FEBRUARY 2013 BAD FAITH CASES: COURT DISMISSES BAD FAITH CLAIM, BUT PERMITS BREACH OF CONTRACT ACTION TO PROCEED (Philadelphia Federal)

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In Dixon v. All State Ins. Co., the insured property owner, who worked as an attorney in an office on the property, brought a pro se action against her homeowner’s insurance carrier for breach of contract and bad faith after the carrier denied coverage on certain items following storm damage to the insured’s home. In 2006 and 2007, storms damaged hardwood floors in her home and the carrier tendered coverage. However, in both cases, the insured did not use the proceeds to replace her floor, instead repairing other aspects of her home.

In 2010, the insured’s home was damaged a third time. Two weeks later, the insured told an adjuster examining the damage that she wanted her floors replaced. The carrier authorized partial refinishing of one portion of the floor and benefits for the insured’s alternative living arrangements, which the insured found unsatisfactory for her law practice and roommates. After the insured provided several contractor invoices, the carrier agreed to provide an additional $1200 for repairs. The insured was not satisfied with the amount and filed suit.

First, the court granted the carrier’s motion to dismiss the insured’s bad faith count. Because the carrier contacted the insured immediately following the loss, had the insured’s home inspected within two weeks, tendered benefits promptly, and adjusted its estimate to cover additional invoices submitted by the insured, the carrier could not be liable for bad faith.

Second, the court denied the carrier’s motion to dismiss the insured’s breach of contract claim. There was confusion as to whether the insured actually performed work to her flooring after the 2006 and 2007 storms, warranting denial of the motion.

Date of Decision: December 21, 2012

Dixon v. All State Ins. Co., No. 11-1925, 2012 U.S. Dist. LEXIS 181472, U.S. District Court for the Eastern District of Pennsylvania (E.D. Pa. Dec. 21, 2012) (Rice, M.J.)

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