Monthly Archive for April, 2016
In International Management Consultants, Inc. v. Continental Casualty Insurance Company, the plaintiff was a general contractor doing work for a school district. As part of the agreement between the contractor and the school district, the school district was required to purchase Builders Risk Insurance. When the contractor suffered increased costs from the work of one of its subcontractors and/or flooding, it asked the school district to cover those costs, but the school district refused.
The contractor then sought relief against the school district’s insurer, which the insurer refused, as the policy issued to the school district did not encompass the contractor as an insured. The contractor subsequently brought a bad faith claim, among others, against the insurer. The court found that the contractor was not an insured under the policy. As the contractor was not an insured under the policy, it had no standing to bring a bad faith claim against the school district’s insurer.
Date of Decision: April 14, 2016
International Mgmt. Consultants, Inc. v. Cont’l Cas. Co., No. 14-4924, 2016 U.S. Dist. LEXIS 50726 (E.D. Pa. Apr. 14, 2016) (Jones, II, J.)
In Puzzo v. Metropolitan life Insurance Co., the Court held that an insured could not amend his declaratory judgment complaint to include allegations of bad faith where he failed to allege he was entitled to coverage as a matter of law.
The insured suffered serious brain injuries as a result of a car collision. Pursuant to two insurance policies, the insurer provided the insured with short term disability benefits under both policies, and for approximately two years, provided long term disability benefits. Approximately two years after the insured’s injury, the insurer terminated the long term disability payments under both policies. Plaintiff appealed the insurer’s decision under ERISA’s administrative appeals process, but the insurer never issued a final decision on appeal.
The insured brought a declaratory judgment action against the insurer and later sought to amend his complaint under Fed. R. Civ. P. 15(a) to include claims of bad faith. In the insured’s Motion to Amend he alleged that the insurer acted in bad faith by withholding documents for long periods of time and for failing to obtain necessary medical records before the deadline for issuing a decision on the appeal expired.
The Court denied Plaintiff’s Motion to Amend finding that as alleged, the proposed amendment did not contain sufficient facts to support a finding of bad faith as a matter of law, and was therefore futile. The Court held that the critical question in a bad faith case was whether there was a “fairly debatable” reason for denying coverage, or in a “delay case”, for delaying a coverage opinion. Although the insured sufficiently plead that the insurer delayed in responding to his appeal, these allegations were insufficient to show bad faith. The insured also had to plead that coverage under the policy was not “fairly debatable” and the insurer knew or recklessly disregarded this lack of a reasonable basis when it delayed its coverage decision. The Court denied the insured’s Motion to Amend, holding that delay, without a corresponding duty to provide coverage, cannot provide a basis for bad faith.
Date of Decision: March 29, 2016
Joseph Puzzo v. Metropolitan Life Ins. Co., NO. 3:15-cv-3190, 2016 U.S. Dist. LEXIS 40766 (D.N.J. March, 29, 2016) (Wolfson, J.)
In Ridolfi v. State Farm Mutual Automobile Insurance Company, the insured brought breach of contract and bad faith claims against its own insurer in connection with an automobile accident. The insured pleaded that she had been trying to resolve the case with her insurer for over two and one half years. She alleged that the insurer had misstated its policy limits on at least two occasions; made repeated, redundant and unnecessary requests for medical records; ignored correspondence from the plaintiff and her counsel for months; and attempted to improperly subpoena medical records of the plaintiff without providing the plaintiff proper notice.
The insurer moved to dismiss the bad faith count, but the court refused to dismiss the claim. The court found that plaintiff met federal pleading standards. The complaint the claim, and delays caused by an allegedly improper investigation, coupled with an alleged lack of response to numerous legitimate requests for assistance and information from the plaintiffs. The complaint further alleged that the insurer’s claims handling violated specific state insurance claims processing laws and regulations, citing these statutory and regulatory violations as further proof of bad faith. The court refused to go beyond the pleadings, and the Magistrate Judge issued a Report and Recommendation that the motion to dismiss be denied.
Date of Decision: March 24, 2016
Ridolfi v. State Farm Mut. Auto. Ins. Co., No. 1:15-CV-859, 2016 U.S. Dist. LEXIS 38344 (M.D. Pa. Mar. 24, 2016) (Carlson, U.S.M.J.) (Report and Recommendation)