MARCH 2014 BAD FAITH CASES: BAD FAITH CLAIM SURVIVES SUMMARY JUDGMENT WHERE DENIAL OF COVERAGE BASED ON NON-COOPERATION HAD MATERIAL ISSUES OF FACT OPEN AS TO THE SUBSTANTIALITY OR PREJUDICE OF MATTERS ON WHICH INSURED DID NOT TIMELY PROVIDE INFORMATION (Philadelphia Federal)
In Page v. Infinity Indemnity Insurance Company, the insured’s car was destroyed in a fire, which resulted from arson. The insurer investigated the claim at great length, on the possibility that the insured’s were responsible for the fire, including pursuit of financial records and the insured’s history of shopping for a new vehicle. The court found that the investigation itself could not be the basis for a bad faith claim. However, at one point, the carrier denied the claim for failure to cooperate in producing certain information, with a statement that the claim could be reopened if there was future cooperation.
The insured was deposed, and later provided bank statements and a police report, and the carrier spoke with representatives of car dealerships identified by plaintiffs. The carrier ultimately paid the claim. The insured still brought a bad faith claim.
The court allowed the bad faith claim to proceed on the basis of the denial for non-cooperation. The court observed that the non-cooperation had to be both substantial and prejudicial to provide a legitimate basis to deny a claim. The court found there was an issue for the trier of fact on the substantial and prejudicial nature of the putative failures to provide the bank statements and police report; but that the failure to identify car dealerships was not substantial non-cooperation as a matter of law. Thus, the carrier motion for summary judgment on the bad faith claim was denied.