Court Denies Carrier's Motion For Summary Judgment on Residency Issue in Fire Loss Coverage Claim

In the case of Jackson v. Spinnaker Ins. Co., No. 2:22-CV-012244-NBF (W.D. Pa. Jan. 28, 2025 Fischer, J.), the court addressed a Motion for Summary Judgment filed by the defendant insurance carrier against claim for breach of contract and bad faith asserted by the Plaintiff relative to an homeowner’s policy and a fire loss. The court granted the defense motion as to the Plaintiff’s claim of bad faith but otherwise denied the motion.

The central question in this case was whether the Defendant insurance company had wrongfully refused to pay coverage for losses sustained by the Plaintiff’s after the Plaintiff's property was damaged in a fire.

The Defendant carrier had denied coverage on the grounds that the property was not the Plaintiff’s “residence,” and that the policy was void due to the Plaintiff’s material misrepresentation during the defense investigation. 

More specifically, the carrier asserted that the carrier falsely represented that the property was his primary residence and that it was not vacant and unoccupied. The Defendant carrier noted that the property lacked any electricity of sewer service.

The court denied the Motion for Summary Judgment on the breach of contract claims after finding, in part, that the policy in question did not restrict coverage to the Plaintiff’s primary residence. Rather, the court found that the policy expressly insured the identified property.

The court held that there was an issue of material fact as to whether or not the property was the Plaintiff’s residence. The Plaintiff had noted that he was sporadically sleeping at the property while completing renovations.

The court also found that the Defendant carrier had failed to establish that the Plaintiff made any statements regarding his residence at the property with knowledge of their alleged falsity or under an alleged deliberate intent to deceive.

The court otherwise denied the Defendant carrier’s Motion for Summary Judgment on the bad faith claim after finding that the Defendant had a reasonable basis for denying coverage.

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


Source: The Legal Intelligencer Federal Case Alert, www.Law.com (Feb. 20, 2025).

Source of image:  Photo by Andrew Gaines on www.unsplash.com.

Motion to Sever and Stay Bad Faith Claim Denied by Federal Western District Court

In the case of Walls v. American Modern Select Ins. Co., No. 3:19-cv-80 (W.D. Pa. Feb. 6, 2020 Gibson, J.), the court refused to strike the carrier’s affirmative defense of fraud and also denied the carrier’s Motion to Sever and Stay the insured’s bad faith claim.

According to the Opinion, this case arose out of a homeowners’ fire loss claim.

After the carrier refused to pay on the basis that the insured made material misrepresentation when they applied for their policies, the insured filed suit. The carrier asserted affirmative defenses in terms of misrepresentations made by the insured during the application process.

Before the court was the insured’s Motion to Strike the affirmative defenses inadequately pled. Also before the court was the carrier’s Motion to Sever and Stay the insured’s bad faith claim.

The court denied the Plaintiff’s Motion to Strike the carrier’s affirmative defenses after finding that, under F.R.C.P. 8(c) affirmative defenses did not have to be thoroughly articulated. However, where, as here, fraud is pled, there are additional pleading requirements under F.R.C.P. 9(b) to plead such claims with particularity. Regardless, the court found that the affirmative defenses pled by the carrier in this matter were sufficiently stated.

As to the other Motion at issue, the court denied the carrier’s Motion to Sever and Stay the bad faith claims. In this regard, the court noted that the underlying issues in the two (2) claims overlapped in terms of the breach of contract and bad faith counts.

The court also felt that trying the claim together would not unduly prejudice the carrier. The court also noted that keeping the cases together would also promote judicial economy.

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

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

Western Pennsylvania Federal District Court Reaffirms Several Products Liability Principles of Law

In the Western District Federal Court case of Chandeler v. L’Oreal USA, Inc., 2:17-CV-01141 (W.D. Pa. Sept. 14, 2018 Fisher, J.), the court reaffirmed several important principles of products liability law.   

In the end, the court granted summary judgment in favor of the Defendant on the basic rationale that the Plaintiff had failed to prove that the product was defective, which is fatal to claims for strict liability, negligence, breach of warranty, and violations of the Unfair Trade Practices & Consumer Protection Law.  

 The court additionally noted that the Defendant’s warnings on the product warned about the type of injury the Plaintiff suffered. The court also stated that the record before it established that the Plaintiff failed to read the warnings.   Moreover, to the extent that the Plaintiff may have allegedly read the warnings, the evidence was that she ignored the warnings.  

According to the Opinion, this case involved the Plaintiff's use of an at-home hair relaxer product manufactured by the defendant.

Among the notable rulings of the court were the following:

-It is the judge who determines whether warnings are adequate and whether the product is defective for an inadequate warning.

-Negligence and strict liability claims overlap in warning claims.

-A manufacturing defect can be established directly or by circumstantial evidence.

-Circumstantial proof of a product malfunction must rule out any abnormal use of secondary causes of the injury.

-Implied warranty claims and manufacturing defect claims are essentially the same.

-To establish an implied warranty, the Plaintiff must prove a product defect.

-Where a Plaintiff does not retain any of the product at issue, that Plaintiff cannot prove a manufacturing defect directly and must, instead, attempt to rely upon circumstantial
evidence.

-A failure of a Plaintiff to follow warnings is fatal to a malfunction theory case.

-Claims for misrepresentation and the UPTCPL claims can fail for lack of justifiable reliance by the Plaintiff, i.e., these claims may fail where a Plaintiff does not read or rely upon any alleged misrepresentations with respect to the product.

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

I send thanks to Attorney James M. Beck, of the Philadelphia office of the Reed Smith law firm and the writer of the excellent Drug and Device Law blog for bringing this case to my attention and providing his above analysis of the same.
 

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.

Judge Nealon of Lackawanna County Addresses Coverage Issues in a Declaratory Judgment Action

In the case of Penn National Ins. Co. v. Kapinus, No. 2016 - CV - 3379 (C.P. Lacka. Co. July 12, 2017 Nealon, J.), Judge Terrence R. Nealon sustained in part and denied in part an insured's Preliminary Objections in a declaratory judgment action on coverage.

In this matter a commercial insurance carrier who issued a liability policy to business owned by the father of a personal injury plaintiff filed a declaratory judgment seeking a judicial declaration that it need not provide coverage on the son's claims given that the father misrepresented information as to whether his son had worked for the father's business in the past.

In his preliminary objections, the son asserted that material misrepresentations in this context must relate to the application for insurance and not to alleged fraud in the later prosecution of a claim. Judge Nealon disagreed with this assertion and denied the preliminary objections in this regard.

The court did sustain the son's preliminary objections that asserted the the duty to cooperate under the policy only pertained to the defense of the underlying matter and not with respect to the carrier's efforts to gather information with respect to a decision to deny coverage under the policy.

Anyone wishing to review this opinion by Judge Nealon in the Kapinus case may email me at dancummins@comcast.net.