This case involved a dispute over whether the insurer acted in bad faith by paying for a damaged car’s value, instead of paying to repair it, after determining the car was totaled. The insured wanted repairs, and claimed the carrier acted in bad faith.
The repairs were estimated initially at approximately $3,390, but with the expectation the damages could be greater once the vehicle was assessed more closely. The insurer valued the van at $3,725, and decided to treat the vehicle as totaled. After considering taxes and the deductible, the carrier offered $3,613.04 for the loss. The insured claimed the total value was $5,000, and sued for breach of contract and bad faith for not paying to have the vehicle repaired.
Insurer’s expert report admissible on following claim handling practices, but not on legal conclusions about reasonableness and good faith
First, the court considered whether the carrier’s expert testimony was admissible. The expert had over 40 years of insurance claims experience. Judge Pratter found the expert qualified and his testimony concerning claim handling reliable and relevant. Thus, the court permitted him to opine that the carrier had followed industry practices in handling the claim. However, Judge Pratter excluded the portions of the expert report to the extent it provided legal conclusions on bad faith, as it did not assist the jury in evaluating evidence.
More specifically, Judge Pratter excluded portions of the expert report stating that the insurer “acted in good faith”, “conducted a reasonable claim investigation” and “reasonably and promptly communicated with [the insured]”. Such statements “are legal opinions. Though experts can testify to the ‘ultimate [factual] issues to be decided by the trier of fact,’ they cannot ‘render[ ] a legal opinion’ as to “whether [a defendant] complied with [its] legal duties.’ … Not only are such legal opinions not helpful, but they impermissibly usurp the roles of the Court and the jury.”
“Not every broken thing is worth the cost to fix it.”
Judge Pratter then addressed the carrier’s motion for summary judgment on the insured’s substantive claims. We address breach of contract and bad faith below.
No breach of contract
Based on the facts and policy language, Judge Pratter found no breach of contract. The insured argued he relied on an advertisement about additional coverage. However, this advertisement was not part of the policy; and even if it were, the promise in the advertisement had not been breached.
The insured also argued that the insurer’s sales agent made promises creating a reasonable expectation of coverage for repairs. The representation at issue was a promise to provide “full insurance”. At most, this was a promise to put the insured back in the position he was in before the accident. “It is not a promise to pay for repairs, no matter the cost.” Thus, “[n]o reasonable juror could find that [the insured] reasonably expected for [the insurer] to pay for repairs free of terms, conditions or exclusions—especially when his insurance contract contained plenty.”
No bad faith
As a matter of logic, there could be no bad faith investigation claim in investigating the accident. “[The insurer] did not need to [investigate the accident], for it planned to compensate [the insured] for the damage to his car, no matter who caused the accident. That is how collision insurance works.”
Next, paying out for a total loss instead of for repairs is not bad faith. The carrier valued the van at $3,725.00, and determined repair costs would exceed that number. The court relied upon 31 Pa. Code § 62.3(e) for the proposition that when the cost or repair equals or exceeds appraised value, less salvage value, or the price for which the damages vehicle could be sold, it is a total economic loss.
Further, the insured’s assertion the vehicle was worth at least $5,000 was unsupported by any appraisal. Rather, the insured only attacked the carrier’s appraisal and makes the conclusory assertion the appraisal was self-serving. The court disagreed and concluded the carrier “followed all the right steps” in preparing its appraisal.
Judge Pratter rejected the argument that the insurer acted arbitrarily in considering the value of comparable vehicles. The insured’s comparables were significantly different, and the carrier’s decision not to use them was not arbitrary, but rather was based on “sufficient reason” to avoid that appellation.
The court also found the carrier communicated immediately with the insured and was responsive to the insured, in time periods less than those required by Pennsylvania’s Code, 31 Pa. Code § 146.5. Further, the facts of record did not show bad faith conduct during the course of negotiations, though the time that the insured decided to himself stop negotiating.
Thus, the insurer was granted summary judgment on all counts.
Date of Decision: November 9, 2021
Ke v. Liberty Mutual Ins. Co., U.S. District Court Eastern District of Pennsylvania No. CV 20-1591, 2021 WL 5203150 (E.D. Pa. Nov. 9, 2021) (Pratter, J.)