The insured purchased an insurance policy covering his residence and its contents. The property allegedly incurred significant water damage from ruptured pipes, and the insured gave the insurer written notice. The insurer allegedly conducted minimal investigation before denying the claim. The insurer argued that the loss was caused by the insured’s failure to maintain heat and/or drain the plumbing system. The insured argued the insurer had records in its possession that the heat was on at the property during the time of loss, and sued for breach of contract and bad faith.
On a motion to dismiss, the Court found a plausible bad faith claim based upon allegations that the insurer denied coverage without adequate investigation, and that the denial contradicted the insurer’s own records. The insured pleaded “[the insurer] did not have a reasonable basis for denying coverage based on the purported lack of heat at the subject property and it knew or recklessly disregarded this lack of a reasonable basis at the time coverage was denied.” Thus, that motion was denied.
The Court further held that the insured’s wife was a necessary party to the litigation because she was a named-insured. “It is well-established that a party to a contract which is the subject of the litigation is considered a necessary party.” The Court allowed an amended complaint adding the wife. Conversely, the Court held that case law does not support the proposition that a “purported holder of the mortgage is . . . a necessary party . . . .”
Date of Decision: January 18, 2018
Fuller v. Allstate Prop. & Cas. Ins. Co., No. 17-0955, 2018 U.S. Dist. LEXIS 7930 (E.D. Pa. Jan. 18, 2018) (Caputo, J.)