BAD FAITH CLAIM WITHSTANDS MOTION TO DISMISS AFTER BREACH OF CONTRACT CLAIM HELD VIABLE (Middle District)
This case involves coverage claims for water damage during a construction project. The insurer refused coverage, and the insured sued for breach of contract and bad faith. The insurer unsuccessfully moved to dismiss both claims.
First, the court found there was an issue of fact concerning the coverage denials. Thus, the court refused to dismiss the breach of contract claim.
As to the bad faith claim, plaintiff alleged two specific instances of the insurer improperly rejecting the claims, and that the insurer “failed to conduct a proper analysis to support its denial.” Additionally, the insureds alleged there was an “inadequate process in reviewing their claim, including over fifty alleged points of bad-faith conduct, evinc[ing] a clear effort to ‘unreasonably and unfairly den[y] and/or delay[ ] payment of benefits’ to Plaintiffs that the Defendant ‘knew, or should have known, … should have been paid.’”
The insurer’s argument relied upon the position that there must be a predicate breach of contract, and the breach of contract claim should fail. However, as set forth above, the court already found the insureds pleaded a viable breach of contract claim, “and Plaintiffs subsequently alleged facts sufficient to state a bad faith claim….” Thus, Judge Mariani denied the motion to dismiss the bad faith claim as well as the contract claim.