APRIL 2018 BAD FAITH CASES: NO BAD FAITH REGARDING VALUATION OR TIME OF PAYMENT (Philadelphia Federal)
A hailstorm severely damaged the insured’s roof, and she submitted a claim to insurer. The insurer estimated replacement costs of $5,145.55. Under the terms of the policy, insurer subtracted $3,380.75 in depreciation (measured by Xactimate—depreciation software used in the insurance industry), and a $1,000 deductible, and remitted $764.80 to the insured. The insured then sued for breach of contract and bad faith.
After the litigation commenced, the insurer conducted a revised estimate and remitted a supplemental payment of $2,500.40 to the insured. The insurer moved for summary judgment on the bad faith claim. Reiterating the evidentiary standard to show bad faith, the Court stated the insured must “produce evidence ‘so clear, direct, weighty and convincing as to enable a clear conviction, without hesitation, about whether or not the defendants acted in bad faith.’” The insured alleged three ways insurer acted in bad faith: 1) it withheld excessive depreciation; 2) it improperly relied on the Xactimate software; and 3) the insurer’s five-month delay in remitting a supplemental payment.
The Court ruled on the following issues as follows:
The insured failed to show any evidence indicating that insurer’s depreciation calculation was erroneous;
The insurer had a reasonable basis to use the Xactimate software because such use is standard industry practice; and
The five-month delay does not evidence bad faith because it was attributable to further investigation by the insurer.
As a result, the Court granted the insurer’s motion for summary judgment on the bad faith claim.
Date of Decision: April 6, 2018
Sands v. State Farm Fire & Casualty Co., United States District Court, Eastern District of Pennsylvania, Civil Action No. 17-4160 (JFL), 2018 U.S. Dist. LEXIS 58637 (E.D. Pa. Apr. 6, 2018) (Leeson, Jr., J.)