MARCH 2017 BAD FAITH CASES: SUMMARY JUDGMENT GRANTED TO INSURER WHERE ITS CLAIMS HANDLING DECISIONS AND CONDUCT WERE REASONABLE (Middle District)

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The court described the insured’s UIM bad faith claim as follows: “[the] bad-faith claim is predicated largely on his contention that [the insurer] conducted a dilatory and meandering investigation into his claim, despite having had sufficient information to evaluate the claim and make a coverage decision, which [the insured] argues was obvious given the severity of the injuries he suffered.”

The insurer sought summary judgment on the bad faith claims, its position being “that the claim in this case was unusual and warranted a careful investigation, which suffered from a number of delays that cannot be attributed to the insurer.” Moreover, the insurer adduced evidence calling into doubt the insured’s policy limits demand and the viability of the insured’s claim based on his own conduct.

In granting the insurer’s summary judgment motion, the court observed that if an insurer can defeat the lack of a reasonable basis component of a bad faith cause of action, it can obtain summary judgment. Moreover, in light of the heavier burden of proof in bad faith cases, “the insured’s burden in opposing a summary judgment motion brought by the insurer is commensurately high because the court must view the evidence presented in light of the substantive evidentiary burden at trial.”

Further, “[i]t is not bad faith for an insurance company to conduct a thorough investigation into a questionable claim.” Thus, “courts applying Pennsylvania law have found that an insurer satisfies its burden by showing a reasonable basis’ for investigating a claim, and is thus 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.”

In finding the insurer’s conduct reasonable, the court focused on the putative delays, the nature of the insured’s policy limit demand in light of another potential source of primary insurance, and the insured’s own culpability in the accident leading to his injury. The court went through the alleged delays, and who caused them, in detail.

It also observed that while phrased as a $100,000 demand against the insured’s carrier, the tortfeasor’s insurer had a $500,000 limit, and settled the underlying claim for $240,000. Thus, in effect, seeking the $100,000 UIM limit when combined with the underlying available insurance made the personal injury claim a $600,000 claim, not a $100,000 claim; and again, the underlying claim was settled for far less than the underlying insurer’s policy limit. Moreover, the arbitrators found the insured 1/3 responsible for the accident leading to his own injuries, which provided some substantiation to the insurer’s position that the insured’s claim may not have been viable.

Date of Decision: November 29, 2016

Walter v. Travelers Pers. Ins. Co., No. 4:12-CV-346, 2016 U.S. Dist. LEXIS 164012 (M.D. Pa. Nov. 29, 2016) (Carlson, M.J.)

 

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