Tag: Summary Judgment

Failure To Comply With Pa.M.V.F.R.L. Renewal Notice Requirements Not Bad Faith, Pa. Federal Judge Rules

Pittsburgh, July 12th. A federal judge in the Western District of Pennsylvania recently granted summary Judgment to an auto insurer in a coverage and bad faith case, ruling that in the presence of a valid UM/UIM rejection by the insured, subsequent non-compliance with the renewal notice requirements of the Pa.M.V.F.R.L. neither provided the basis for policy reformation, nor a bad faith claim.

In a ruling by Magistrate Judge Kelly, adopted by Judge Hornak, the court found that the insurer’s failure to include a proper renewal notice regarding the rejection of UIM coverage was a violation of the MVFRL. It also found, however that such violations do not allow private civil remedy, beyond administrative review, and such a violation could neither form the basis of reformation of the policy, or of a bad faith cause of action

The court also found that since there had been a prior valid rejection of UM/UIM coverage by the insured, the claims adjuster’s denial of a claim for such benefits was objectively reasonable.

Keeler v. Esurance, U.S. District Court Western District of Pennsylvania No. 20-271 (W.D.Pa. July 12, 2021) (Kelly, M.J.) Link: https://www.govinfo.gov/app/details/USCOURTS-pawd-2_20-cv-00271/USCOURTS-pawd-2_20-cv-00271-0

Advertisement

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

penalty2_5139_356

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.)

Disability Insurer Prevails: Pre-Existing Condition Justifies Denial, Federal Judge Rules

Witness_stand_in_a_courtroom

HARRISBURG, June 21 — A Pennsylvania federal judge has granted a disability insurer’s summary judgment motion, finding that a refusal of long term disability (LTD) benefits was neither arbitrary nor capricious, because the denial properly relied on a pre-existing condition exclusion in the policy.

In Yvonne Hilbert v. The Lincoln National Life Insurance Co., 15-471, M.D. Pa., 2017 U.S. Dist. LEXIS 93424), U.S. District Judge Sylvia Rambo ruled that Lincoln National Life Insurance Co., did not violate or abuse its discretion under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (1974) (ERISA), when it found that Ms. Hilbert’s claim was not covered under a LTD policy it issued to Delta Dental, covering her as an employee.
Hilbert worked at Delta Dental and received benefits under the company’s short term disability policy (STD) for back and leg pain, and depression, claiming she was unable to work.   When Lincoln reviewed her claim for LTD status, the LTD policy in question barred coverage for any condition for which the employee was treated within 3 months of her hire.  Lincoln determined that Hilbert received treatment for depression  during her “look back” period of  Aug. 1, 2011 to Nov. 1, 2011, and eventually denied Hilbert’s claim for LTD benefits pursuant to the pre-existing condition exclusion.  Lincoln contended that Hilbert did not prove she was unable to work independent of her depression.
Following the denial of her administrative appeals, Hilbert sued Lincoln in the Eastern District of Kentucky, but the case was moved by Lincoln to the Middle District of Pennsylvania on grounds that  that it was a more convenient forum.
Following transfer, the parties filed cross motions for summary judgment..Judge  Rambo granted Lincoln’s motion and denied Hilbert’s motion , ruling that Lincoln’s denial of LTD benefits was not arbitrary and capricious.  She rejected Hilbert’s argument that the grant of STD benefits undercut the denial — the STD policy did not have a pre-existing condition exclusion.  She also found that Hilbert failed to prove her inability to work was wholly divorced from her depression:
“[the record] demonstrates that Lincoln considered the relevant medical evidence and supports Lincoln’s decision that Plaintiff was not totally disabled due a physical condition as of September 18, 2012…Lincoln did not act in an arbitrary and capricious manner in characterizing the principal duties and responsibilities of Plaintiff’s occupation…Significantly, although Plaintiff treated with several medical providers, not a single physician — not even her primary care physician or her pain physician — supported her claim… Here, Lincoln’s decision to deny Plaintiff LTD benefits is supported by substantial evidence in the record, and without substituting the court’s judgment for that of the defendant in determining eligibility for plan benefits, the court concludes that Plaintiff is not entitled to benefits under the terms of the LTD Policy and that Lincoln’s decision was neither arbitrary nor capricious.”
The judge also found that Hilbert’s receipt of Social Security disability benefits did not entitle her as a matter of course to LTD benefits under the Lincoln policy, observing that SSDI rules do not bar coverage for pre-existing conditions.

Dickie McCamey Lawyers Hold Summary Judgment For Harleysville On Appeal Of Breach of Contract and Bad Faith Case

discovery

HARRISBURG, September 13 – Dickie McCamey Attorneys C.J. Haddick and Christine Line won a victory for Harleysville Insurance in Pa. Superior Court yesterday, winning an affirmance of a summary judgment motion in a coverage and bad faith case originally filed against the company in Berks County.

In the case, insured Clyde Rogers made claims under both commercial and inland marine insurance policies issued by Harleysville covering a van Rogers used in his business.  After Rogers claimed the vehicle caught fire on January 25, 2012, and was a total loss, he sought reimbursement for the van, tools, and equipment allegedly destroyed inside the van.  Harleysville  paid Rogers a policy limit of $5,000.00 for unscheduled tools and equipment which Rogers accepted, and offered to pay $1,120.00 for the value of the van and $1,220.68 for rental of a substitute van, which Rogers did not accept.  Rogers thereafter filed suit against Harleysville in the Berks County Court of Common Pleas.

The Berks County Court of Common Pleas granted Harleysville’s Motion for Summary Judgment, finding that Harleysville’s remaining offers to pay for the actual cash value of the van, and for rental of a substitute van, were the only remaining obligations owed under either the commercial auto or inland marine policies.  Rogers appealed.

On appeal, a unanimous panel dismissed all of the arguments made on Rogers’ behalf seeking reversal of the judgment in favor of the insurer.  Pa. Superior Court Senior Judge William H. Platt found that nothing in either of the Harleysville polices was ambiguous, as Rogers contended.  Judge Platt also found there was no provision in the policies supporting Rogers’ claims for storage fees or loss of business income.

Based upon his review of the policy language and Harleysville’s position on payment of the claim, the Court found the Plaintiff’s bad faith claims without merit, and affirmed summary judgment on those claims as well.

Finally, Judge Platt ruled that the failure of Mr. Rogers’ lawyer to attend oral argument on Harleysville’s summary judgment motion despite receiving notice of the date of the argument from Harleysville’s lawyers was insufficient grounds to overturn the judgment in favor of Harleysville.

Clyde Rogers v. Harleysville Insurance, No. 289 MDA 2016, Filed September 13, 2016, Pa. Superior Court.

 

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.

 

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

driveway-gate1

Excepting death and taxes, there are no sure things.  But there are plenty of near – sure things and fat pitches in life, and summary judgment motions by insurers in bad faith cases is one of those things.    Insurers should be filing and winning more of them.  In this post, we undertake a brief review of why more summary judgment motions should be filed by insurers in bad faith cases.  In the next post, we will look at how such motions can be best positioned to win.

But first, why should more summary judgments be sought in bad faith cases?

The Burden of Proof Is Exactingly High, Favoring The Insurer

In most if not all states, bad faith must be proved by a hybrid burden of proof which lies somewhere above preponderance of the evidence, and below beyond a reasonable doubt.  This burden of proof applies as much to the summary judgment stage as it does to the trial of a bad faith case, and it can be used offensively to argue that no genuine issue of material fact can be established.

In my experience, the burden of proof should be stressed more by insurers at the summary judgment stage than it is.  It is a great reminder to the judge to properly orient his frame of reference when reviewing the motion.

Genuine, Bona Fide Bad Faith Is Rare

Don’t believe what the Plaintiff’s bar says.  Claims adjusters and claims departments simply do not benefit from intentionally and unfairly  handling claims, and the list of why they do not benefit is a long one.  Most people want to do a good job and do it fairly.  Even the ones that don’t  seek to avoid unwarranted attention, and don’t want to get fired.  Nobody in a claims department wants their name associated with a bad faith suit, to be drug into interviews and depositions, or to be responsible for legal expense and risk.

I have written on this subject before, but in nearly 30 years of practice I can count the number of instances of claims handling with malice aforethought on a single hand — half of a single hand, actually.  It just does not happen.

Do mistakes happen in claims handling?  Of Course.  Negligence?  Occasionally.  But bad faith law allows safe harbor for both, and neither statutory nor common law bad faith claims are designed to punish an insurer for either mistakes or negligence.

Bad Faith Rulings Are Inherently Ideal  For Judges To Make

Nearly ten times out of ten, the proper adjudication of a bad faith case can be made following discovery, when a judge can look at the facts of the specific claims handling, and apply the particular bad faith law of the jurisdiction to serve a gate keeping function.  If  a judge finds a reasonable basis for handling the claim at issue, the inquiry is over.  And only in the rarest of cases will a judge genuinely believe that an insurance bad faith case can go to trial.

Summary judgments for insurers in bad faith litigation are fat pitches in which the odds favor the insurer.  In the next post, we will examine how to maximize that advantage, and win more summary judgment motions.

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.

Basement Collapse Caused By Defective Workmanship Not Covered By Property Policy

shoring

VIRGINIA, July 26 – Peerless Insurance has won a summary judgment motion in federal court in Virginia, after the Court held that a property policy insuring a building under renovation did not provide coverage for a collapsed basement wall which was the result of a subcontractor failing to properly shore a basement wall.

Construction Company Taja Investments was doing excavation work in a building crawl space. One of the basement walls collapsed because a subcontractor did not properly shore the walls as construction proceeded.  Taja filed a claim with Peerless.

Peerless denied the claim made by the insured, Taja, arising out of the collapse and Taja filed suit.  In granting summary judgment, the Court reasoned that the collapse was a result of the insured’s failing to safeguard the basement walls during excavation.  The Court found under Virginia law that there was no independent cause of the loss apart from the insured’s failure, and the failure of the subcontractor. The Court also rejected the lines of cases outside Virginia which do not require independent cause to establish coverage.

The Court also found that an earth movement exclusion applied to bar coverage whether or not the movement was underground and whether the movement was natural or man made:

“while the movement that caused the east wall’s collapse occurred below grade (in the basement, below the ground level of the structure), it still involved movement of the earth surface (the uppermost layer of the soil and clay).”

Taja Investments v. Peerless Ins. Co. a/k/a Liberty Mutual Insurance Co., Civ. No. 1:15-cv-01647, 2016 U.S. Dist. LEXIS 95760 (E. D. VA, July 21, 2016).

Summary Judgment For Insurer In Mold Coverage Dispute

mold

CAMDEN, July  15 — A New Jersey federal judge ruled an insurer’s handling  of claims for water and mold damages were neither breach of contract nor bad faith.  The Court further ruled that the insurer paid the full amount of the mold remediation sublimit under the policy.

Warren and Maryann Andrews sued Merchants Mutual Insurance Co. in the U.S. District Court for the District of New Jersey after a dispute arose under the Andrews’ homeowners’ policy with Merchants.  The insureds discovered several water leaks after a rainstorm, and filed a claim for coverage with Merchants.

The Andrewses sought coverage from Merchants Mutual for the damages. Merchants made partial payment for some of the damages, including a $10,000.00 payment to satisfy the policy’s mold remediation sublimit.

The Andrewses were unsatisfied with the payment, and alleged breach of contract and bad faith against Merchants in the New Jersey federal action.  In the case,  Merchants moved for summary judgment.

U.S. District Judge Joseph H. Rodriguez granted the motion, determining that Merchants Mutual fully  paid the mold remediation sublimit, and otherwise fully performed its obligations under the homeowners policy.  Rodriguez also found no evidence in the record of claims delay on the part of merchants, which led to the dismissal of both the breach of contract and bad faith claims.

Warren and Maryann Andrews v. Merchants Mutual Insurance Co., No. 14-5147, D. N.J.; 2016 U.S. Dist. LEXIS 89997

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

CAT262B

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

Computer Fraud Losses Barred By “Authorized Representative” Exclusion

cyber-liability

PASADENA, June 28 — The Ninth Circuit U.S. Court of Appeals affirmed summary judgment for Great American Insurance Co., holding that the relevant policy’s “authorized representative” exclusion barred coverage of $100,000 in losses to Southern California Counseling Center  arising out of computer fraud by one of the Center’s payroll agencies.

The Southern California Counseling Center (SCCC) sued its insurer Great American Insurance Co. (GAIC) for breach of contract and bad faith, alleging  $100,000 in losses after a payroll company withdrew funds from SCCC’s bank accounts and used them instead of paying SCCC’s federal and state payroll tax obligations.  SCCC sought a declaratory judgment that Great American had a duty to cover the underlying losses arising out of computer fraud.

On June 17, 2014, U.S.District  Judge Audrey B. Collins granted summary judgment for Great American, holding that a policy provision excluding coverage for losses caused by “authorized representatives” applied to the misconduct of SCCC’s payroll services agent Ben Franklin Payroll Service .

The Ninth U.S. Circuit Court of appeals  affirmed the District Court’s ruling in favor of the insurer,  holding:

the plain meaning of the “authorized representative” language [here] . . . is not ambiguous and covers those who by authorization of the insured are given access to and permitted to handle the insured’s funds. . . This understanding comports with the function of the provision within the policy: to place the onus of vetting the individuals and entities whom the insured engages to stand in its shoes — and thus the risk of loss stemming from their conduct — squarely on the insured. In other words, the term ‘authorized representative’ is ‘a straightforward effort to embrace all statuses that are “authorized,” and thus are the insured’s responsibility to supervise…’”

“SCCC executed multiple agreements with Ben Franklin Payroll Service and/or its principal, Richard Zakarian, to allow the latter party or parties to provide payroll services…In doing so, SCCC gave them direct access to its bank account and permission to file tax documents on its behalf. These agreements used the word ‘authorize’ numerous times; indeed, it is difficult to imagine contracts that could more explicitly ‘authorize’ a ‘representative’ to act on one’s behalf. Under these circumstances, the district court did not err in concluding that the only reasonable construction of the term ‘authorized representative’ encompasses Ben Franklin Payroll Service and/or Zakarian, and, as a result, the exclusion unambiguously applies.”

Southern California Counseling Center v. Great Am. Ins. Co., (9th  Cir., 2016)

%d bloggers like this: