Daily Archive for January 6th, 2010

JANUARY 2010 BAD FAITH CASES
INSURER’S MOTION DISMISSED IN ORDER TO PROVIDE INSURED WITH MORE TIME FOR DISCOVERY (Philadelphia Federal)

In Collins v. Allstate Insurance Company, after the case was referred to arbitration, the insurer timely moved for partial summary judgment as to the insured’s claims for breach of contract and bad faith. Plaintiff claimed that summary judgment was premature because his attorneys had not had the opportunity to depose the insurer’s representatives. The insured did not submit any evidence that he had issued any notices for depositions before the insurer filed its motion for partial summary judgment. The court found that the insurer’s motion was not premature, but dismissed the motion without prejudice in order to provide the insured with more time for discovery. The court stated “Although plaintiff’s delay in seeking depositions of [the insurer’s] representatives is very troubling, it is well established that a court ‘is obliged to give a party opposing summary  judgment an adequate opportunity to obtain discovery,’ especially when, as here, relevant facts are within the control of the moving party.” The court found that the fact-specific inquiries required in examining plaintiff’s claims and the short period of time for discovery in arbitration matters provided a sufficient basis to permit the additional discovery sought by the plaintiff. The court provided the plaintiff with 45 days to take depositions.

Date of Decision: December 10, 2009

Collins v. Allstate Ins. Co., Civil Action No. 2:09-cv-01824-WY, United States District Court for the Eastern District of Pennsylvania, 2009 U.S. Dist. LEXIS 115778 (E.D. Pa  December 10, 2009) (Yohn, J.).

 

JANUARY 2010 BAD FAITH CASES
COURT GRANTS INSURANCE BROKER’S MOTION FOR RECONSIDERATION AND DISMISSES COUNT FOR CONTRIBUTION (Middle District)

In Pine Grove Manufactured Homes v. Indiana Lumbermens Mutual Insurance Company, the insured sued Indiana Lumbermens Mutual (“ILM”) for bad faith and breach of contract after ILM refused to apply the proceeds from one of the insured’s other insurance policies to the deductible under the ILM policy. ILM joined its broker, Chamberlin & Reinheimer Insurers, Inc. (“CRI”), as a third-party defendant. The third-party complaint sought indemnification and/or contribution “with respect to the breach of contract claim.” CRI then filed a motion to strike or, in the alternative, dismiss ILM’s third-party complaint. The court denied both motions in its October 23, 2009 memorandum and order. 

The court stated that as its insurance broker CRI was the insured’s agent, and therefore, owed CRI a duty of care to act as a reasonably prudent insurance broker. The court held that CRI breached this duty, which caused the indivisible harm that resulted when ILM did not apply the other policy’s proceeds to the ILM policy deductible. Accordingly, the court held that CRI was a joint tortfeasor whose negligence, along with ILM’s bad faith, caused the harm to the insured and as joint tortfeasors, ILM could be entitled to contribution from CRI.

CRI filed a motion for reconsideration. CRI argued that: (1) the court misapprehended the allegations raised in the third-party complaint when it based its analysis on contribution for the bad faith claim, rather than limiting its analysis to contribution on the breach of contract claim, and (2) that the court committed an error in law when it held that CRI can be jointly liable to the insured for bad faith.

The court recognized that it had mistakenly read the third-party complaint as covering the underlying bad faith claim. The court held that ILM could not have a right to contribution on the breach of contract claim because CRI cannot be liable jointly and severally in tort for a claim based on breach of contract theory. The court granted CRI’s motion for reconsideration and dismissed the third-party complaint’s count for contribution on that ground.

The court held that it did not err in holding that CRI and ILM might be joint tortfeasors based on the injury created by the confluence of CRI’s negligence and ILM’s bad faith. Therefore, the court did not grant the motion for reconsideration on that basis.

Date of Decision: December 8, 2009

Pine Grove Manufactured Homes v. Ind. Lumbermens Mut. Ins. Co., Civil Action No. 3:08-CV-1233, United States District Court for the Middle District of Pennsylvania, 2009 U.S. Dist. LEXIS 114772 (M.D. Pa December 8, 2009) (Caputo, J.).