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In Rau v. Allstate Fire and Casualty Insurance Company, the Court found that the insured’s claim for breach of the common law duty of good faith and fair dealing was adequately pleaded within a breach of contract/UIM claim, and permitted the deposition of the insurer’s claims adjuster to proceed, within limits.

The insured wanted to depose the insurer’s claims handler in a UIM case where no statutory bad faith claim was yet asserted. The insurer objected to the deposition insofar as it related to the insurer’s “investigation of [the insured’s] claim, how [the insured’s] claim was evaluated and the specifics of [the insurer’s] claims handling procedures.” The insurer argued that because the complaint only alleged a claim for underinsured motorist coverage and not for bad faith, “the claims adjuster’s testimony as to how she handled this claim is irrelevant.”

The insured responded that it only intended to ask the adjuster about the elements of her investigation of the claim “to discover the factual details of the investigation and evaluation of” the claim.  The insured conceded that she could not ask about the adjuster’s mental impressions, conclusions, or opinions with respect to the claim.

Defendant cited cases to support the proposition that discovery into the “method of investigating, evaluating and negotiating an underinsured motorist claim, is clearly outside the scope of relevant evidence in a pure underinsured motorist claim”, and is only relevant if a bad faith claim has been asserted.

Even though no bad faith claim was pleaded in a separate count, the court found that the complaint’s allegations in support of its breach of contract claim sufficiently pleaded a common law breach of the duty of good faith and fair dealing.

The complaint included allegations that the insurer did not reasonably investigate the claim or it would have discovered the serious nature of the injuries, and that the insurer owed the insured “a fiduciary, contractual and statutory obligation to her to investigate, evaluate and negotiate her underinsured motorist claim in good faith and arrive at a prompt, fair and equitable settlement…”

Thus, the court found these bad faith allegations were “part of the broader breach of contract action—and therefore make [the] proposed lines of deposition questioning appropriate and permissible.” The court cited case law for the proposition that creation of statutory bad faith did not supplant contractual bad faith claims.

The court put several limitations on how the deposition would proceed, making clear that it was only ordering the discovery of facts concerning the investigation, and would not permit discovery of any privileged materials or work product. The court cited its recent decision in Lane (involving an exhaustive analysis of numerous discovery issues) for the details of when such discovery might be sought.

The court concluded: “While the Court believes that its Opinion is correct and clear, the parties should recognize that the Opinion speaks only in general terms and therefore does not eliminate the possibility that future disputes may arise during the deposition when Plaintiff’s questions are actually posed. Plaintiff’s counsel must understand that she treads a narrow path between asking the types of factual questions that are permitted by this Opinion and venturing into questions regarding work product, which are not.”

Date of Decision: May 29, 2015

Rau v. Allstate Fire and Casualty Ins. Co., Civil Action No. 3:14-CV-00479, 2015 U.S. Dist. LEXIS 69466 (M.D. Pa. May 29, 2015) (Mariani, J.)