MARCH 2013 BAD FAITH CASES: COURT GRANTS INSURED’S MOTION TO DISMISS CARRIER’S REVERSE BAD FAITH CLAIM, HOLDS THAT CARRIER MAY SEEK COMPENSATORY DAMAGES IN AMENDED COUNTERCLAIM (Philadelphia Federal)

In Barnes v. Allstate Prop. & Cas. Ins. Co., the court heard an insured’s motion to dismiss its home insurer’s counterclaim under Pennsylvania’s Insurance Fraud statute, which was filed in response to the insured’s breach of contract and bad faith claims against the carrier. The suit arose after the carrier denied coverage over fire damage sustained by the insured’s residence. After it denied coverage, the insured filed the instant suit. Once the carrier’s counterclaim was filed, the insured moved to dismiss.

The court granted the insured’s motion to dismiss the counterclaim, arguing that the carrier could not make out a claim for insurance fraud. While the court agreed, it noted that carrier does not need to plead a “pattern” of fraud to successfully allege such a counterclaim. The court also permitted the carrier to file an amended counterclaim, suggesting that compensatory damages against the insured would be a proper remedy.

Date of Decision: February 15, 2013

Barnes v. Allstate Prop. & Cas. Ins. Co., 2013 U.S. Dist. LEXIS 20661, U.S. District Court for the Eastern District of Pennsylvania (E.D. Pa. Feb. 15, 2013) (McLaughlin, J.)