Pennsylvania Superior Court Reverses Verdict In Favor of Plaintiff in Bad Faith Case

In the case of Watchward Worldwide v. Erie Insurance Exchange, No. 1221 WDA 2022 (Pa. Super. Jan. 9, 2021 Bowes, J. Kunselman, J., and Collins, J.) (Op. by Colins, J.), the Pennsylvania Superior Court vacated a lower court judgment in favor of the Plaintiff in an insurance breach of contract and bad faith claim after finding that the carrier was entitled to judgment in its favor as a matter of law on all claims presented.

In this case, the insured filed an insurance claim for loss of electronic data as a result of a computer hacking incident. At the time, the insured was covered by the carrier under a property damage and liability insurance policy that included coverage for the reproduction or replacement of electronic data.

When the insured filed a claim with the carrier for a loss caused by the deletion of its electronic data, the carrier denied the coverage claim on the grounds that the policy did not cover the loss because the electronic data that was destroyed was not on the insured’s computers and on the grounds the cost of replacing the data lost was less than the insured’s $2,500.00 deductible.

At trial, the carrier moved for a nonsuit at the end of the Plaintiff’s case based upon the defenses noted above. The jury entered a verdict in favor of the insured. The carrier then filed post-trial motions which were denied.

A non-jury trial on the Plaintiff’s bad faith claim was then scheduled. Prior to the date of that trial, the parties agreed to proceed by way of argument based upon trial evidence and written submissions along with some additional testimony. The trial court then issued its non-jury verdict on the bad faith claim finding that the carrier had acted in bad faith based upon its denial of coverage. The trial court awarded the Plaintiff $20,000.00 in punitive damages and $50,000.00 in attorneys' fees and costs.

The trial court then denied post-trial motions filed by both parties with respect to the bad faith verdict. The case was then appealed up to the Superior Court.

The Pennsylvania Superior Court ruled that the carrier’s interpretation of its own policy was correct in terms of a finding that no coverage was due to the insured under the case presented. More specifically, the Superior Court noted that the Plaintiff’s evidence did not prove that the Plaintiff’s loss exceeded the policy’s $2,500.00 deductible. As such, the Superior Court found that Erie did not breach its contract when it denied the request for insurance benefits under the policy.

Given that the Superior Court found that the contract had not been breached, the Superior Court also found that the carrier was entitled to judgment in its favor on the bad faith claims. The court otherwise also noted that, although a different aspect of the carrier’s denial of the claim presented may have been erroneous, the carrier’s decision in this regard was reasonable under the circumstances presented.

Accordingly, the bad faith claim failed because the Plaintiff was not able to show, by clear and convincing evidence, that the carrier had no reasonable basis for denying the claims presented.

In the end, the Superior Court ruled that the carrier was entitled to judgment in its favor on all claims presented. As such, the lower court judgments entered in favor of the Plaintiff were vacated and the case was remanded with instructions for the trial court to enter judgment notwithstanding the verdict in favor of the carrier.

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

Homeowner's Insurance Bad Faith Claim Dismissed

In the case of Qin v. Travelers Personal Ins. Co., No. 2:22-CV-03264-KNS (E.D. Pa. Dec. 15, 2023 Scott, J.), the court granted a Defendant carrier’s Motion to Dismiss a Plaintiff’s bad faith claim based upon the homeowner insurance carrier Defendant’s refusal to cover a loss because the property in question had been vacant for more than sixty (60) days prior to the date of the loss.

The court found that the Complaint lacked factual allegations to support the bad faith claim.

This case involved issues arising under a homeowner’s insurance policy.  The Plaintiff alleged that tenants had damaged a property that he owned.

The court found that the Plaintiff did not allege any facts to support a claim of bad faith and only made conclusory allegations. The court otherwise held that the allegations in the Complaint failed to satisfy the two prongs necessary to establish a bad faith claim, that being that the Defendant allegedly lacked a reasonable basis for denying benefits under the policy and that the carrier knew or recklessly disregarded its lack of a reasonable basis in denying the claim.

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 (Jan. 5, 2024).

Source of image:  Photo by Tierra Mallorca on www.unsplash.com.

If No Coverage Under Policy, Then No Bad Faith

In the case of Walker v. Foremost Ins. Co., No. CV-20-4966 (E.D. Pa. March 2, 2022 McHugh, J.), the court followed prior precedent in granting summary judgment on a bad faith claim after finding that there was no coverage due on the policy in question.

According to the Opinion, this case arose out of an incident during which a homeowner’s fallen tree damaged her neighbor’s property.

The neighbor and the neighbor’s carrier sued for damages.

The homeowner’s carrier asserted that its policy did not provide liability coverage for the claim at issue.

The neighbor filed for breach of contract and bad faith.

After finding that no coverage was due under the policy and granting the homeowner’s carrier’s Motion for Summary Judgment on the breach of contract claim, the court likewise granted the summary judgment on the bad faith claim indicating that, since there was no coverage due under the policy, “by definition, the insurer had a reasonable basis to deny the benefits.”

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


I send thanks to Attorney Lee Applebaum of the Philadelphia law office of Fineman, Krekstein & Harris for bringing this case to my attention through his Pennsylvania and New Jersey Insurance Bad Faith Case Law blog.

Photo by Castorly Stock on www.pexels.com.

No Bad Faith Where Plaintiff Failed to Pay Premium and UIM Policy Was No Longer In Effect

In the case of Gonzales v. State Farm Mutual Automobile Insurance Company, No. CV 20-4193 (E.D. Pa. Oct. 21, 2021 Schmehl, J.), the court granted summary judgment in favor of the carrier in a breach of contract and bad faith claim in the UIM/medical payments context.

The court noted that summary judgment was entered in favor of the carrier on the basis that the insured failed make all payments necessary to keep the policy in effect.

Given that the policy was not in effect at the time of the incident at issue, the court found that the carrier could not have breached its coverage obligations.

The court noted that, given that the carrier was granted summary judgment on the breach of contract claim, it followed that carrier was also entitled to summary judgment on the bad faith claims as well.

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


I send thanks to Attorney Lee Applebaum, the writer of the excellent Pennsylvania New Jersey Insurance Bad Faith Case Law blog for bringing this case to my attention. Attorney Applebaum is with the Philadelphia law firm of Fineman Krekstein & Harris.

COVID-19 Business Interruption Coverage and Bad Faith Claims Dismissed

In the case of Round Guys Brewing Co. v. Cincinnati Ins. Co., No. CV-20-6252 (E.D. Pa. Sept. 22, 2021 Sanchez, J.), the court found that no coverage was due in this COVID-19 business loss coverage case.

After finding no coverage due, the court also dismissed the Plaintiff’s claim for bad faith after noting that the carrier’s position in denying coverage in this case was widely supported by the case law. As such, the court noted that the carrier’s denial of coverage in this business interruption coverage case was reasonable and that the Plaintiff had failed to adequately pled the elements of bad faith.

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

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman Krekstein & Harris and the writer of the excellent Pennsylvania New Jersey Insurance Bad Faith Case Law blog for bringing this case to my attention.

Business Interruption Coverage and Bad Faith Claims Dismissed

In the case of Round Guys Brewing Co. v. Cincinnati Ins. Co., No. CV-20-6252 (E.D. Pa. Sept. 22, 2021 Sanchez, J.), the court found that no coverage was due in this COVID-19 business loss coverage case.

After finding no coverage due, the court also dismissed the Plaintiff’s claim for bad faith after noting that the carrier’s position in denying coverage in this case was widely supported by the case law. As such, the court noted that the carrier’s denial of coverage in this business interruption coverage case was reasonable and that the Plaintiff had failed to adequately plead the elements of a bad faith claim.

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

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman Krekstein & Harris and the writer of the excellent Pennsylvania New Jersey Insurance Bad Faith Case Law blog for bringing this case to my attention.

UM Bad Faith Claim Regarding Disagreement Over Value of Claim Dismissed

In the case of Brown v. LM Gen. Ins. Co., No. 21-2134 (E.D. Pa. Aug. 24, 2021 Pratter, J.), the court granted a Defendant carrier’s Motion to Dismiss a Plaintiff’s bad faith claim in a UM matter after finding that the Plaintiff could not sustain a bad faith claim against the insurance company where the allegations in her Amended Complaint boiled down to a disagreement between the parties over the amount of a settlement for uninsured motorist benefits.

In this matter, the Plaintiff had alleged that the carrier, among other things, failed to conduct a medical evaluation, review the Plaintiff’s medical records, or otherwise invest the claims presented prior to offering a settlement. The Plaintiff also claimed that the carrier was dilatory in its claims handling practices when it allegedly mispresented that it would resolve the claim and then continuously and endlessly requested documentation before ignoring that documentation.

The defense argued that the Plaintiff had simply recycled the same allegations as in the initial pleading. The carrier also asserted that the Amended Complaint again came down to a claim by the Plaintiff that, because the carrier allegedly failed to offer an amount to which the Plaintiff believed she was entitled, the carrier allegedly acted in bad faith. The carrier also emphasized that there was a serious dispute in this case as to whether or not the Plaintiff was even entitled to coverage under the applicable policy.

After reviewing the current status of Pennsylvania law regarding bad faith claims, the court found that, although the Plaintiff’s Amended Complaint listed thirty-eight (38) ways in which Liberty Mutual allegedly acted in bad faith, the list was a list of conclusions, not facts. The court found that there were no details offered by the Plaintiff that would describe or was supposedly unfair about the process.

Relative to the claim that the carrier acted in a dilatory fashion, the court noted that the Plaintiff failed to meet her requirement of asserting specific facts to support that allegation such as the number of months between a demand and a settlement offer. 

The court noted that, in the end, the Amended Complaint simply reflected a disagreement between the parties over the amount of an appropriate settlement of the claims presented. The court reiterated a well-settled law that an insured must do more than allege an allegedly “low-ball” offer.

The court also emphasized that “a policy limit- -as its name suggests- -is the theoretical maximum that an insured could recover. ‘It is not the de fecto value of a claim.’” See Op. at p. 5.

Given that the Plaintiff had failed to support her claim for bad faith with facts, this claim was dismissed with prejudice.

The court also addressed the carrier’s Motion to Strike all references in the Plaintiff’s Complaint that the carrier’s conduct was reckless, wanton, and willful relative to the declaratory judgment and breach of contract claims.

The court found that, in order to prevail on a Motion to Strike allegations, the allegations must not only be unrelated to the claim presented but the moving party must show how the moving party will be prejudiced if the allegations are allowed to remain in the pleadings.

Given that the carrier failed to explain how it will be prejudiced in this matter if the challenged allegations are not stricken, the court denied the Motion to Strike. The court also noted that a bald assertion that the carrier acted willfully or recklessly is only a legal conclusion that the court need not accept as true.

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


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (Sept. 17, 2021).

Western Federal District Court Narrows Application of Gallagher v. Geico To Its Facts

A Federal Western District Court Judge has joined those judges who have breathed life into the Household Exclusion by limiting the Gallagher v. Geico decision to its facts and rejecting a reading that the Pennsylvania Supreme Court's decision eradicates the exclusion across the board.

In the case of Dunleavy v. Mid-Century Ins. Co., No. 2:19-CV-1304 (W.D. Pa. May 19, 2020 Ranjan, J.), Judge Ranjan of the Pennsylvania Western Federal District Court held that the Pennsylvania Supreme Court’s decision in Gallagher v GEICO, in which that court ruled that the household exclusion was no longer valid, did not apply to invalidate a household exclusion in this case where the insured had waived UIM coverage on a motorcycle insured with another carrier. 

The Court in Dunleavy therefore ruled that the claimants were not entitled to stacked UIM coverage from their automobile insurer because there was no coverage on the motorcycle with which to stack. In other words, the claimants had waived stacking on the motorcycle policy, which had been issued by a different carrier.

In its decision, the Court also held that, because the Plaintiff’s claims failed with respect to the household exclusion issue, the Plaintiff’s claims for bad faith and under the Unfair Trade Practices and Consumer Protection Law also failed.

Anyone wishing to review this decision may click this LINK.

I send thanks to Attorney Patricia A. Monahan of the Pittsburgh office of the Marshall Dennehey law firm for bringing this case to my attention.

Another Court Rules: No Coverage, No Bad Faith

In the case of NVR, Inc. v. Mutual Benefit Ins. Co., No. 2:19-cv-26-NR (W.D. Pa. March 13, 2020 Ranjan, J.), the court issued another decision in which it was held that, if there is no coverage under a policy, there can be no bad faith as well.

The insured, NVR, was a company that developed and built homes.  When a number of landslides in western Pennsylvania damaged a number of homes, NVR was sued by the homeowners.  NVR filed this lawsuit against the carrier seeking coverage and a defense under insurance policies issued to an engineering company and under which NVR was listed as an additional insured.  However, the coverage under the policy to additional insureds was found to be limited.

In this matter, the court determined that there was no coverage due to NVR as an additional insured and, as such, ruled against NVR on its breach of contract and declaratory judgment claims. The court then ruled that the bad faith claims also failed as a result.

As to the additional insured’s statutory bad faith claim, the court more specifically noted that, where there is no duty to defend, there can be no statutory bad faith claim against the carrier.

NVR attempted to avoid a total dismissal by asserting that it still had a valid common law bad faith claim to pursue.

However, the court noted that the only common law bad faith cause of action available in Pennsylvania arises out of claims pertaining to the insurance contract itself.  The court noted that where, as here, a contract claim is found to be invalid, then the common law bad faith claim must also be dismissed as well.

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

I send thanks to Attorney Lee Applebaum, the writer of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog for bringing this case to my attention. Attorney Applebaum is with the Philadelphia law firm of Fineman, Krekstein & Harris.