Plaintiff's Failure To Uphold His End of The Bargain In An Insurance Contract Results in Dismissal of His Bad Faith Case

In the case of Guerrier v. State Farm, No. 19-2435 (E.D. Pa. June 6, 2022 Pratter, J.) (Mem. Op.), the court granted the carrier’s Motion for Summary Judgment and found that State Farm did not act in bad faith by instituting a subrogation action against its insured when the insured failed to notify the carrier about an auto accident and failed to respond to the carrier’s request for information seeking to confirm the insured’s liability coverage.  In light of this ruling the plaintiff's case was dismissed.

Judge Gene E.K. Pratter of the Eastern Federal District Court of Pennsylvania opened her Opinion by aptly stating that "[a] contract is a legal instrument designed to ensure each party holds up his end of the bargain.  When one party fails to do so, he cannot expect the other party to pick up his slack and then blame that other party for failing to do so."

Here, the Plaintiff-insured was found to have failed to uphold his end of the bargain and, as such, his case was dismissed by the court.

As noted, this matter arose out of a motor vehicle accident. At the time, the Plaintiff in this matter was insured by State Farm, although he was driving a loaner vehicle while his insured vehicle was being repaired. The carrier covering the loaner vehicle had denied coverage.

The court confirmed that, under the terms of the State Farm policy, the Plaintiff was required to give the carrier notice of the accident “as soon as reasonably possible.” The Plaintiff did not report the accident to State Farm.

However, the occupants of the other vehicle, which was also insured by State Farm did file a claim. State Farm then contacted the Plaintiff in this coverage case to confirm whether he had auto liability coverage but the Plaintiff failed to respond. As a result, State Farm initiated subrogation proceeds for the benefits it paid to the occupants of the other vehicle, and the carrier ultimately obtained a default judgment. The Plaintiff later learned of the default judgment when he was denied a renewal of his driver’s license due to nonpayment of the judgment.

The Plaintiff then filed this action for breach of contract and bad faith and other claims. The Plaintiff argued that State Farm had the information it needed to know that he was one of the companies insureds when the occupants of the other vehicle filed their insurance claim.

In this case, the court granted State Farm’s Motion for Summary Judgment. The court found that no reasonable jury could conclude that State Farm acted in bad faith.

Rather, the court held that the Plaintiff breach his obligation under the insurance policy to notify State Farm about the accident as soon as practicable.

The court also found that State Farm acted reasonably under the circumstances by contacting the Plaintiff to confirm his insurance coverage. When the Plaintiff failed to respond, State Farm assumed that he was uninsured and proceeded accordingly.

Moreover, the court noted that, once the Plaintiff did contact State Farm, the carrier promptly investigated the situation and then discontinued the subrogation action after confirming that the Plaintiff’s loaner vehicle qualified as a substitute vehicle under his policy.

Based on these findings, the court granted State Farm's motion for summary judgment and dismissed the Plaintiff's case.    

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be viewed HERE.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (July 5, 2022).

Source of image:  Photo by Pedro de Silva on www.unsplash.com.