[UPDATED JANUARY 25, 2020] COURT ACCEPTS GENERAL ALLEGATIONS OF BAD FAITH CONDUCT AS ADEQUATE, BASED ON APPARENTLY LIMITED PLEADING OF UNDERLYING FACTS CONCERNING SEVERITY OF HARM AND LENGTH OF TIME WITH NO PAYMENT, AND LATER DENIES THE INSURER SUMMARY JUDGMENT ON SAME GROUNDS AND EXPERT REPORT ON DEVIATIONS FROM INDUSTRY CLAIM HANDLING STANDARDS (Western District)
In this UIM breach of contract and bad faith case, the insureds were severely injured by a drunk driver. There was $600,000 in UIM coverage. No UIM payments were made for two years and the insured brought suit. The insurer moved to dismiss both counts.
The court first found the plaintiffs adequately pleaded a breach of the insurance contract. Next, the court drew inferences from the complaint’s averments in allowing the bad faith claim to proceed.
Specifically, plaintiffs pleaded severe injuries, through no fault of their own, that could not be fully compensated by the tortfeasor’s insurance. The complaint alleges that two years after the accident, the insurer “had failed to make any payments whatsoever to [the insureds] under the policy’s UIM coverage provision.” The insureds complied with the terms of the insurance policy at issue, giving reasonable notice of the accident and cooperating with the investigation.
“The complaint further alleges that, in addition to [the insurer’s] unreasonable delay in claims handling and its unreasonable failure to pay benefits, [the insurer] has failed to make a reasonable settlement offer, failed to reasonably and adequately investigate their claims, and failed to reasonably evaluate or review all pertinent documentation provided by the plaintiffs in support of their claim for UIM benefits. Accepting the facts alleged in the complaint as true and viewing them in the light most favorable to the plaintiffs, we find that the plaintiffs have stated a plausible statutory bad faith claim….”
Date of Decision: October 24, 2019
Golden v. Brethren Mutual Insurance Company, U. S. District Court Middle District of Pennsylvania CIVIL ACTION NO. 3:18-cv-02425, 2019 U.S. Dist. LEXIS 183691 (M.D. Pa. Oct. 24, 2019) (Saporito, M.J.)
One month later, the court issued an opinion denying summary judgment on both breach of contract and statutory bad faith. On the contract claim, the court stated that the contractual duty of good faith can be breached through a delay in payment of an inordinate and unreasonable time period. Within the breach of contract analysis, the court looked to such issues as the insurer’s claims handling and investigation, the insureds cooperation, and the ultimate claim valuation.
On the statutory bad faith claim, the court identified documents produced by the parties concerning the years long claims handling process. The insurer produced a body of documents in support of its claim that it was in constant communication with the insureds, and the insureds submitted other communication documents including demands on the insurer and medical records to support their bad faith position. The court also considered the insureds expert’s testimony opining that “in the context of industry standard for claims handling, [the] investigation, evaluation and resolution of the plaintiffs UIM claims was unreasonable and intentionally dilatory.”
Taking the evidence in the light most favorable to the non-moving insured, the court found there remained a material dispute of fact concerning the alleged failure to reasonably investigate, evaluate, or pay the claim.
Date of Decision: November 25, 2019
Golden v. Brethren Mutual Insurance Co., U. S. District Court Middle District of Pennsylvania CIVIL ACTION NO. 3:18-cv-02425, 2019 U.S. Dist. LEXIS 183691 (M.D. Pa. Nov. 25, 2019) (Saporito, M.J.)
