OCTOBER 2018 BAD FAITH CASES: ALLEGED FAILURE TO MEET CONDITION PRECEDENT UNDER POLICY CANNOT BE BASIS TO DISMISS A BAD FAITH CLAIM AT THE PLEADING STAGE (Western District)

The insured’s home was burglarized, and he sought coverage for his losses. The insurer conducted an investigation. It asked for an examination under oath on a specific date, and for certain additional information. After this request, the insured filed its breach of contract and bad faith action. The insured told the insurer he would sit for an examination under oath or a deposition in the context of a bad faith litigation, but not both. The examination never occurred and litigation proceeded, with the insurer stating its investigation was ongoing.

The insurer moved to dismiss the complaint on the basis that the insured “failed to comply with the conditions of the Policy when he objected to [Defendant’s] requests that he produce evidence about his potential motive and opportunity to commit insurance fraud during the course of [Defendant’s] investigation of his claim.” The court found the argument inapposite. The existence of policy terms precluding a claim, or conditions precedent requiring satisfaction before recovery, “are matters yet to be determined,” and not issues to be decided on a motion to dismiss.

Thus, the motion was denied without prejudice.

Date of Decision: October 2, 2018

Fontana v. Pacific Indemnity Co., U. S. District Court Western District of Pennsylvania Civil Action No. 18-516, 2018 U.S. Dist. LEXIS 169694 (W.D. Pa. Oct. 2, 2018) (Kelly, J.)