Court Upholds Carrier's Right to Deny Coverage For Material Misrepresentations After Fire Loss

In the Western District Federal Court case of American National Property and Casualty Co. v. Felix, No. 3:16-cv-147 (April 11, 2018 Gibson, J.), the court granted the carrier Defendant’s Motion for Summary Judgment as to all claims of bad faith asserted.

According to the Opinion, this case arose out of the carrier’s denial of the insured’s claim under a homeowner’s policy after the insured’s home was damaged by fire.  

Part of the issues raised in this matter included an allegation that the insured had submitted material misrepresentations to the carrier after the fire loss in that he, in part, asserted that diamond stud earrings and a Louis Vuitton purse were lost in the fire.  During the carrier’s investigation, the carrier consulted with the insured’s ex-fiancé who confirmed that she was in possession of the diamond stud earrings and the Louis Vuitton purse that the insured claimed had been lost in the fire.  

After securing a legal opinion on whether the policy could be voided due to an alleged material misrepresentation by the insured, the carrier decided to deny the claim and to file a lawsuit against the insured for a Declaratory Judgment to seek judicial confirmation that the carrier was not required to provide coverage to the insured based upon alleged material misrepresentations.   The carrier also included a claim against the insured for civil insurance fraud in the Complaint.  

The insured responded by filing an Answer and Counterclaims for breach of contract and statutory bad faith. 

The case later came before the court on cross-Motions for Summary Judgment.  

After reviewing the current status of Pennsylvania law pertaining to Pennsylvania’s Bad Faith Statute and applying the same to the record before it, the court granted the carrier’s motion and denied the insured’s motion.  

Anyone wishing to review a copy of this decision may click this LINK. 

I send thanks to Attorney Joseph Hudock of Summers, McDonnell, Hudock, Guthrie & Rauch, along with Attorneys Richard McMonigle and Brian Shay of Post & Schell for bringing this case to my attention.