Monthly Archive for June, 2009

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JUNE 2009 BAD FAITH CASES
JUDGMENT GRANTED WHEN INSURED PROVIDES NO EVIDENCE OF DELIBERATE DELAY & A PROPERLY EXECUTED IME IS RELIED UPON TO DENY BENEFITS (Philadelphia Federal)

Published on June 10, 2009 in Claims Handling Procedures. Closed

In Spinelli v. State Farm Mutual Automobile Insurance Company, the court granted summary judgment to the insurer on a statutory bad faith claim because there was no evidence the insurer purposely delayed arbitration and because the insurer had a reasonable basis for its actions.

The insured was injured in a car accident in 1994, thus beginning an extended sequence of events that ended with an arbitration award in 2006.  This case was filed slightly over a year after the insurer paid what it owed of that award.  The insured asserted statutory bad faith for delay in the arbitration and denial of underinsured motorist bodily injury benefits, and asserted breach of contract.

The court found that there was no evidence that the insurer deliberately delayed arbitration.  Instead, the insurer tried to reschedule sessions when it had to cancel due to other court appearances and tried to find a second neutral arbitrator after the insured found the first one unsatisfactory.  There was no evidence of collusion between the first arbitrator and the insurer, and the only evidence that the insurer did not reassign the claim, after the original adjustor left, came from the deposition testimony of the insured’s own counsel.

The court also found that the insurer had a reasonable basis for its actions so it had not acted in bad faith.  Acknowledging precedent, the court noted that a denial is reasonable when a thorough investigation is used as its basis and that the insurer may rely on an independent medical examination (“IME”) performed in the “usual and customary manner” by a qualified professional if the insurer provides the examiner with all relevant documents.  Despite the insured’s assertion, the IME did consider specific medical records allegedly ignored when it reached a contrary opinion as to the cause of the insured’s physical condition.

Summary judgment was also granted to the insurer on the breach of contract claim because the insured did not provide any example of a breach and the fact that the arbitration took place was, in itself, proof that the insurer complied with the contract terms.

Date of Decision:  March 17, 2009

Spinelli v. State Farm Mut. Auto. Ins. Co , No. 08-1455, 2009 U.S. Dist. LEXIS 22191 (E.D. Pa. March 18, 2009)(Schiller, J.)

 

JUNE 2009 BAD FAITH CASES
SUPERIOR COURT REVERSES TRANSFER OF BAD FAITH CASE FROM PHILADELPHIA TO MONROE COUNTY (Superior Court)

Published on June 5, 2009 in Procedural Issues. Closed

In Walls v. Phoenix Insurance Company, the Philadelphia Court of Common Pleas transferred the insured’s breach of contract and bad faith action on the grounds of forum non conveniens to the Court of Common Pleas of Monroe County.  The Superior Court reversed, finding that the original choice of forum was not vexatious.

Date of Decision:  May 19, 2009

Walls v. Phoenix Ins. Co., NO. 1702 EDA 2008, SUPERIOR COURT OF PENNSYLVANIA, 979 A.2d 847 (Pa. Super. May 19, 2009) (McEwen, J.)

 

JUNE 2009 BAD FAITH CASES
WHERE INSURER CONDUCTED INVESTIGATIONS AND MULTIPLE EXPERTS & ADJUSTERS CONCLUDED LOSS WAS RESULT OF INSURED’S CONDUCT, NO BAD FAITH (Philadelphia Federal)

Published on June 3, 2009 in Claims Handling Procedures. Closed

In Grammenos v. Allstate Insurance Company, the insured made a first party claim for water damage from a burst pipe.  The insurer denied the claim, and the insured sued for breach of contract and bad faith.  The insured claimed that he had made a good faith effort to repair the pipe and the work later failed, leading to the water damage.  If true the claim would be covered.  The insurer had two independent experts who disputed the insured’s version of events and that he actually attempted to repair the pipe as he claimed, as well as an in-house adjuster, an in house investigator and one independent adjuster who likewise raised issues concerning the insured’s version of events.  The insured filed a motion for partial summary judgment on the bad faith claim. The court granted the motion, finding that the insured could not meet his burden of proof. 

The court stated that the “plaintiff has failed to show by clear and convincing evidence that [the insurer] had no reasonable basis for denying plaintiff’s claim. There is also no clear and convincing evidence that [the insurer] acted improperly in investigating plaintiff’s claim. To show that it acted in good faith, ‘an insurance company simply must show it conducted a review or investigation sufficiently thorough to yield a reasonable foundation for its action.’ …. ‘The insurance company also is not required to show the process by which it reached its conclusion was flawless or that the investigatory methods it employed eliminated possibilities at odds with its conclusions.’”

Date of Decision:  April 28, 2009

Grammenos v. Allstate Ins. Co., CIVIL ACTION NO. 07-2725, 2009 U.S. Dist. LEXIS 36155 (E.D. Pa. April 28, 2009) (Rueter, Chief M.J., hearing case by agreement of the parties)

JUNE 2009 BAD FAITH CASES
EVIDENCE PRECLUDED OF INSURER EMPLOYEE PARTICIPATION IN PROFIT SHARING PLAN TO SHOW MOTIVE IN DENYING CLAIM OR JOINING PUBLIC ADJUSTER IN CASE (PHILADELPHIA FEDERAL)

Published on June 3, 2009 in Discovery and Evidence. Closed

In Grammenos v. Allstate Insurance Company, the insurer had joined the insured’s public adjuster as a third party defendant, claiming that the public adjuster participated in making an improper claim and should be liable under Pennsylvania’s insurance fraud statute.  At trial the jury ultimately found for the public adjuster and entered a verdict in his favor and against the insurer on this claim.  On a motion in limine prior to trial, the insurer successfully obtained an order precluding evidence that its employees participated in a profit sharing plan which purportedly gave them a motive to deny claims and to harass public adjusters.  The court found that the public adjuster was attempting to assert a bad faith affirmative defense to the insurer’s fraud claims.  As the public adjuster was not an insured, the court found it had no standing to assert a statutory bad faith claim under 42 Pa.C.S. § 8371.  Thus, the evidence was inadmissible for those reasons.

In addition, the court found the evidence inadmissible because the evidence was irrelevant to the public adjuster’s efforts to show the insurer’s allegedly improper motive in bringing the claim; and to the extent it may have had some probative value, it was outweighed by the prejudice it could create and confusion it could cause the jury.

Date of Decision:  April 30, 2009

Grammenos v. Allstate Ins. Co., CIVIL ACTION NO. 07-2725, 2009 U.S. Dist. LEXIS 37069 (E.D. Pa.  April 30, 2009) (Rueter, Chief M.J., sitting by agreement of the parties)

JUNE 2009 BAD FAITH CASES
NO BAD FAITH CLAIM WHERE NO DUTY TO DEFEND OR INDEMNIFY UNDER POLICY EXCLUSIONS (Philadelphia Federal)

Published on June 2, 2009 in Coverage Issues. Closed

In Pincus v. Chubb Group of Ins. Companies, the insured was sued for sexually assaulting the plaintiff, after luring her into his limousine and then taking her to another location for the attack.  The court found that the claims were excluded under the intentional acts exclusion and that a claim concerning common carrier status was likewise excluded from coverage as a business pursuit.  As to the bad faith claim, the court state that the bad faith claim “necessarily fails when the court makes ‘a determination that there was no duty to defend, because the court’s determination that there was no potential coverage means that the insurer had good cause to refuse to defend.’” Thus, the carrier in this case did not act in bad faith.

Date of Decision:  March 27, 2009

Pincus v. Chubb Group of Ins. Cos., No. 08-1483, 2009 U.S. Dist. LEXIS 26599  (E.D. Pa. Mar. 27, 2009) (Ditter, J.)

JUNE 2009 BAD FAITH CASES
BAD FAITH NOT PERMITTED IN WORKERS’ COMPENSATION CASES (Philadelphia)

Published on June 2, 2009 in General Bad Faith and Litigation Issues. Closed

In Manufacturers Alliance Insurance Company v. Sagot, the Philadelphia Court of Common Pleas stated that a party could not assert bad faith under Pennsylvanias Unfair Insurance Practices Act, because bad faith actions are disallowed under the Pennsylvania Workers’ Compensation Act.

Date of Opinion:  April 16, 2009

Mfrs. Alliance Ins. Co. v. Sagot, July Term 2005, No. 02120, 2009 Phila. Ct. Com. Pl. LEXIS 21, (Court of Common Pleas of Philadelphia, April 16, 2009) (Jackson, J.)  (This case is pending on appeal at the time of posting, Superior Court Docket No. 3527 EDA 2008)