Archive for the 'PA – Sworn Statement/EUO' Category


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This case involves a head-spinning array of factual discrepancies between the insured’s claims to the carrier and the results of the insurer’s investigation. These range from whether the insured actually owned the property to whether the structure at issue collapsed from a sudden event or collapsed because of (uncovered) faulty construction. We leave you to the court’s lengthy and detailed narrative concerning these discrepancies, and the various coverage issues invoked by their presence. Of particular interest here is that in addition to involving an adjuster, SIU adjuster, supervisor and engineering expert, the insurer also puts its outside counsel’s coverage opinion on the record.  

The insured brought a bad faith claim, and the insurer moved for summary judgment after making a detailed record.  The insurer asserted various bases for why it was entitled to summary judgment. In granting summary judgment, the court stated that, at a minimum, there was a reasonable basis to deny coverage:

“The record indicates that [the insurer] conducted a thorough investigation of the claim and ultimately decided that coverage should be denied. Indeed, [a] property adjuster and an SIU adjuster inspected Plaintiff’s loss; the claim was reviewed by [a] supervisor; [the insurer] took the recorded statement of Plaintiff and reviewed relevant property documentation from the City of Philadelphia; [the insurer] obtained the services of a structural engineer; and [the insurer] then sent the structural engineer’s report, which opined on the cause of the loss, to independent legal counsel for an opinion on the coverage. Finally, relying upon independent legal counsel’s conclusion that coverage did not exist for Plaintiff’s loss, [the insurer] denied Plaintiff’s insurance claim. It cannot be said that [the insurer]’s investigation and decision-making process was ‘frivolous or unfounded,’ as required under Pennsylvania law to succeed on a bad faith claim.”

The court added, “the factual record is devoid of any ‘clear, direct, weighty and convincing’ evidence that would allow a factfinder to find ‘without hesitation’ that [the insurer] acted in bad faith in investigating and ultimately denying Plaintiff’s insurance claim.”

Moreover, even if the insured could make a case for unreasonableness, “the record is devoid of any evidence that [the insurer] either knew it had an unreasonable basis for denying coverage or recklessly disregarded its lack of a reasonable basis in denying Plaintiff’s claim or in the manner in which it investigated Plaintiff’s claimed loss.” The record shows the contrary. The insurer not only engaged a structural engineer, but also independent legal counsel to analyze coverage. It then “relied on the independent findings of both the expert and legal counsel in its ultimate decision to deny” the claim.

Date of Decision: February 14, 2020

Nguyen v. Allstate Insurance Co., U.S. District Court Eastern District of Pennsylvania CIVIL ACTION No. 18-5019, 2020 U.S. Dist. LEXIS 25789 (E.D. Pa. Feb. 14, 2020) (Kenney, J.)



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Today’s post summarizes Lehigh County Judge Melissa Pavlack’s Findings of Fact and Conclusions of Law in this breach of contract and bad faith case.

The Court’s Factual Findings

The insureds’ car was stolen. It was recovered, but with considerable damage. The insureds’ license plate was replaced with a stolen plate. The court found that the thieves never intended to return the vehicle. The insureds sought coverage based on the theft and vandalism, relying on policy language covering theft, larceny, vandalism, and malicious mischief.

The court found the insureds were not involved in any way with the theft or vandalism, nor was there any fraud on their part. The car was deemed a total loss, and valued at around $13,000. There were additional costs for hauling and storage, bringing the total claim to approximately $17,000.

The insurer denied the claim, citing insufficient evidence the car had been stolen. It refused to consider a separate vandalism claim because the damages arose out of an alleged theft. Thus, the insurer did not investigate the vandalism claim, and the denial letter never addressed the vandalism claim’s merits. The insurer never cited any policy exclusions applying to the vandalism claims. There was also no denial based on fraud.

The insurer’s investigation included a claim’s adjuster and supervisor, a fraud investigator, an appraiser, an appraisal report, an investigator and three investigator reports, an examination under oath over the telephone and in person, document requests, and a site visit to the loss location. At trial, the adjuster could not recall which of the insured’s statements under oath led to the claim denial.

The investigator reported to the carrier that one of the insureds was uncooperative because she did not bring unredacted tax returns and cell phone records to her examination under oath. Relying on this alleged lack of cooperation, the claims supervisor wrote to the insured that she had failed to cooperate by not bringing these tax returns and records, and failed to cooperate with the insurer’s investigation. However, the investigator was not aware that another of the insurer’s representatives had actually instructed the insured to bring redacted copies of the tax returns to the examination under oath, which she did.

As to other document issues allegedly evidencing a failure to cooperate, it was made clear during the examination under oath that the insured was a medical professional. She could not simply produce her phone records without violating HIPAA. She attempted to cooperate during the examination under oath by showing some messages in her phone from the days in question; but the adjuster was also concerned about HIPAA, and was hesitant to proceed with looking at her phone. Further, the court found the insured could not respond to the insurer’s request for the car purchase documents because these had been stolen from the glove compartment.

Moreover, in contrast to assertions that the insureds failed to cooperate, the court found that the insurer’s fraud investigator conceded the insureds had cooperated, and had provided documents requested in the manner requested.

As to the allegation there was insufficient evidence of theft, the insurer relied upon its expert report. The expert opined there was no forced entry, and that the car only could have been moved using a key. The court found (1) the insurance policy did not require forced entry as a condition precedent to establish theft, and (2) the car could be moved without a key. Further, the insurer’s fraud investigator testified that cars can be stolen without noticeable signs of forced entry, and there was other testimony to the same effect. The court also found that the fraud investigator never communicated with the claim adjuster that forced entry was not required to steal a car.

In sum, the court found these conclusions (forced entry and use of a key) were not reasonable bases to deny the very existence of a theft.

Most significantly, the expert only opined the car was not stolen by means of forced entry, and that a key had to have been used. Whether or not these conclusions were correct was irrelevant in the court’s view, because the expert never opined the car was not stolen. Thus, it was an error to make the leap that the car was not stolen, as it could have been stolen by some means other than forced entry, or could have been moved without a key.

There was Coverage for Theft, Vandalism, and Malicious Mischief

In addressing the breach of contract claim, the court looked at the policy’s plain language. The policy expressly covered theft, larceny, vandalism, and malicious mischief. There were no applicable exclusions in this case, so the court only had to interpret the coverage language.

The court looked at the dictionary definition of these terms, rather than any criminal statutes or case law defining vandalism, theft, etc. It concluded the facts of the case fell within these coverage terms, and the insureds claims were covered. As to bad faith, it was unreasonable to conclude the facts at hand did not fall within the policy’s plain and unambiguous language. Further, the court found the insurer’s conduct unreasonable in failing to consider coverage for vandalism and malicious mischief when denying the claims.

Court uses Unfair Insurance Practices Act and Unfair Claim Settlement Practices Regulations as Standards

The court cited (1) Unfair Claim Settlement Practice regulations (UCSP), 31 Pa. Code § 146.4, on obligations to fully disclose coverages and benefits; and (2) the Unfair Insurance Practices Act (UIPA), 40 Pa.S.A. § 1171.5(a)(10)(iv), on failing to reasonably explain a claim denial.

The court cited these UCSP and UIPA provisions in the context of the first bad faith prong, lack of a reasonable basis to deny benefits. The court then observed the insurer had completely failed to consider the vandalism and malicious mischief claims covered under the policy. This supported the existence of bad faith, though it is not wholly clear whether the UCSP and UIPA violations were evidence of bad faith conduct, or were bad faith per se.

[We have previously posted on how courts treat alleged violations of UCSP regulations and the UIPA in bad faith cases, ranging from (1) their being completely outside the scope of consideration in determining bad faith, (2) as constituting potential evidence of bad faith, or (3) as amounting to statutory bad faith. It is not quite clear in the present case which of the latter two standards applied. Even without citing the UCSP or UIPA, however, it would seem the court’s finding that the insurer gave no regard to plainly covered vandalism claims was a basis for bad faith, regardless of any UCSP or UIPA violations.]

Erroneous Red Flags

The insurer justified its conduct by identifying certain “red flags” that caused legitimate doubt in the insureds veracity. When scrutinized, however, the court found these red flags were based on factual errors or erroneous assumptions.

  1. The insured was deemed uncooperative for failing to attend a unilaterally scheduled examination under oath. In fact, however, the court found the insured gave sufficient notice she could not attend on that date, and cooperated in rescheduling the examination under oath on another date, at which she appeared. She also had agreed to, and participated in, an examination over the phone.

As to the original date for the in-person examination, the court observed that the insurer knew in advance the insured was not going to appear on the first scheduled date, but still had its representatives appear to make a record against the insured for failing to appear.

  1. The insurer also asserted the insured was uncooperative because she provided redacted tax returns. As stated above, the insurer’s own representative had informed the insured in writing that certain redactions could be made. Further, when the insurer later requested an unredacted return, the insureds provided it.

  2. As to the alleged lack of cooperation on cell phone records, this was fully addressed during the examination under oath. As stated above, the insured was a medical professional and there were certain items on her phone records that could not be produced under HIPAA. That being said, she still offered to let the insurer’s representative look at her cell phone during the examination under oath, regarding non-HIPAA messages from the date the car was stolen. The adjuster was concerned about violating HIPAA, and was hesitant to do so.

  3. The insurer also deemed it a red flag that the loss came shortly after the policy’s purchase. This turned out to be an error. The court found the policy was purchased at least six months earlier. Another suspicion surrounded alleged excessive mileage on the car, which the court found was likewise not factually the case.

Failure to Fully Investigate the Red Flags

The court observed that while the insurer took the insured’s examination under oath, and conducted various investigations based on these alleged red flags, it failed to contact the police. Nor did the insurer follow up on evidence that drugs reportedly were found in the glove compartment. Though not expressly stated in the conclusions of law, this implies that the presence of drugs, under all the facts, favored the idea that strangers had stolen the car for nefarious purposes.

The Insurer Relied on its Expert Report for the Wrong Conclusion

For the court, the coverage issue concerning the insurer’s expert was simple: Was the car stolen? The issue was not: How was the car stolen?

The expert opined on two means by which the car was not stolen. The court found the expert never opined, however, that the car was not stolen. Moreover, the insurer never argued that the insureds faked a theft or lied about it.

The court pointed out that other means could have been used to steal the car, including non-intrusive and non-mechanical means. For example, after the car was recovered it was towed twice. The court found this demonstrated the car could be moved without forced entry and/or without a key.

Thus, the insurer’s reliance on the expert report to deny the fundamental existence of theft was unreasonable. The court found relying on the expert report to reach a conclusion (no theft) on which the report did not render an opinion, amounted to a knowing or reckless unreasonable denial of benefits, i.e. bad faith.

After finding bad faith on all the foregoing grounds, the court stated it would schedule a hearing on attorney’s fees, interest, and punitive damages.

Date of Decision: December 27, 2019

Unterberg v. Mercury Insurance Company of Florida, Court of Common Pleas of Lehigh County Case No. 2016-C-806 (Dec. 27, 2019) (Pavlack, J.)

Thanks to Daniel Cummins of the excellent and extremely useful Tort Talk Blog for bringing this case to our attention.


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The insured’s home was burglarized, and he sought coverage for his losses. The insurer conducted an investigation. It asked for an examination under oath on a specific date, and for certain additional information. After this request, the insured filed its breach of contract and bad faith action. The insured told the insurer he would sit for an examination under oath or a deposition in the context of a bad faith litigation, but not both. The examination never occurred and litigation proceeded, with the insurer stating its investigation was ongoing.

The insurer moved to dismiss the complaint on the basis that the insured “failed to comply with the conditions of the Policy when he objected to [Defendant’s] requests that he produce evidence about his potential motive and opportunity to commit insurance fraud during the course of [Defendant’s] investigation of his claim.” The court found the argument inapposite. The existence of policy terms precluding a claim, or conditions precedent requiring satisfaction before recovery, “are matters yet to be determined,” and not issues to be decided on a motion to dismiss.

Thus, the motion was denied without prejudice.

Date of Decision: October 2, 2018

Fontana v. Pacific Indemnity Co., U. S. District Court Western District of Pennsylvania Civil Action No. 18-516, 2018 U.S. Dist. LEXIS 169694 (W.D. Pa. Oct. 2, 2018) (Kelly, J.)



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The insurer sought damages and rescission under Pennsylvania common law and New Jersey’s Insurance Fraud Prevention Act. There was a fire at the insured’s New Jersey shore home, and allegedly subsequent theft of personal property from the home. The insured made a claim for lost personal property and submitted photographs of the lost items.

After investigation, the insurer concluded that the photographs were taken after the fire loss at issue, at a different home owned by the insured in Philadelphia. Thus, contrary to the insured’s sworn statement, these items were not lost or stolen from her shore home.

The policy provided there was no coverage “if, whether before or after a loss, an ‘insured’ has: 1. intentionally concealed or misrepresented any material fact or circumstance; 2. engaged in fraudulent conduct; or 3. made false statements relating to this insurance.”

The insurer denied the claims for the personal property in the photos on the basis that the insured “intentionally concealed and/or misrepresented material facts concerning [her] claim for personal property, and made false statements regarding the items that were allegedly lost due to the fire or theft.”

The insured brought breach of contract and bad faith claims, which were dismissed for lack of prosecution. The insurer’s fraud claims were raised as counterclaims. The insured did not file any opposition, and by the time the insurer moved for summary judgment, the insured was pro se.

On the Pennsylvania common law fraud claims, the court observed: “It follows, as the night follows the day, that [the insured] has suffered no personal property loss for the items photographed since she still had possession of those undamaged items after the fire and alleged theft.”

The court not only granted relief on the personal property damage claims for the allegedly lost items, but as to the entire loss, including the sum paid for the value of the home. The court stated:

“The record is clear that [the insurer] made payments … in reliance on what it believed at the time to be her truthful representations about her losses as a result of the fire and alleged theft. [The insurer paid] $351,767.17 in dwelling coverage and $10,000 in personal property coverage. As it turned out, there is no genuine dispute about the fact that [the insured] made materially false representations … in an effort to mislead it into paying her for personal property which she did not lose. … Under the terms of the insurance policy, no coverage is provided if the insured either before or after the loss intentionally concealed or misrepresented any material fact, engaged in fraudulent conduct, or made a false statement relating to their insurance. Clearly, [the insured] breached these provisions of the policy.”

Accordingly, we will enter summary judgment … against [the insured] on the counterclaim of common law fraud for $361,767.16, the amount …paid to her.”

The court also granted equitable rescission under Pennsylvania common law fraud principles, and granted relief under New Jersey’s Insurance Fraud Prevention Act. The court noted that the New Jersey statute includes recovery of reasonable investigation expenses, costs of suit and attorney’s fees. However, the court did not appear to award damages for investigation, costs or legal fees.

The Act itself provides for relief against an insured who “(1) Presents or causes to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy . . . knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim; or . . . (3) Conceals or knowingly fails to disclose the occurrence of an event which affects any person’s initial or continued right or entitlement to (a) any insurance benefit or payment or (b) the amount of any benefit or payment to which the person is entitled[.] N.J.S.A. § 17:33A-4(a).(1, 3).”

The same facts supporting the common law fraud finding supported this statutory relief.

Finally, the court also awarded over $45,000 in prejudgment interest on the Pennsylvania claims.

Date of Decision: August 21, 2018

Pallante v. Certain Underwriters at Lloyd’s, London, U. S. District Court Eastern District of Pennsylvania CIVIL ACTION NO. 17-1142, 2018 U.S. Dist. LEXIS 141427 (E.D. Pa. Aug. 21, 2018) (Bartle, J.)


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This is another UIM bad faith case. The court found the following allegations were sufficient to defeat a motion to dismiss the bad faith claim.

First, the court found the following allegations were adequate to meet the standard that the insurer lacked a reasonable basis to deny benefits:

  1. Defendant did not request a written statement from plaintiff;

  2. Defendant never requested a statement under oath;

  3. Defendant never requested a medical examination;

  4. Defendant did not request authorizations from plaintiff to secure any medical records;

  5. Defendant did not have a medical expert review plaintiff’s MRI;

  6. Defendant did not have Plaintiff’s medical records reviewed or evaluated;

  7. Defendant did not put its aforementioned offer in writing

  8. Defendant made no reference to any record or diagnostic firm review in making its offer;

  9. Defendant offered no explanation of its offer

  10. Defendant did not request current records of plaintiff’s treatment even though he was actively treating at the time of the oral offer; and

  11. Defendant assigned an inexperienced and/or inadequately experienced adjuster to plaintiff’s claim.

Second, the insured adequately pleaded knowing or reckless disregard of the alleged lack of a reasonable basis to deny coverage. Plaintiff alleged that the insurer’s “denial of full coverage for Plaintiff’s claim is unsupported by factual evidence; Defendant did not have Plaintiff’s medical records reviewed or evaluated; it made no request for current records of Plaintiff’s treatment; it did not reference any record or diagnostic firm review in making its offer; and it did not offer any explanation of its offer.”

Date of Decision: January 30, 2018

Irving v. State Farm Mut. Auto. Ins. Co., CIVIL ACTION NO. 17-1124, 2018 U.S. Dist. LEXIS 14163 (E.D. Pa. Jan. 30, 2018) (Slomsky, J.)


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A UIM claimant alleged bad faith based upon: “misstatement of … coverage limits, alleged delay in claims processing, insistence upon a sworn statement under oath …, persistence in collecting medical records and failure to comply with insurances regulations regarding periodic status notices to insureds as evidence of bad faith.”

The insurer wanted summary judgment on the bad faith claim, which the court granted, stating: “that, while both parties indulged in occasional missteps in the process of reviewing and litigating this claim, the essentially uncontested evidence does not meet the demanding, precise and exacting legal standards prescribed under Pennsylvania law for a bad faith insurance processing claim.”

The court observed the “well-established” principle “that it is not bad faith for an insurance company to ‘conduct a thorough investigation into a questionable claim.’” Insurers can be successful in defending against bad faith claim by showing that there were “red flags” warranting further investigation.

Thus, delay alone does not equate to bad faith: “the mere passage of time does not define bad faith. Rather, an inference of bad faith only arises when time passes as part of a pattern of knowing or reckless delay in processing a meritorious insurance claim.”

The court observed that insurers in UIM cases need to deal with the claim against the underlying tortfeasor, which in this case went on for a number of years. Further, the insured did not place the insurer on notice of the UIM claim until nearly 5 years after the accident. Once the claim was made, the parties engaged in an ongoing process to attempt to resolve the dispute.

Further, though the carrier did originally misstate the scope of coverage, this was an understandable mistake and was corrected, resulting only in a brief delay.

In addition, there was nothing untoward in seeking a sworn statement in light of multiple circumstances, including, e.g., incomplete medical information. The court did not accept the argument that no sworn statement was needed because the insured had been deposed two years earlier in the underlying litigation. Further, as stated, each party engaged in some missteps in exchanging medical information, and the insurer was justified in seeking further medical information after having obtained some records.

Next, in evaluating the claim the underlying tortfeasor only settled years after the accident, and for a sum less than policy limits; a factor going to the UIM insurer’s ability to evaluate the claim. The insured had originally demanded over double the UIM policy limits to settle, and then policy limits.

The final argument involved alleged violations of Pennsylvania’s Unfair Claims Settlement Practices Act and the Unfair Insurance Practices Act, specifically concerning the regulatory requirement to provide 45 day updates on the status of insurance claims.

The court recognized that a “violation of these insurance rules can be considered when examining a bad faith claim under §8371.” The court then went on: “However, it is also clear beyond peradventure ‘that a violation of the UIPA or the UCSP is not a per se violation of the bad faith standard.’”

Applying these principles, the court concluded: “This case aptly illustrates why technical violations of these state insurance regulations cannot be equated with bad faith. The record before us amply reveals active, extensive and on-going communications …. Our review of the substance of these multiple communications … reveals that even when the communications are viewed in a light most favorable to [the insured], these communications do not support a claim of bad faith shown by clear and convincing evidence.”

The court then observed: “Given that the communications, in their substance, do not allow for a finding of bad faith here, it would be anomalous to conclude that the fact that the communications did not meet the technical frequency requirements mandated by insurance regulations, standing alone, established a bad faith claim in this case.”

Date of Decision: April 10, 2017

Ridolfi v. State Farm Mut. Auto. Ins. Co., No. 15-859, 2017 U.S. Dist. LEXIS 54267 (M.D. Pa. Apr. 10, 2017) (Carlson, M.J.)



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The court granted summary judgment to the insurer in this bad faith case arising out of a fire at the insureds’ home. While the insurer provided a detailed factual recount from the record to makes its case, the court stated that the insureds “relied upon bare allegations and narrative argument that does little more than summarize bad-faith law in Pennsylvania, without showing how the facts of this particular case could support a claim under the statute.”   The insurer had paid nearly $150,000 after investigating the fire and losses therefrom, but it argued the items put in dispute by the insured were not connected to the fire, which the insured failed to factually refute.

The court observed that “It is not bad faith for an insurance company to ‘conduct a thorough investigation into a questionable claim.’” The insurer will be successful in defending a bad faith claim based on its investigation of the matter by “showing ‘a reasonable basis’ for investigating a claim, and is … entitled to judgment as a matter of law, where it demonstrates the existence of certain ‘red flags’ which prompted it to further investigate an insured’s claim.”

Red flags existed in this case where “the insurance policy had been purchased immediately prior to the fire and the determination by two fire experts that it had been caused by arson. The record also reveals that, rather than wasting time, [the insurer] began an investigation immediately, while at the same time advancing money to the plaintiffs for immediate needs such as clothing and hotel expenses.”

Further, the insurer “promptly undertook investigation into the fire’s cause, the plaintiffs contributed directly to the duration of the investigation by delaying their examinations under oath, which State Farm had requested, roughly two months earlier.” And, “during this investigation, [the insurer] continued to pay the plaintiffs’ housing and living expenses, despite the ongoing nature of the investigation and the possibility that at the end of that process coverage would not be offered.” The insurer ultimately concluded that the matter was not arson, but as stated did not pay every claim the insureds made in connection with the loss.

The insurer routinely and appropriately sent correspondence in response to the insureds, and delays in the process were “not solely or even principally attributable to” the insurer.

Finally, the court rejected the notion that it should review evidence provided by the moving insurer, and “wade into that evidence in order to find some evidence that could rise to the level needed for the plaintiffs to carry their burden on this claim. This invitation is antithetical to good summary judgment practice, and the plaintiffs would do well to remember that “‘[j]udges are not like pigs, hunting for truffles buried in the record.’”

Date of Decision: November 16, 2016

Hoffman v. State Farm Fire & Cas. Co., No. 4:14-1978, 2016 U.S. Dist. LEXIS 158795 (M.D. Pa. Nov. 16, 2016) (Carlson, M.J.)


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The insureds brought an action against their insurer, alleging breach of contract as well as bad faith on the part of the insurer in negotiating regarding a claim for underinsured motorist benefits. The insurer moved to compel the deposition of counsel for the insureds, while the insureds countered with a motion for a protective order.

The insurer sought to depose counsel for the insureds regarding “discussions that she had with [the insurer’s] claims adjuster concerning the [insureds’] insurance claims before filing this lawsuit.” The insurer argued that these conversations concerned central factual issues that were relevant in determining whether the insurer acted in bad faith in negotiating settlement of the insurance claim.

The insurer noted that in support of their bad faith claim, the insureds alleged that the insurer failed to request a statement under oath or a medical examination of one of the insureds. The insurer argued that it acted reasonably pursuant to an oral agreement with the insureds’ counsel, however, that counsel would provide the insurer with information that would render a statement under oath and medical examination unnecessary.

The court stated that the existence of this oral agreement was central to both the bad faith claim and defense of the claim, and acknowledged that a deposition of counsel is appropriate where “the attorney’s conduct itself is the basis of a claim or defense, [and] there is little doubt that the attorney may be examined as any other witness.”

Because counsel for the insureds had factual information regarding the agreement that was only available from her, the court found that the insureds could not meet their burden of showing that “the information is so readily available from other sources that an order compelling [counsel’s] deposition would be oppressive.”

Further, the court found that harm to the insureds’ representational rights would be minimal, as the communications at issue were not protected by the attorney-client privilege. Accordingly, the court granted the insurer’s motion and held that the insurer may depose the insureds’ counsel “limited to her communications with [the insurer] regarding the [insureds’] pre-litigation insurance claim.” The insureds’ motion for a protective order was denied.

Date of Decision: October 21, 2015

Adeniyi-Jones v. State Farm Mut. Auto. Co., CIVIL ACTION NO. 14-7101, 2015 U.S. Dist. LEXIS 142822 (E.D. Pa. October 21, 2015) (Bartle III, J.)



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In Tran v. Seneca Insurance Company, a case defended by Jay Barry Harris  of Fineman, Krekstein & Harris, the insured alleged that the insurer denied coverage in breach of contract and in bad faith. In support of her bad faith claim, the insured argued that the insurer used “unfair investigation techniques” and intentionally “delayed the payment of her claim,” which, according to the insured, showed that the insurer never intended to pay for the loss. The insurer moved for summary judgment. In response, the insured averred that there was a dispute of material fact as to two particular allegations of bad faith: (1) that the insurer and its agents never attempted to estimate the size of the insured’s loss, and (2) that the insurer unreasonably delayed the investigation.

The court first found that nothing in the record supported the insured’s assertion that the insurer was indifferent to the loss or “never intended to honor the policy.” The court further concluded that the insurer conducted a reasonable investigation, which included employing specialists to investigate the loss, reviewing the fire department’s investigation and the insured’s estimate for the loss, conducting an examination under oath, and requesting additional documents over the course of the year. Based on the record, the court found that the insured could not show by clear and convincing evidence that the insurer was indifferent to the loss or conducted an investigation in a way that would suggest that the insurer never intended to honor the policy.

As to the insured’s claim that the investigation was unreasonably delayed, the court noted that in order to prevail on this claim, the insured must demonstrate that “the delay is attributable to the [insurer], that the [insurer] had no reasonable basis for the actions it undertook which resulted in the delay, and that the [the insurer] knew or recklessly disregarded the fact that it had no reasonable basis to deny payment.” The court stated that bad faith does not occur where a delay is “attributable to the need to investigate further or even to simple negligence.”

Here, the insurer assigned an adjuster to investigate the loss immediately after being notified of the incident, and the adjuster performed an inspection within three days of the loss. While an engineer hired by the insurer to inspect the roof and investigate the cause of loss did not begin its investigation until approximately six months after the incident, the court observed that the insured refused to respond to the insurer’s requests for information for several months, and that the insurer only retained the engineer after months of attempting to communicate with the insured without a response. Further, while the insurer waited several months after the engineer’s investigation to deny the claim, the court recognized that the insurer continued to investigate during this period as well.

Thus, the court found that the record did not provide clear and convincing evidence of bad faith, and that the delays in the investigation were not solely attributable to the insurer. Accordingly, the court granted the insurer’s motion for summary judgment with respect to the insured’s bad faith claim.

Date of Decision: October 14, 2015

Tran v. Seneca Ins. Co., CIVIL ACTION NO. 14-5491, 2015 U.S. Dist. LEXIS 139527 (E.D. Pa. October 14, 2015) (DuBois, J.)



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In Royce v. Erie Insurance Exchange, the insured brought breach of contract and bad faith claims against an insurer for the insurer’s purported failure to fairly evaluate the insured’s claim and to promptly offer payment of the claim. The insurer sought summary judgment on the basis that the policy included a “suit against us” provision, which precluded the insured from bringing suit against the insurer unless the insured had fully complied with the policy.

The underlying claim involved a burglary to the insured property. Two days after his home was burglarized, the insured reported the burglary to the insurer and submitted a personal property inventory form as requested by the insurer, as well as a list of personal property stolen and lost from the burglary.

The policy at issue provided that the insurer could not be sued unless the insured complied with all the terms of the policy, which included the duty to submit to examinations and statements under oath at the request of the insurer. After the insurer requested that the insured and his wife submit to an examination under oath (“EUO”), counsel for the insured stated that while his clients were willing to submit to the EUO, it may be necessary to schedule the EUO by video conference as the insured and his wife were now residents of the state of Florida.

Counsel for the insurer responded by e-mail and explained that the insurer “could not agree to an EUO by video conference because a video conference would make the use of exhibits extremely difficult, if not impossible.” The insurer’s counsel further stated that because the claim arose out of a Pennsylvania contract and claim of loss, the EUOs would properly be taken in Pennsylvania. The insured’s counsel did not respond to this e-mail.

Over the next several months, the insurer’s counsel sent periodic e-mails to the insured’s counsel inquiring as to possible dates to schedule the EUOs in Pennsylvania. The insured’s counsel did not respond to any of these e-mails, and maintained that a response was not necessary because the insured and his wife had “previously made their position clear [that they would appear by video conference for the EUO] and any follow up letter was only repetitive and unnecessary given the [insurer’s] refusal to cooperate and act in good faith to investigate the loss given [the insured’s] physical condition.”

Subsequently, the insured’s counsel e-mailed the insurer’s counsel a doctor’s note restricting the insured’s travel due to the insured’s medical condition. Sometime prior to the burglary, the insured had allegedly been involved in a car accident, which caused him severe physical injury that prevented him from traveling. However, no mention had been made of this accident or the insured’s medical condition in his counsel’s previous request to the insurer for an EUO by video conference. In its reply brief to its motion for summary judgment, the insurer questioned the legitimacy of the doctor’s note and travel restrictions, specifically, “how [the insured] was able to travel from the Commonwealth of Pennsylvania to his current residence in Florida after the purported motor vehicle accident that caused his physical injuries.” The insurer also questioned how a “Pennsylvania physician was able to issue an ‘Excuse Slip’ noting [the insured’s] physical condition and travel restrictions when [the insured] was living in Florida and therefore, had not been physically examined by the Pennsylvania physician.” To date, there is no evidence in the record that the insured ever submitted to an EUO.

The insured filed suit and asserted breach of contract and bad faith claims against the insurer “on the basis that [the insurer] purportedly failed to, inter alia, fairly evaluate [the insured’s] claim and promptly offer payment of the claim.” The insured asserted that the insurer acted in bad faith “by failing to accommodate [the insured’s] disability in scheduling an EUO by video conference.” The insurer moved for summary judgment, and argued that because the insured failed to fully comply with the policy, he was precluded from bringing suit under the Policy’s “suit against us” provision. Specifically, the insurer alleged that the insured failed to comply with the Policy by “failing to (1) submit to an EUO in Pennsylvania and (2) provide documentation relating to his claim that [the insurer] had previously requested.”

The Court first acknowledged that the “suit against us” provision was enforceable under Pennsylvania law. The Court also noted that the insured had complied with the Policy in several ways, but at issue was whether the insured complied with the Policy’s requirements to (1) provide all supporting documentation related to his claim as [the insurer] may reasonably require and (2) submit to an EUO.” More specifically, at issue was whether the insured complied with three provisions of the Policy.

The first required the insured to submit certain documentation relating to his claim. The insurer asserted that the insured failed to submit this documentation, while the insured asserted that he did in fact produce the requested documents. The Court determined that it was unclear what other documentation had been requested by the insurer that had not been provided by the insured. Thus, a genuine issue of material fact existed with regards to this issue.

The second required the insured to submit to an EUO. The Court noted that “[r]egardless of whether or not [the insured’s] medical condition restricts him from traveling to the Commonwealth of Pennsylvania to physically appear for an EUO, he agreed to submit to an EUO by video conference, and it is not clear from the terms of the Policy that this constitutes a failure to fully comply ….” The Court further acknowledged that the provision only required the insured to submit to an EUO, but did not reference where the examination must take place. Thus, a genuine issue of material fact existed as to whether the insured’s offer to submit to an EUO by video conference was in full compliance with the Policy.

The third required the insured to “cooperate with [the insurer] in [their] investigation of a loss and any suits.” The Court determined that it was a question for the fact-finder as to whether the insured’s offer to submit to an EUO by video conference satisfied this provision to “cooperate” with the insurer in its investigation. In addition, the Court found that “a reasonable juror could find that the repeated failure by [the insured] and his counsel to respond to [the insurer’s] letters and e-mails over a course of four (4) months requesting an EUO and additional documentation also fails to satisfy this provision.” Thus, genuine issues of material fact existed as to whether or not the insured fully complied with the Policy such that he would be precluded from filing suit, and the Court denied the insurer’s motion for summary judgment.

Date of Decision: August 21, 2015

Royce v. Erie Ins. Exch., Case No. 3:15-CV-00058, 2015 U.S. Dist. LEXIS 110656 (M.D. Pa. August 21, 2015) (Caputo, J.)