MARCH 2013 BAD FAITH CASES: COURT GRANTS CARRIER’S SUMMARY JUDGMENT MOTION ON INSURED’S BAD FAITH CLAIMS (Middle District)
In Mason v. Travelers Home & Marine Ins. Co., the court heard a carrier’s summary judgment motion filed in response to its insureds’ claims for breach of contract and bad faith. The suit arose from a fire on the insureds’ property which destroyed a building and its contents. The carrier made two payments for loss of personal property and fire damage. However, the insureds filed suit, alleging that the carrier acted in bad faith by making an improper depreciation deduction and failing to cover the replacement cost of the lost building. The carrier removed the suit to federal court and filed a motion for summary judgment.
First, the court granted the carrier’s motion with respect to the insureds’ contention that the depreciation deduction was improper. It reasoned that “actual cash value,” as defined in the policy, is the cost of repair or replacement, subject to a depreciation deduction.
Second, the court agreed with the carrier than the policy did not cover the building that was destroyed. The building was a “structure other than the dwelling” and was used to store property of the insureds’ business. As such, the building was excluded from coverage because it was not owned by the insureds, but a business that is an independent entity.
Third, the court granted summary judgment to the carrier on the insureds’ bad faith claims, which failed to allege conduct that would amount to actionable bad faith.