Tuesday, January 21, 2020

Bad Faith Victory for Plaintiff in Lehigh County

In the case of Unterberg v Mercury Ins. Co., No. 2016-C-806 (C.P. Lehigh Co. Dec. 27, 2019 Pavlack, J.), the court entered judgment in favor of a Plaintiff and against the carrier on both a breach of contract claim and on a statutory bad faith claim with the bad faith damages to be determined in a separate hearing. 

This case arose out of the carrier’s denial of a theft and/or vandalism claim relative to the insured’s vehicle. 

According to the findings of the court, there was no reason to believe that the insureds had anything to do with the theft or the vandalism of their vehicle. 

The carrier had issued a denial letter that contained reasons for the carrier’s denial of the claim which included, in part, a determination by the carrier that there was insufficient evidence to support the claim that the vehicle was stolen. Although this determination was based, in part, upon statements under oath, the claims handler testified that she could not remember what statements under oath led the carrier to deny the claim.

The court also noted that the claims department had been advised that the insured-wife was uncooperative with the investigation by the carrier because she failed to bring unredacted tax returns and cell phone records to her examination under oath.

The court found in its Findings of Fact that it found that the Plaintiff-wife had indeed cooperated with the investigation. The court noted that the record confirmed that the Plaintiff had brought redacted documents to her examination under oath as instructed but could not comply with the request for phone records due to HIPAA privacy laws. 

The court additionally noted that, under the denial letter, it was indicated that, with respect to the examination of the vehicle, the carrier found no evidence of a forced entry into the vehicle and that the ignition switch were intact. However, elsewhere in the opinion, it was indicated that the ignition switch had been vandalized by being filled with and covered with glue.

The court also otherwise held that forced entry into a vehicle was not required to establish theft pursuant to the policy. Therefore, the court found that the alleged lack of evidence of a forced entry into the vehicle was not a reasonable basis for denying a theft claim. 

After reviewing other issues to support its opinion, the court found that the carrier breached its contract and that the carrier had no basis to deny the claim particularly where employees of the carrier had admitted that the vehicle was vandalized based upon the investigation completed. 

The court also found that the carrier knew or recklessly disregarded its lack of a reasonable basis in denying the claim presented. Accordingly, the court held that the carrier acted in bad faith when it denied the insurance claim of the Plaintiff. 

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

I send thanks to the prevailing Plaintiff’s attorney, Steven A. Bergstein of the Allentown, Pennsylvania law office of Engle, Wiener, Bergstein & Fleischaker for bringing this decision to my attention.

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