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Plaintiff claimed her home was damaged by vibrations from heavy construction work.  The carrier engaged an engineer to investigate the damage, who concluded it had different origins. A portion of the claim was denied on a structural and earth movement exclusion, based upon the sources identified in the engineer’s report; the conclusions of which the insured disputed.  She hired her own expert and lawyer, who disputed the claim but would not produce the expert report contrary to the carrier’s engineer though repeatedly requested.

Only after suit was filed and three years after the damage arose, did plaintiff produce her own expert’s report that the damage was related to construction work vibrations affecting the soil.  The carrier retained two additional experts, both of whom disagreed with plaintiff’s expert on the origins of any damage to the home.

The court found the exclusions ambiguous and ruled in the insured’s favor, denying a summary judgment motion on the breach of contract claim.  The court also denied summary judgment on the issue of causation, as there were material disputes of fact.

However, the court granted summary judgment on the bad faith claim.

First, there was a reasonable basis to deny the claim as plaintiff did not produce her report – and her ultimate theory as to what caused the harm — for years after the damage occurred, and until months after suit was initiated.

Second the carrier actively investigated the harm by engaging the engineer and repeatedly seeking plaintiff’s response thereto and her own expert study.  Plaintiff offered no challenge to this expert’s methods other than subjective speculation on how the expert should have carried out her work; and even if the expert was ultimately proven wrong, this would not make trust in her conclusions unreasonable.

Once plaintiff’s expert report was finally received, the carrier obtained two additional reports; while plaintiff disagrees with the results, if these reports are correct, which a jury could find, then there would be no basis for coverage – again making the denial reasonable.

The court observed that a jury could accept the causation theories advanced by the carrier, and rule the exclusions did apply.  Simply because the carrier argued the exclusions applied under plaintiff’s theory of the case, as it had to for summary judgment purposes, did not make it bad faith for the carrier to persist in its original opinion.

The court concluded:  “There simply is no evidence that Defendant advanced this argument to evade its obligations under the policy as opposed to defend itself in the lawsuit Plaintiff filed against it. See W.V. Realty Inc. v. Northern Ins. Co., 334 F.3d 306, 313-15 (3d Cir. 2003); O’Donnell v. Allstate Ins. Co., 1999 PA Super 161, 734 A.2d 901, 909 (Pa. Super. Ct. 1999); see also Jung v. Nationwide Mut. Fire Ins. Co., 949 F. Supp. 353, 360 (E.D. Pa. 1997) (aggressive defense of insurer’s interests is not bad faith).”

Date of Decision:  August 28, 2006

Totty v. Chubb Corp., 455 F. Supp. 2d 376 (W.D. Pa. 2006) (Ambrose, J.).

Plaintiff sought reconsideration of an Order granting Defendant’s Motion for Summary Judgment.  Plaintiff contended that granting summary judgment on her bad faith claim was inappropriate because there was a genuine issue of material fact as to whether Defendant insurance company had conducted an adequate investigation into the cause of Plaintiff’s alleged damage.  The United States District Court for the Western District of Pennsylvania denied Plaintiff’s Motion.  The Court held that a Motion for Reconsideration would be granted only where: (1) new evidence becomes available; (2) there has been an intervening change in controlling law; or (3) there is a need to correct a clear error of law or fact or to prevent manifest injustice.  Because Plaintiff did not offer any new evidence; raise any new issues of fact; or raise any new issues of law, the Court held that another review of Defendant’s Motion was not warranted.  In reviewing the relevant case law and the evidence supplied by both parties in the light most favorable to Plaintiff, the Court found that no reasonable jury could conclude, by clear and convincing evidence, that Defendant had acted in bad faith.

Date of Decision:  September 19, 2006

Totty v. The Chubb Corp., United States District Court for the Western District of Pennsylvania,  No. 05-111, 2006 U.S. Dist. LEXIS 67026 (W.D. Pa. Sept. 19, 2006) (Ambrose, J.)