JULY 2016 BAD FAITH CASES: NO BAD FAITH ON BASIS OF: (1) LACK OF COMMUNICATION OR INVESTIATION, (2) DIFFERENCE OF OPINION IN CALCULATING LOSS OR (3) PUTATIVE FAILURE TO ASSIGN LARGE LOSS ADJUSTER (Philadelphia Federal)

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Whalen v. State Farm Fire & Casualty Co. involved a first party homeowners’ bad faith claim. The court dismissed that claim on summary judgment. The case involved a significant water damage loss due to a failed line going to an upstairs sink which went undetected for a substantial period while the insured was on vacation.

The first bad faith claim was based on an alleged failure to provide the homeowner with information, conduct a reasonable investigation, and to explain coverage decisions. The court drilled down into the detailed record of the insurer’s efforts and conduct, and found no clear and convincing evidence of bad faith on the summary judgment record. The insurer responded to the public adjuster, and offered reasons for its decision not to pay portions of the claimed losses.

The court next rejected the argument that the insurer’s loss calculations were made in bad faith. A difference of opinion in calculating the loss cannot constitute bad faith.

Finally, the court rejected the argument of bad faith failure to assign a large loss adjuster. The record did not establish by clear and convincing evidence this was factually true, but even if so, it would at most be negligence and negligence is not a basis for bad faith.

Date of Decision: April 25, 2016

Whalen v. State Farm Fire & Cas. Co., No. 15-2200, 2016 U.S. Dist. LEXIS 54628 (E.D. Pa. Apr. 25, 2016) (Padova, J.)

 

 

 

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