Monthly Archive for August, 2008

AUGUST 2008 BAD FAITH CASES
CLAIM PRECLUSION DIRECTLY BARRED BAD FAITH CLAIM (Western District)

Published on August 29, 2008 in PA - Procedural Issues. Closed

Fogarty brought a ten count complaint, including a bad faith claim arising out of a vehicular accident in which Fogarty was involved.  Fogarty was employed as an interstate driver and his employer was self insured and provided insurance coverage to him.  Fogarty was scheduled to make a delivery on a morning when there were dangerous road conditions. Fogarty advised the dispatcher that given the situation, he did not want to leave until conditions had improved.  Fogarty’s employer, through the risk manager and dispatcher, informed him if he did not leave he would be fired. Fogarty went on the delivery and was involved in a vehicular accident.

In the accident report Fogarty told police at the scene that his employer had wrongfully caused him to drive in unsafe conditions by threatening to fire him. The employer was not happy about this statement and the risk manager made a statement that Fogarty would be lucky if they did anything for him.

Fogarty was subsequently fired for failure to return to work even though he had presented excuses from two doctors stating that he had not yet recovered from injuries received in the accident. Another driver involved in the accident filed suit against Fogarty and his employer and an attorney named Levin was provided to represent both parties.

However, Fogarty claims that his employer would not let the attorney do anything to defend him without first getting permission.  Fogarty then hired another attorney and Levin withdrew his representation due to conflict of interest which Fogarty alleged was a breach of fiduciary duty. Fogarty’s employer then hired a third attorney, McKenna, to represent Fogarty but again would not let him fully defend him without prior approval. Therefore Fogarty fired him.

Fogarty filed a ten count complaint including a bad faith claim against his employer and his employer’s risk manager individually.  The employer and risk manager individually filed motions to dismiss.  The lower court dismissed the insured’s claims.

The appellate court affirmed the district court’s dismissal of the bad faith insurance claim because, even if one were to assume a duty on the part of the employer to provide the insured with legal representation, the record showed that the employer had initially provided such service to Fogarty.  Therefore the court found that claim preclusion directly barred Fogarty’s bad faith claim against his employer/insurer.

In addition since the claims against the employer had been dismissed , no claim could proceed against the corporation’s employee who was acting within the scope of his employment.  The  court found that since the claims against the employer had been precluded, the claims against the risk manger individually were also barred. Therefore the motions to dismiss were granted.

Date of decision: June 30, 2008

Fogarty v. USA Truck, Inc.,2008 U.S. Dist. LEXIS 50270 (W.D. Pa. June 30, 2008)(Standish, J.)

J.M.A.

AUGUST 2008 BAD FAITH CASES: INSURER’S MOTION TO BIFURCATE BAD FAITH CLAIM PENDING DISPOSITION OF THE DUTY TO DEFEND CLAIMS DENIED (Philadelphia Federal)

Published on August 29, 2008 in PA - Bifurcate/Sever & Stays. Closed

The insureds commenced an action seeking a declaratory judgment that the insurer had a duty to defend and indemnify insureds in connection with a lawsuit brought against insureds for alleged exposure to contaminated air and groundwater from insureds’ manufacturing facility.  Insureds also asserted breach of contract and a bad faith claim arising from insurer’s handling and investigation of the underlying claim.

Insurer moved to bifurcate discovery and trial relating to the bad faith claim pending the outcome of the duty to defend claims because the insurer argued that a ruling in its favor on the duty to defend claims would dispose of the bad faith claim.  The court acknowledged that claims may be bifurcated for convenience, to avoid prejudice, or to expedite and economize.

Addressing the insurer’s argument, the court noted that, while bad faith claims generally require a predicate contractual claim, such as breach of a duty to defend, bad faith claims may also proceed based on other grounds, such as the handling and investigation of the underlying claim in bad faith.  Therefore, the duty to defend claims were not necessarily dispositive of the bad faith claim.

The court also noted that that the insurer failed to demonstrate that bifurcation would promote expedition or economy.  As a result, the insurer’s motion to bifurcate was denied.

Date of decision:  June 20, 2008

Rohm and Haas Company v. Utica Mutual Insurance Company, United States District Court for the Eastern District of Pennsylvania, Civil Action No. 07-584 (E.D. Pa. June 20, 2008) (Pratter, J.)

R.E.M.

AUGUST 2008 BAD FAITH CASES
COLLAPSE VS. INSECT INFESTATIONS - SUMMARY JUDGMENT GRANTED WHEN DAMAGE WAS CAUSED BY TERMITE INFESTATION (Philadelphia Federal)

Published on August 26, 2008 in PA - Coverage Issues and PA - Negligence not bad faith. Closed

Plaintiff filed a complaint alleging breach of contract and bad faith against the insurer for failing to pay a purported “collapse” claim made under a homeowners policy.  On April 11, 2006, Plaintiff, while adding a second floor on top of an existing addition, discovered that termites had caused structural damage to the walls of the addition.  The addition had experienced termite infestation in 1996 for which Plaintiff had retained an exterminator.  However, the structural damage to the walls to the addition caused by the termites remained hidden until April 2006, when Plaintiff’s contractor were preparing to put on the second floor.

As a result of the damage to the addition, it would not support a second floor.  Consequently, Plaintiff’s contractors were required to remove the damaged addition.  Thereafter, Plaintiff submitted a claim for the damage caused to the addition by termites.  Defendant conducted an investigation by taking Plaintiff’s recorded statement.  Based on the investigation and a determination that the damage to Plaintiff’s house was caused by termite infestation, Defendant denied coverage.  Specifically, Defendant’s policy included an exclusion for “for loss … [c]aused by … [b]irds, vermin, rodents, or insects”

Plaintiff contended that the policy provided coverage for loss caused by a “collapse”.  Specifically, the policy stated that there is coverage for “direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following: . . . c. Hidden insect or vermin damage. . . .”  Collapse is defined in the insurance policy as, inter alia, “sudden and entire falling down or caving in of a building or any part of a building . . .”  Further, the policy stated that “collapse” does not include “a building or any part of a building that is in danger of falling down or caving”.

The court concluded that Defendant did not act in bad faith in denying Plaintiff’s claims for multiple reasons.

First, the court found that Defendant reasonably determined that the loss occurred in 1996.  Since Plaintiff was required to give prompt notice of a loss and the loss occurred in 1996, Defendant did not act in bad faith in denying coverage.

Second, there was no basis for coverage when Defendant learned from Plaintiff that Plaintiff’s contractor had voluntarily removed the walls as a result of the termite damage.

The court relied on 401 Fourth Street, Inc. v. Investors Insurance Group, 879 A.2d 166 (Pa. 2005), in which the Pennsylvania Supreme Court noted that “[h]istorically, our Court has considered the policy term ‘collapse’ to require the sudden falling together of a structure.”  The Court reasoned that the “collapse” provision required the falling of a building, and that substantial impairment of structural integrity was not sufficient.  The Court warned that such an interpretation “would possibly convert the policy into a maintenance agreement by permitting recovery for damage which, while substantial, does not threaten collapse of the structure.”

Based on the reasoning in 401 Fourth Street and the fact that Plaintiff voluntarily removed the walls to the addition after finding structural damage, the court concluded that the insurance policy did not cover either the structural damage caused to the walls or the removal of the walls due to the structural damage.

Lastly, the court stated that to the extent that Defendant neglected the possibility of collapse, Defendant was, at most, negligent or demonstrated bad judgment.  Mere negligence or bad judgment does not constitute bad faith.  Consequently, the court granted Defendant’s motion for summary judgment.

Date of decision:  June 17, 2008

Miller v. First Liberty Insurance Corporation, United States District Court for the Eastern District of Pennsylvania, Civil Action No. 07-1338 (E.D. Pa. June 17, 2008).

(O’Neill, J.)

H.P.M.

AUGUST 2008 BAD FAITH CASES
INSURER’S MOTION FOR SUMMARY JUDGMENT GRANTED FOR BAD FAITH CLAIM BECAUSE REASONABLE BASIS FOR DENIAL OF THE INSURED’S CLAIM EXISTED (Philadelphia Federal)

Published on August 22, 2008 in PA - Claims Handling (reasonable) and PA - Experts. Closed

Allison initiated suit against the insurer for breach of contract and bad faith based on the insurer’s denial of her claim for water damage to her property. Allison had a Homeowner’s policy with the insurer. Allison filed a claim with her insurer for water damage to this property. The parties disputed the cause of the water damage.  The insurer’s log documented Allison stating that the her downspout and her neighbor’s downspouts were clogged and leaked as a result of a heavy rainstorm. The insurer denied the claim.

Allison contacted the insurer again. This time, she stated that the damage was caused by wind.  The insurer sent out an adjuster to evaluate the damage to Allison’s property. Allison  retained a public adjuster to inspect the property, who advised the insurer’s adjuster that wind blew a large tree limb onto the roof, which created an opening in the roof.

Then the insured hired a company to inspect the property.  This company prepared a report to the insurer which stated that the property had no damage from wind or tree branches.  The insurer again denied the claim.  The insurer’s adjuster conducted a re-inspection and, based on his report, the insurer again denied the claim.

Allison filed a breach of contract and bad faith claim against her insurer.  The insurer moved for summary judgment.  Allison responded with a counter motion for summary judgment.  Then, the insurer moved to strike Allison’s counter motion for summary judgment.

As to the breach of contract claim, the insurer alleged that Allison’s loss was not covered by the policy.  Allison claimed that the damages to her home were caused by wind and should have been covered under her policy.  Additionally, Allison claimed that even if the damage was caused by the gutters and downspouts as the insurer alleged, it is still covered under the Limited Water Damage Endorsement in her policy.

The Court found that, even though the endorsement provides coverage for the plumbing system, the plain and natural language of the Limited Water Damage Endorsement specifically precludes coverage for loss from water which backs up through sewers or drains and loss caused by rain without related wind damage.

Therefore, the Court found that Allison is precluded from seeking coverage under this theory.  However, the Court found that, since there is a factual dispute about whether wind caused the loss, a reasonable jury could find in Allison’s favor and, consequently, a genuine issue exists. Therefore the Court denied the insurer’s motion for summary judgment with regard to the breach of contract claim.

As to the bad faith claim, the Court found that when Allison first called and reported her claim, stating that the roof leak was caused by clogged downspouts, such a loss was not covered under her policy and therefore the insurer had a reasonable basis for denying her claim.  Additionally, when Allison called a second time to report that the loss was caused by wind, the insurer investigated the claim, and then reinvestigated it.

The insurer reasonably relied on an expert to make its determination and Allison failed to present clear and convincing evidence that the insurer did not have a reasonable basis for denying the claim under the policy;  or that it knew of or recklessly disregarded its lack of a reasonable basis in denying the claim.

The fact that the insurer’s conclusion might prove incorrect, fails to establish that the insurer had a dishonest purpose or disregard for the truth.  Therefore the Court granted the insurer’s motion for summary judgment with regard to the bad faith claim.

Date of Decision: June 30, 2008

Allison v. Allstate Indem. Co., U.S. District Court Eastern District of Pennsylvania No. 07-cv-4618, 2008 U.S. Dist. LEXIS 50684 (E.D. Pa. June 27, 2008) ( Rice, J.)

J.M.A.

AUGUST 2008 BAD FAITH CASES
MOTION TO REMAND GRANTED BECAUSE THE INSURED PROPERLY LIMITED THE AMOUNT IN CONTROVERSEY TO AN AMOUNT BELOW THE JURISDICTIONAL LIMIT (Philadelphia Federal)

Published on August 22, 2008 in PA - Removal & Remand. Closed

The insureds initiated a bad faith suit against the insurer arising from a property damage claim.  The insureds suffered sudden and accidental, direct physical damage to their  property.  The insureds alleged that the insurer breached its contractual obligations, under the policy, to pay for the loss.  The insureds filed a complaint against the insurer in the Philadelphia County Court of Common Pleas. The insureds’ Complaint alleged breach of contract and bad faith.

The insureds alleged that the amount in dispute for damages to their property was $39,733.51.  They also contend that, as a result of the insurer’s failure and refusal to pay benefits and the insurer’s mishandling of their claim, they suffered losses and damages in an amount not in excess of $50,000.

The insurer removed the case to the United States District Court for the Eastern District of Pennsylvania on the basis of diversity jurisdiction.  The insureds then moved to remand the case to the Philadelphia County Court of Common Pleas, on the basis that the amount in controversy did not exceed $75,000.  The insureds argued, both counts of the Complaint specifically seek damages not in excess of $50,000 and the insurer has given no evidence to show that the insureds’ claims exceed the jurisdictional minimum.

The insurer argued that the case should not be remanded because it is “certainly possible” that the damages will meet or exceed the jurisdictional limit of $75,000. Also, the insurer argued that, even though damages in arbitration are capped at $50,000,  the insureds may recover more than $75,000 by appealing the arbitration award.

In Morgan v. Gay, the Third Circuit established three main rules to apply in cases where the complaint expressly limits the amount in dispute to less than the jurisdictional minimum.

First, the party wishing to establish federal jurisdiction has the burden to prove, to a legal certainty, that the amount in controversy exceeds the statutory threshold.

Second, a plaintiff may limit her monetary claims to avoid the amount in controversy threshold.

Third, a plaintiff’s statement that her claims fall below the jurisdictional minimum is not dispositive; the court must look to see if the plaintiff’s actual monetary demands in the aggregate exceed the threshold.

Since the insureds specifically limited the amount in controversy to less than the jurisdictional minimum, Morgan applies to this case.

The insureds’ ad damnum clauses limiting their damages to $50,000 are permitted under Pennsylvania laws governing compulsory arbitration.  Therefore, the Court found that the insureds properly limited the amount of damages in the ad damnum clauses to “an amount not in excess of $50,000,” below the jurisdictional minimum.

The Court found that the insurer’s argument that damages “could” exceed $75,000 or that it is “certainly possible” to exceed $75,000 does not prove it is legally certain that amount in controversy exceeds $75,000.  Therefore, it found that the insurer did not show, to a legal certainty, that the amount in controversy exceeds $75,000.  As a result, the Court granted the insureds’ motion for remand.

Date of Decision: June 26, 2008

Dunfee v. Allstate Ins. Co.,2008 U.S. Dist. LEXIS 49955 (E.D. Pa. June 26, 2008) (Baylson, J.)

J.M.A.

AUGUST 2008 BAD FAITH CASES
MOTION FOR SUMMARY JUDGMENT ON BAD FAITH CLAIM GRANTED WHERE INSURER ACTED REASONABLY IN INVESTIGATION AND DENIAL OF PLAINTIFF’S CLAIM (Philadelphia Federal)

Published on August 4, 2008 in PA - Claims Handling (reasonable) and PA - Reverse Bad Faith. Closed

Plaintiff initiated suit against the insurer for breach of contract and bad faith based on the insurer’s denial of disability benefits.  Plaintiff asserted that he is disabled and was entitled to disability benefits under two separate insurance policies issued by the insurer.

The insurer filed a counterclaim seeking recission of one of the policies based on alleged false misrepresentations made by the insured on his application for the policy.  The insurer also filed a motion for summary judgment for both the breach of contract and bad faith claims.

The court found that the issue of whether plaintiff made false representations on his policy application was an appropriate determination for a jury, and therefore denied the insurer’s motion for summary judgment on the breach of contract claim.

For the bad faith claim, the court found that no rational jury could conclude that the insurer acted in bad faith in its investigation and denial of plaintiff’s claim. Since the  insurer acted reasonably in its investigation and denial of the claim, the court granted the insurer’s motion for summary judgment.

Date of Decision: June 10,2008

Schaeffer v. Allianz Life Ins. Co. of N. Am.,2008 U.S. Dist. LEXIS 44939 (E.D. Pa. June 10, 2008)(Fullam, J.)

J.M.A

AUGUST 2008 BAD FAITH CASES
INSURER DID NOT ACT IN BAD FAITH MERELY BY INITIATING A DECLARATORY JUDGMENT ACTION WITH REGARD TO A LEGITIMATE COVERAGE ISSUE (Philadelphia Federal)

Published on August 4, 2008 in PA - Declaratory Judgment and PA - Litigation Conduct Claims. Closed

The insurer brought a motion to dismiss bad faith crossclaims for seeking a declaratory judgment that it had no duty to defend or indemnify the insured in a tort action filed against the insured.

The underlying state action involved an injury to an ironworker on a construction site.  The injured worker was not the insured’s employee, but was an employee of an independent contractor retained by one of the insureds.  The insurer retained counsel to defend, yet at the same time instituted a declaratory judgment asserting that it had no duty to defend or indemnify.  The insurer relied on endorsements in the policy, one which excluded coverage for bodily injury to an employee or independent contractor of the insured, and another which asserts that there is no policy coverage in this situation to the additional insured part.

The insured filed an answer to this declaratory judgment,  and alleged bad faith for filing the declaratory judgment action which allegedly raised inaccurate and baseless  coverage defenses. Specifically,  the insured argued that  reliance on the coverage exclusion for claims involving injury to an independent contractor was unreasonable.  The insurer filed a motions to dismiss because it is not bad faith to litigate legitimate coverage issues.

The court stated that an insurer does not act in bad faith merely by initiating a declaratory judgment action.  The insurer did not act in bad faith by investigating and litigating issues of coverage.  In addition, the court  found that  reliance on the exclusion in the policy relating to injuries to an independent contractor was reasonable.

Therefore, the court found that the insureds failed to state a bad faith claim and  granted the insurer’s motion to dismiss the bad faith counterclaims.

Date of Decision: June 9, 2008

Victoria Ins. Co. v. Li He Ren, 2008 U.S. Dist. LEXIS 44674 (E.D. Pa. June 9, 2008)(Padova, J.)

J.M.A.

AUGUST 2008 BAD FAITH CASES
INSURER’S MOTIONS IN LIMINE DENIED, BUT PLAINTIFF’S WERE GRANTED TO PRECLUDE EVIDENCE THAT DID NOT FOCUS ON INSURER’S CONDUCT; TRIFURCATION DENIED (Middle District)

Published on August 4, 2008 in PA - Bifurcate/Sever & Stays, PA - Discovery and Evidence and PA - UIM/UM Cases. Closed

In Suscavage v. Nationwide Mutual Insurance Company, the plaintiff initiated suit stemming from an automobile accident in which plaintiff sustained injuries.  At the time of the accident, plaintiff had an automobile insurance policy with her insurer which provided underinsured motorist (UIM) coverage. Plaintiff made a claim for UIM benefits in May 2004.  Before the arbitration hearing, in which plaintiff obtained an UIM award of $90,000, plaintiff filed an action asserting that defendants committed bad faith, and breached the insurance contract, by failing to properly evaluate the plaintiff’s claim and manipulating the arbitration process.  In response, the insurer filed a motion for summary judgment, which was denied.  In advance of the pre- trial conference, the parties filed motions in limine, and defendant field a motion to trifurcate the trial.

The insurer’s motion to trifurcate the trial of the breach of contract, bad faith action, and punitive damages claim was denied because it would lead to confusion, delay and inconvenience since the breach of contract claim and bad faith claim are interrelated.

In addition, the insurer filed two motions in limine to preclude evidence.  The first motion related to an independent medical expert of Nationwide’s, and the other motion related to a physician utilized by Nationwide who was allegedly an acquaintance of Nationwide’s defense counsel in the underlying UIM claim.  The court held that because the definition of “relevant” is broad, and the issue of bad faith is very fact specific, this evidence may be useful to the jury in determining whether the defendant acted in bad faith.  Therefore, the insurer’s motions in limine were denied.

Plaintiff’s motion in limine sought to preclude the following evidence:  plaintiff’s settlement demands and valuation of their UIM claim, the binding high/low agreement entered into by the parties prior to the arbitration, the ultimate award by the UIM arbitration, plaintiff’s conduct in selecting his arbitrator, and the alleged bias of the court appointed “neutral arbitrator”.   The court noted that in a bad faith claim the focus is on the insurer’sconduct. Therefore the court granted plaintiff’s motion in limine to preclude this evidence which related to plaintiff, and was irrelevant to the bad faith claim.

Date of Decision: June 3, 2008

Suscavage v. Nationwide Mut. Ins. Co.,2008 U.S. Dist. LEXIS 43793 (M.D. Pa. June 3, 2008)( Munley, J.)

J.M.A.

AUGUST 2008 BAD FAITH CASES
LIFE INSURANCE POLICY FOUND TO BE VOID WHERE THE INSURED MADE BAD FAITH MATERIAL MISREPRESNTATION ON THE INSURANCE APPLICATION (Philadelphia Federal)

Published on August 4, 2008 in PA - Reverse Bad Faith. Closed

Plaintiff sought to recover the proceeds of her deceased’s son’s life insurance policy as the beneficiary. The deceased insured signed and submitted a life insurance policy application.  During his in- house inspection interview and on his application he responded “no” when asked whether he had ever used marijuana, cocaine or any other non-prescribed drugs or narcotics.  He was issued a life insurance policy which was subsequently terminated for non payment of premiums.

The deceased insured then submitted a second application and again answered “no” when asked if within the last five years whether he had used drugs, substance or other controlled materials without a physicians prescription. During a second in-house inspection interview the deceased insured did admit to using marijuana some ten years prior, but did not disclose using cocaine. The insurer issued a second life insurance policy to the deceased insured.

A year later, the insured died from a gunshot wound to the head. The insurer investigated the insured’s death and obtained medical records which indicated that the insured had tested positive for cocaine, and other records indicating drug abuse by the insured. The insurer sent a letter to plaintiff and informed her that they were rescinding the life insurance policy.

The plaintiff filed an action to recover the proceeds of her deceased’s son’s life insurance policy.  The insurer filed a motion for summary judgment, and denied the plaintiff’s claim to recover the proceeds of the policy because the insured had made material misrepresentations in his life insurance application with regard to prior cocaine use.  The insurer argues these knowing material representations made the insurance policy void ab initio.

Plaintiff admits that her son misrepresented information, but argued that the misrepresentation was not material.

The court found that the deceased insured’s representations were false and made in bad faith.  The plaintiff admitted that the deceased had made misrepresentations, and Pennsylvania law has routinely held that misrepresentations regarding alcohol and drug use are deemed to be made in bad faith.

The court found that the misrepresentations were material because the insurer presented evidence that if they had known of the insured’s past drug use, they would not have issued any life insurance policy to him.  The court stated that any misrepresented fact is material if being disclosed to the insurer it would have caused it to refuse the risk altogether or to demand a higher premium.

Therefore, the court concluded that the insurance policy was void and that the insurer is entitled to summary judgment.

Date of Decision: May 7, 2008

Cummings v. Am. Gen. Life Ins. Co.,2008 U.S. Dist. LEXIS 37157(E.D. Pa. May 7, 2008)( Pratter, J.)

J.M.A.

AUGUST 2008 BAD FAITH CASES
SUMMARY JUDGMENT GRANTED WHERE BAD FAITH CLAIMS BROUGHT AGAINST FRANCHISOR WHO WAS NOT AN INSURER AND DID NOT ISSUE PLAINTIFF INSURANCE POLICY (Philadelphia Federal)

Published on August 2, 2008 in PA - Who is an Insurer?. Closed

Plaintiff franchisee brought a breach of contract and bad faith claim in the United States District Court for the Eastern District of Pennsylvania against franchisor.  There were four separate franchise agreements in effect between plaintiff, and the franchisor.

A lawsuit arose, alleging that the plaintiff’s  home inspection failed to inform the homeowners’  that their property had private instead of public sewage.  Notice of this suit was provided by plaintiff to the franchisor. The franchisor contacted its insurance carrier and engaged a law firm to defend the claim. However the lawyers withdrew because the  franchise agreement with plaintiff for that county allegedly expired prior to this incident.  Therefore plaintiff was not a franchisee of defendant at the time of the alleged injury.  In response the homeowners’ filed an amended complaint voluntarily dismissing defendant from the suit.

Plaintiff claims that this letter from the law firm was deceptive. Plaintiff claims defendant breached the franchise agreements by making a false assertion that there was no franchise in effect, and also by failing to defend plaintiff in the lawsuit. In addition,  plaintiff alleges that the law firm’s letter was an act of bad faith.

Defendant argued for summary judgment because plaintiff had not shown a breach of contract and defendant is not an insurer with whom plaintiff has an insurance policy.

For the  breach of contract claim, plaintiff failed to identify any clause of the franchise agreements prohibiting defendant’s actions.  There is nothing in the franchise agreements prohibiting defendant from sending the letter, and its contents were true.  Furthermore, no provision of the franchise agreements obligated defendant to either indemnify plaintiff or pay for its legal defense; and in fact the agreements stated the opposite.

Defendants had no duty to defend because franchise agreements are not insurance policies.  The court held that there was no breach of contract, and granted  summary judgment on this matter.

For the bad faith claim,  the franchisor argued that it cannot be liable for bad faith because it is neither an insurance company, nor has it ever issued a policy of insurance to plaintiff.  Plaintiff  failed to produce any evidence to the contrary; and franchise agreements are not insurance policies.

The franchise agreements themselves contain no provision requiring the franchisor  to assume the risk of liability, and they require franchisees to obtain and maintain liability insurance.  Therefore, since the franchisor is not an insurer, and the franchise agreements are not insurance policies, the court granted the motion for summary judgment.

Date of Decision: June 4, 2008

Del. Valley Home Evaluations, Inc. v. Housemaster of Am.,2008 U.S. Dist. LEXIS 44011 (E.D. Pa. June 4, 2008) ( Padova, J.)

J.M.A.