Tuesday, November 13, 2018

Low Offer Possibly Not Supported by the Record - Bad Faith Claim Allowed to Proceed

A bad faith homeowner’s insurance claim was allowed to proceed into discovery after the carrier’s Motion to Dismiss the Plaintiff’s federal court Complaint was denied in the case of Meiser v. State Farm Fire & Cas. Co., No. 3:17-2366 (M.D. Pa. Sept. 28, 2018 Mannion, J.).  

According to the Opinion, the case arose out of an incident during which a truck crashed into the insured’s home.

The insured’s own carrier evaluated the damage as being less than $2,500.00, which came to less than $600.00 after deductibles.  

The court noted that the tortfeasor’s carrier had evaluated the damages to the house at $60,000.00, based upon a finding a structural damage. Also, the Plaintiff’s public adjuster and another entity evaluated the damages at approximately $40,000.00.   The Plaintiff’s carrier allegedly did not revise its evaluation even after being provided these other estimates.

The insured brought a lawsuit against his own carrier for breach of contract and bad faith.   The issue came before the court on the Defendant’s Motion to Dismiss the bad faith claim.  

Judge Malachy E. Mannion
M.D. Pa.
In his Opinion, Judge Mannion provided a nice overview of the elements of a statutory bad faith claim and noted the demanding standard of clear and convincing evidence required in such cases.  

The Defendant carrier asserted that it was willing to pay the claim but that there was only a disagreement with the insured as to the amount offered.  The carrier asserted that this did not constitute bad faith and relied upon the principle of law that low but reasonable offers cannot be deemed to be bad faith as a matter of law.  

The carrier additionally argued that the Plaintiff’s Complaint only contained conclusory allegations of bad faith and should be dismissed on that basis as well.  

The court denied the Motion to Dismiss after finding that the Plaintiff had pled sufficient facts to support the bad faith claim.   The court also disagreed with the characterization of the pleadings as merely indicating that the carrier’s estimate was low but reasonable.   

Rather, based upon the court’s review of the Complaint, it appeared that the Plaintiff was asserting that there was an extreme disparity between the carrier’s estimate and the other estimates which may suggest something more than mere negligence.  

The court also noted that the motion was being dismissed as several of the issues raised required further discovery to address the same, including with respect to the Plaintiff’s bad faith allegations that the carrier was unreasonable in failing to re-investigate and re-evaluate the damages asserted in light of the new information generated in the claim.  

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

I send thanks to Attorney Lee Applebaum of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law blog for highlighting this case on his blog, which can be viewed HERE.

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