Monthly Archive for July, 2007
The insured filed a claim for benefits under her insurance policy after her home was destroyed by a fire. The insured alleged that the insurer did not provide her with appropriate temporary housing or shelter, as per her insurance agreement, for a period of 309 days. The insurer ultimately denied the insured’s claims ten months after the loss. The insurer had continued to accept the insured’s premiums after the fire, until her claim was ultimately denied. The insured obtained counsel and requested a copy of the policy within twelve months of the fire.
The insurer allegedly withheld the documents, however, until after twelve months of the date of loss. The insured brought the instant action setting forth a declaratory judgment seeking recovery of policy benefits seventeen months after the fire loss. The insurer then filed a motion for summary judgment, arguing that the insured’s claims are barred by a one-year suit limitation clause in the insurance policy which requires that any suit be filed within one year of the date of loss.
In response to the motion for summary judgment, the insured argued that the insurer waived its right to assert this defense by its conduct and that the insurer’s actions in denying her claim were in bad faith.
The court, however, sided with the insurer. Because the insurer was under no duty to affirmatively inform the insured of the one-year limitations provision and because the insured had sufficient time to initiate an action prior to the expiration of the limitations period, the court granted the insurer’s motion for summary judgment.
While the court sympathized with the insured, it determined that even if the insurer acted in bad faith in denying the claim, it would not change the legally required result.
Date of Decision: July 5, 2007.
Davidson v. Brethren Mutual Insurance Company, United States District Court for the Middle District of Pennsylvania, No. 3:05-1929, 2007 U.S. Dist. LEXIS 48525 (M.D. Pa. July 5, 2007) (Mannion, J.).
In Novinger Group, Inc. v. Hartford Ins., Inc., the insureds filed suit against the insurer because they alleged that they were “baited and switched” into purchasing the policies by insurer’s salesperson. The salesperson executed insureds’ insurance applications during which time insureds alleged that they were misled and misinformed regarding the salesperson’s expertise and advising abilities. The insureds further alleged that the salesperson “created a false sense of urgency.”
The insureds commenced the instant action raising claims of a violation of Pennsylvania’s Insurance Bad Faith Statute among others. The insurer then filed a motion to dismiss the complaint.
The court granted in part and denied in part. The court granted the insurer’s motion to dismiss with respect to the claims of insurance bad faith. Because the insureds’ allegations of bad faith relate to alleged misrepresentations and omissions that occurred prior to formation of the insurance contract and because the insureds did not allege that the salesperson denied them benefits under the policy, the court held that the insureds failed to state a claim for insurance bad faith. As a result, the insurer’s motion to dismiss was granted with respect to this claim.
Date of Decision: May 16, 2007.
Novinger Group, Inc. v. Hartford Insurance, Inc., United States District Court for the Middle District of Pennsylvania, No. 1:06-CV-0188, 2007 U.S. Dist. LEXIS 35779 (M.D. Pa. May 16, 2007) (Connor, J.).
Plaintiff filed a bad faith claim against her insurer alleging that it improperly valued the damage to her property. Plaintiff had stored property in a rental storage unit and the roof on the storage facility leaked and subsequently caused damage to her property. Plaintiff claimed that the property damage was approximately $120,000 but refused to allow inspection of the damaged property for a significant period of time.
Eventually, an inspection was permitted and the adjuster for the insurer valued the loss at approximately $3,600. Soon after suit was brought, the insurer tendered the remaining amount under the policy paying out a total of $15,000.
The District Court dismissed Plaintiff’s bad faith claim. On appeal, the United States Court of Appeals for the Third Circuit affirmed holding that the insurer had not acted in bad faith since the value of the loss was debatable and that the insurer could not have settled the claim until Plaintiff had permitted an inspection of the property.
February 7, 2007
Kane v. U-Haul International, United States Court of Appeals for the Third Circuit, No. 05-5002, 2007 U.S. App. LEXIS 2987 (3rd Cir. Feb. 7, 2007) (Fisher, J.)
The insureds sought a declaration of their right to the advancement of their defense expenses in a related action and alleged that the insurer’s refusal to advance their defense expenses constituted bad faith.
First, the court determined that coverage should have been extended to the insureds based on the unambiguous language of the policy. Next, the court looked to whether or not the decision to deny coverage constituted bad faith. Both parties sought summary judgment on the bad faith issue and relied on the deposition testimony of the claims examiner who denied coverage.
The court noted that at the summary judgment stage, the plaintiff must demonstrate bad faith by clear and convincing evidence, and the court is required to view the record in the light most favorable to the non-moving party. As a result of these standards, the court determined that the insurer’s denial of coverage was negligent by clear and convincing evidence, but when viewed in the light most favorable to the non-moving party, a jury could conclude that the denial of coverage was simply due to error. Therefore, the summary judgment motions filed by each party were denied.
Date of Decision: June 27, 2007
McPeek v. Travelers Casualty and Surety Company of America, United States District Court for the Western District of Pennsylvania, No. 2:06-cv-114, 2007 U.S. Dist. LEXIS 46628 (W.D. Pa. June 27, 2007) (McVerry, J.).
The United States Court of Appeals for the Third Circuit was confronted with the issue of a bad faith claim due to an alleged failure to provide health benefits to an employee’s husband. An employee and her husband filed a complaint against an insurer alleging wrongful denial of payment for surgery performed on an employee’s husband. The complaint alleged, among other things, a claim for bad faith denial of insurance pursuant to 42 Pa. Cons. Stat. §8371.
The District Court, however, dismissed plaintiff’s complaint holding that plaintiff’s claims were preempted by §502 (a) and §514 (a) of ERISA. On appeal, the Third Circuit affirmed the dismissal of Plaintiff’s complaint in its entirety and held that state law claims are preempted by ERISA if the claim could have been subject to civil enforcement under §502 (a).
June 5, 2007
Scheibler v. Highmark Blue Shield, U. S. Court of Appeals for the Third Circuit, No. 06-1277, 2007 U.S. App. LEXIS 12977 (3rd Cir. June 5, 2007) (Hardiman, J.)
The Court ruled that the insurer had not acted in bad faith. The insureds noticed water penetrated to the interior of their house and believed that it was due to faulty construction. The insureds, three years after the incident, filed a claim under their homeowners’ policy. The insurer denied the claim and the insured filed the instant action alleging breach of contract and bad faith.
The court found that the insurer had not acted in bad faith for several reasons.
First, the insurer, upon receiving notification of the loss, promptly retained an inspector.
Second, the insured’s statement was taken.
Third, the insurer reviewed the insured’s expert report which detailed damage only to the exterior of the house; damage to the exterior was plainly excluded under the faulty construction provision of the insurance policy.
Based on the insurer conducting a thorough investigation and making a reasonable finding, the court granted the insurer’s motion for summary judgment.
Date of Decision: June 15, 2007
Smith v. Westfield Ins. Co., United States District Court for the Eastern District of Pennsylvania, No. 06-3077, 2007 U.S. Dist. LEXIS 43996 (E.D. Pa. 2007) (Robreno, J.)