the insured claimed that some of its property was lost due to storm damage.  A reservation of rights letter was issued promptly after the claim was submitted.  The carrier investigated, via an adjusting firm and an independent roof specialist who concluded that the damage was not caused by the storm, but that rain water had gotten into the building because the roof had deteriorated.  On the issue of coverage, the court concluded that there was potentially coverage under the policy, but that the material facts remained in dispute over whether or not there would be coverage; thus, summary judgment was denied both parties on coverage.

The carrier’s motion on summary judgment on the bad faith claim was granted.  The court cited to the facts that there was a timely reservation or rights letter; that there was an investigation that the carrier claimed was reasonable and formed the basis for a reasonable and good faith denial of coverage – an argument that was unrefuted; and that the denial was promptly communicated.  The court found that based on the affidavits of the adjustor and roofing specialist and correspondence supporting the foregoing, there was a reasonable basis to deny the claim, and certainly no clear and convincing evidence to the contrary. 

Date of Decision: November 21, 2007

Easy Sportswear, Inc. v. American Economy Ins. Co., No. 05-1182, 2007 U.S. Dist. LEXIS 86114 (W.D. Pa. November 21, 2007) (Fischer, J.)

L.A.

In Nelson v. Vigilant Insurance Company, the insured sought a declaratory judgment and asserted breach of contract and bad faith claims against two insurers.  The insurers moved to dismiss based on a two year contractual statute of limitations.  The court determined that it could not rule against the insured at the motion to dismiss stage, and distinguished a case arguing that the discovery rule could not apply because it was at the summary judgment stage.

Date of Decision:  November 9, 2007

Nelson v. Vigilant Ins. Co., United States District Court for the Western District of Pennsylvania, No. 07-1406, 2007 U.S. Dist. LEXIS 83394 (Schwab, J.)

L.A.

In Telecommunications Network Design, Inc. v. Brethren Mutual Ins. Co., the Philadelphia Commerce Court "bifurcated the case, so that the issue of whether [the carrier] had a duty to defend … in the Underlying Action could be addressed first. Only if such a duty is found to exist will the issues of indemnification and bad faith subsequently need to be addressed.”

Date of Decision:  May 10, 2007

Telecommunications Network Design, Inc. v. Brethren Mutual Ins. Co., 2007 Phila. Ct. Com. Pl. LEXIS 156  (C.C.P. Philadelphia May 10, 2007) (Abramson, J.),

 

L.A.