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

discovery

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

Bad Faith Claim Satisfies Federal Amount In Controversy Requirement

Witness_stand_in_a_courtroom

PHILADELPHIA, Sept. 28 – A federal judge has denied a remand request in a removed action against Omni Insurance company, holding that while the amount of the coverage claim was only $28,000.00, a bad faith claim also in the suit satisfied the $75,000.00 jurisdictional amount.

Plaintiff Richard Duncan originally sued a motorist insured by Omni Insurance arising out of an automobile accident.  Omni denied its insured defense and indemnity on grounds of an unlicensed driver exclusion in the applicable policy.

Duncan won $28,000.00 in an arbitration against Omni’s insured who, after the award, assigned all rights it had against Omni to Duncan.  Duncan then filed coverage and bad faith claims against Omni in Philadelphia County, seeking the amount of the arbitration award, along with bad faith damages.  Omni removed the case to the U.S. District Court for the Eastern District of Pa., and Duncan moved to remand the case.

Eastern District Judge Harvey Bartle, III denied the remand motion, citing the 3rd Circuit precedent requiring reasonable reading of pleadings to determine amount in controversy, and holding:

“Because of the bad faith claim, we deem the amount in controversy requirement to have been met.”

Judge Bartle also granted summary judgment to Omni on the merits in the case, finding that the unlicensed driver exclusion was not void as against public policy, and that it barred coverage for the underlying loss.

Duncan v. Omni Insurance Company, CIVIL ACTION NO. 16-1489, 2016 U.S. Dist. LEXIS 133134 (E. D. Pa., Sept. 28, 2016)

 

Why You Should File (And Win) Summary Judgment In (Almost) Every Bad Faith Case, Part II

driveway-gate1

In Part I of this post, we examined the reasons why motions for summary judgment should be filed and won more often  by insurers in bad faith litigation.  In Part II, we examine how to improve the odds which already start out in an insurer’s favor in the summary judgment arena.

You Had One Job

The first rule of filing and winning more summary judgments in bad faith litigation is to do what the summary judgment rules ask be done:  demonstrate that there is no genuine issue of material fact remaining for trial.  The operative word in that requirement is “demonstrate.”

Summary judgments are won and lost based upon the amount of sweat and toil the moving lawyer puts into the facts which will appear in the summary judgment motion and briefing.  The record in the case, most plainly discovery, has to be combed through to cull all documents, all testimony, all evidence which demonstrates that the insurer handled the claim in question reasonably.

We do not say that it must be shown the insurer handled the claim “correctly” here, because as discussed in the prior post, insurers have a right to be wrong, as long as they are not unreasonably wrong.  By all means, however, if you can demonstrate to the reviewing court that the insurer handled the claim both reasonably and correctly, that should be done. Reasonable and correct is always better than reasonable and incorrect, although either can win an insurer a summary judgment in a bad faith case.

The main jobs in developing the record for a summary judgment motion are specificity and thoroughness.  Every assertion made in support of the motion should be supported with some item from the record.

Be A Beast Of Burden

In Part I of this post, we reviewed the burden of proof in bad faith cases, often referred to as “clear and convincing evidence,” which favors insurers, and makes the job of a bad faith plaintiff an uphill battle.  It is a burden of proof which should be stressed throughout the summary judgment submissions because some  judges tend to forget that the burden applies at the summary judgment stage , and it does not hurt to remind those judges who do remember.

If the summary judgment opinion and ruling an insurer’s lawyer gets back following the motion mentions that the plaintiff’s burden at summary judgment  is one of clear and convincing evidence, then the insurer’s lawyer has done her job in sufficiently arguing it.  She has also increased the chances that summary judgment is going to be granted for her client.

Tell A Story, And Trace The Thought Process

In my practice, I defend professional liability actions of all kinds from time to time.  There is an important lesson in defending those cases which translates very nicely to summary judgment motions in bad faith cases:  telling a story, and tracing a thought process.

Since the focus of any bad faith case is the nature and quality of how the insurance claim at issue was handled, the successful insurers in summary judgment motions are the ones which walk the presiding judge through the claims handling process, demonstrating what was done, when it was done, why it was done, and how the insured’s interests were considered and not unfairly compromised.  If the presiding judge can understand the how and why of the claims handling process, the burden and proof and the case law will very likely carry the judge where insurers need him to go.  The judge is equipped  to see that while the insured may not have agreed with the claims outcome, the insurer came by that outcome honestly, sincerely, and reasonably.  And if an insurer can get a judge to go there, they will win summary judgment in their bad faith case.

As we did in closing out Part I of this post, we close here by saying again:  summary judgments for insurers in bad faith litigation are fat pitches in which the odds favor the insurer.  If the motion and briefing process are executed with the above in mind, the chances of success are substantial.

For more information on how to file and win more summary judgments in coverage and bad faith cases, and to reduce your legal expense while doing it,  reach  me at chaddick@dmclaw.com or 717-731-4800.

 

Bad Faith Allegations Too General, Dismissed Again In Pa. Federal Court

CSCC-Lawsuit-Dismissed

PHILADELPHIA, June 8 – A  federal magistrate judge in Philadelphia has found that overly broad bad faith allegations in a complaint filed against New Jersey Manuracturers Insurance Company should be dismissed.  The Court ruled that the insured plaintiff made only conclusory allegations insufficient to withstand the early challenge.

Mary Camp settled and auto accident claim with the tortfeasor’s insurer for $82,000, and then made a demand to her insurer, New Jersey Manufacturers Insurance Co. (NJMIC), for UIM benefits, seeking $221,412 for future medical treatment requirements.  NJMIC denied the claim, and Camp sued the insurer in the U.S. District Court for the Eastern District of Pennsylvania.  The complaint included claims for breach of contract and bad faith.

NJMIC filed a motion to dismiss the bad faith claims as insufficiently conclusory pursuant to F.R.C.P. 9.  NJMIC contended that the bad faith claims were simply  “a generic and non-specific reference to bad faith without enumerating any specific conduct of the defendant other than a disagreement over the value or amount of the claim.”

It was the second time Magistrate Judge Marilyn Heffley granted a motion to dismiss.  She earlier granted the same motion in March, but granted Camp leave to amend her complaint.  Camp’s amended complaint was not sufficiently different, according to Judge Heffley, with withstand dismissal.  In dismissing the similarly conclusory allegations, she wrote:

“The bad faith allegations in subsections (i) through (k) of paragraph 35 of the Amended Complaint remain unchanged from Camp’s original pleading. They include claims that NJMIC ‘engag[ed] in dilatory and abusive claims handling,’ ‘fail[ed] to adopt or implement reasonable standards in evaluating plaintiff’s claim,’ and ‘act[ed] unreasonably and unfairly in response to plaintiff’s claim.’ These allegations are devoid of factual specificity as to what claims handling practices were abusive or how NJMIC acted unreasonably. As the Third Circuit [U.S. Court of Appeals] ruled in Smith [Smith v. State Farm Mutual Automobile Insurance Co. (506 F. App’x 133, 136 [3d Cir. 2012])], without such details, a plaintiff has “fail[ed] to allege a legally sufficient cause of action for bad faith under [Pa. Consolidated Statutes] § 8371…

Alhough bad faith may be found where an insurer fails to communicate its reasons for denying a claim to an insured, in this case, according to the facts pled by Camp in her Amended Complaint, NJMIC actually did provide a reason for denying the claim. In paragraph 23 of the Amended Complaint, Camp alleges that in response to her submission for UIM coverage, NJMIC responded that it ‘[would] not be making a settlement offer as “it appears [Plaintiff] has been fairly compensated by the tort carrier for the injuries she sustained in the loss.”’ Thus, the facts alleged in the Amended Complaint clearly contradict the legal conclusion that Camp asks this Court to accept. Accordingly, Camp’s bad faith claim is insufficient to state a claim upon which relief can be granted.”

(Mary Camp v. New Jersey Manufacturers Insurance Co., No. 16-1087, E.D. Pa.; 2016 U.S. Dist. LEXIS 74496)

Travelers, Cincinnati Owe No Duty To Defend School In Lacrosse Death

Louisville, Jan. 21.  A U.S. District Court Judge in Kentucky has ruled that neither Travelers or excess insurer Cincinnati Ins. Co. have a duty to defend Bellarmine University in a wrongful death suit brought by the estate of a university lacrosse player who died while participating in conditioning drills.

On January 21, U.S. District Judge Charles R. Simpson granted the insurers’ motion for judgment on the pleadings, holding that the policy’s Athletic Participants Exclusion Endorsement relieved the insurers of the duty to defend or indemnify Bellarmine in the underlying death suit.   The endorsement excluded coverage for bodily injury “to any person engaged in athletic, exercise, or sports activities” sponsored by the university.

The Court held that Travelers did not contract to ensure the exposure for which Bellarmine was seeking defense and indemnity.  It also held that the excess policy issued by Cincinnati did not apply, as it contained language disclaiming coverage for any loss which came within an applicable exclusion in the language of the primary policy.

Underwriters Safety et al v. Travelers et al, W.D. Ky. 2016 (Simpson, J.)

Federal Judge Denies Stay, Upholds Insurer’s Work Product Privilege In Bad Faith Case

Reading, Pa., Jan. 19.  U.S. District Judge  Joseph Leeson  has denied a motion filed by Allstate Insurance Company to sever and  stay a  bad faith claim, including  discovery,  in a combined breach of contract and bad faith case, but has ordered that Allstate may properly assert work product privilege protection as to matters genuinely prepared in anticipation of litigation.

In Wagner v. Allstate, Judge Leeson conceded that while there may be a basis for separate trial of the breach of contract and bad faith claims under F.R.C.P. 42 , there was no need to prevent simultaneous discovery in both the breach of contract and bad faith claims.

Judge Leeson also granted in part and denied in part Plaintiff’s motion to compel discovery of Allstate’s claims file, ruling that the Court needed more information to make a complete ruling on the motion.  The Court ruled that Allstate did have the right to assert privilege over materials in its claims files which were prepared in anticipation of litigation, while observing the parties disputed the date at which time Allstate’s anticipation of litigation over the underlying UIM claim was bona fide.

Wagner v. Allstate Ins. Co., E.D. Pa. 2016 (Leeson, J.)