’s instructions to the bank to effectuate the wiring change were verbal as well.

The Court held:

“The email was part of the scheme; but, the email was merely incidental to the occurrence of the authorized transfer of money. To interpret the computer-fraud provision as reaching any fraudulent scheme in which an email communication was part of the process would. . . convert the computer-fraud provision to one for general fraud.. . . We take judicial notice that, when the policy was issued in 2012, electronic communications were, as they are now, ubiquitous, and even the line between “computer” and “telephone” was already blurred. In short, few—if any—fraudulent schemes would not involve some form of computer-facilitated communication. This is reflected in the evidence at hand. Arguably, Apache invited the computer-use at issue, through which it now seeks shelter under its policy, even though the computer-use was but one step in Apache’s multi-step, but flawed, process that ended in its making required and authorized, very large invoice-payments, but to a fraudulent bank account.”

For the Apache court, then, a critical area of focus in the analysis of coverage of cyber-crime insurance is the nexus between the crime, and the degree of computer, versus human, involvement. Apache, and decisions like it, impose rather strict limits on the scope of cyber-insurance coverage, setting a bright line between fraud which is primarily the result of flawed human systems, and fraud which is primarily digital, and computer-driven.

Cyber-crime and related technology insurance coverage is still very much an emerging insurance market.  Policy language, therefore, remains varied, and such variance imposes obligations on both insurers and insureds to be precise in their understanding of what kinds of protections  the policy terms, conditions, and endorsements provide.

Apache Corp. v. Great American Insurance Company, No. 15-20499, 2016 WL 6090901 (5th Cir. Oct. 18, 2016) 

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)

 

 

 

 

 

 

Pa. Federal Bad Faith Suit Against State Farm Dismissed: Revised Repair Estimates Not In Bad Faith

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SCRANTON, Pa.,  Dec. 7 — A federal judge  granted State Farm’s motion for summary judgment on a bad faith claim  in a homeowners insurance dispute, finding that the insured failed to show that State Farm’s issuance of an estimate and revised estimates constituted bad faith as a matter of Pennsylvania law.

Joan Yatsonsky filed a homeowners’ insurance claim with State Farm arising out of water damage from broken pipes at the Yatsonsky’s home.   Within three days of the claim,  State Farm sent a disaster mitigation contractor to examine the property.  A State Farm claims representative also discovered mold in the home and told Yatsonsky that mold was not a covered loss in the policy.

State farm sent Yatsonsky an estimate of the covered damages to her home in the amount of $18,426.34.    She disputed the valuation, and submitted an estimate of damages from her contractor, Grimm Construction, for $43,403.00.  State Farm then revised its original estimate and agreed to pay an additional $15,979.50 based on Grimm Construction’s estimate.  State Farm also agreed to pay for additional mitigation services, but Yatsonsky continued to dispute the amount.

State Farm then met with Yatsonsky and Grimm Construction at the property for an inspection, and the insurer revised its estimate for a second time, mailing Yatsonsky a check for an additional $3,874.36.  The insurer then advised Yatsonsky that she could claim an additional $11,719.32 upon completion of repairs.

The parties failed to resolve their discrepancies in estimates, and Yatsonsky decided to demolish the home and rebuild.  She also sued State Farm  Wayne County, Pa., for breach of contract and bad faith.  State Farm removed the case to  U.S. District Court for the Middle District of Pennsylvania.

State Farm obtained early summary judgment on the breach of contract claim because suit filed beyond the one year limitations period in the policy.  Following discovery State farm sought summary judgment on the bad faith claim as well.

U.S. District Judge James M. Munley granted the motion, ruling:.

“plaintiff fails to present evidence that State Farm’s claims management was anything other than what it claimed:  an attempt to further investigate the water damage at plaintiff’s home to determine the value of her claim…Plaintiff has offered no expert evidence pertaining to State Farm’s investigation.  Plaintiff cites no internal State Farm communication or testimony establishing that State Farm acted out of spite during its investigation.  In sum, plaintiff has presented no competent evidence from which a reasonable jury could find that the number of State Farm employees assigned to her claim establishes bad faith.”

Judge Munley disagreed with Yatsonsky’s claim that multiple estimates issued by State Farm did not constitute bad faith:

 “Contrary to plaintiff’s arguments, the undisputed facts establish that State Farm conducted a detailed investigation over the course of one year.  State Farm inspected plaintiff’s home on five different occasions from January 2014 through June 2014.  During each inspection, State Farm met with plaintiff, or plaintiff’s contractor, and reviewed the damage to plaintiff’s home.  The parties also attempted to reconcile the estimates at these meetings.  Additionally, based on its inspections, State Farm mailed payments to plaintiff totaling $38,280.20 from January 2014 – June 2014.  These $38,280.20 payments are only $5,122.80 less than plaintiff’s initial $43,403 estimate from Grimm construction.. . . In short, plaintiff has failed to produce evidence ‘so clear, direct, weighty and convincing as to enable a clear conviction, without hesitation, about whether or not the defendants acted in bad faith.. . . At most, the available evidence may demonstrate that State Farm’s investigation and estimates were arguably negligent.  The bad faith doctrine, however, is not implicated by mere negligence.  Accordingly, the court will grant State Farm’s motion for summary judgment on plaintiff’s bad faith claim.”

Joan Yatsonsky v. State Farm Fire & Casualty Co., No. 15-1777, M.D. Pa.; 2016 U.S. Dist. LEXIS 167224

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