JANUARY 2011 BAD FAITH CASES NO BAD FAITH WHEN INSURER PROPOSES TO MERGE UNDERINSURED MOTORIST CLAIM WITH A LIABILITY CLAIM FOR THE SAME ACCIDENT, AND WHEN DISPUTE EXISTS OVER CLAIM’S VALUE (Middle District)
The insured was involved in two car accidents. In the first, which occurred in August 2005, the plaintiff was rear-ended by a car, the driver of which was insured by the insurer. A week after this accident, the plaintiff notified the insurer that it was pursuing an underinsured motorist claim relating to the accident for the amount of injuries in excess of $25,000, which was the insurer’s maximum liability coverage under the policy. The plaintiff was in another car accident in April 2006, when he was hit by a car that was making a left turn. Despite the driver of the vehicle in the second accident being insured by a different insurer for $25,000 in liability coverage, the plaintiff soon-after put the insurer from the first accident on notice that it was pursuing an uninsured motorist claim relating to the second accident.
The plaintiff eventually obtained new counsel, who promptly notified the insurer that he was demanding arbitration with respect to the underinsured motorist claims. At this point, the insurer proposed to the plaintiff that the underinsured motorist claim against it for the first accident be tried by a jury at the same time as the liability claim against the driver, but the plaintiff rejected this idea. The plaintiff eventually settled with the driver of the first accident for $15,000 of the original $25,000 available in liability coverage, and the insurer then offered the plaintiff $2,000 for both the first and second accidents to resolve the underinsured motorists claims.
The parties could not agree on a settlement or to move the case to arbitration, so the plaintiff filed a Complaint against the insurer. The Complaint contained claims for breach of contract and bad faith with respect to both accidents. The insurer then filed a motion for summary judgment to dismiss the two bad faith claims.
The plaintiff alleged that the insurer acted in bad faith by (1) suggesting to the plaintiff that his underinsured motorist claim relating to the first accident be tried with the plaintiff’s negligence claim against the driver relating to the same accident, and (2) failing to properly evaluate the plaintiff’s underinsured motorist claims. Concerning the first allegation, he felt that the insurer’s proposal to merge the two claims relating to the first accident undermined the purpose of underinsured motorist coverage, but the court disagreed with this assertion. It noted that the insurer would still be responsible to pay any damages awarded by the jury in excess of the $25,000 available under the driver’s insurance policy. The court also gave credibility to the insurer’s assertion that its proposal was partially designed to save the plaintiff from the trouble and expense of two separate proceedings.
With respect to the second bad faith assertion, the court determined that the insurer had not failed to properly evaluate the plaintiff’s claim because there still was a genuine dispute over the claim’s value. As the court noted, the plaintiff did not provide the insurer with an expert report regarding his injures and bases of claims until three years after the second accident and ten days before filing the Complaint. Finally, the plaintiff had been involved in many other accidents causing him injuries over the past six years, and the insurer understandably wanted to conduct a thorough investigation before settling the his claim. Therefore, the court determined that the insurer had not acted in bad faith as a matter of law, and it granted the insurer’s motion to dismiss both bad faith claims.
Date of Decision: December 28, 2010
Calestini v. Progressive Cas. Ins. Co., Civil Action No. 3:09-CV-1679, United States District Court for the Western District of Pennsylvania, 2010 U.S. Dist. LEXIS 136815, (Dec. 28, 2010) (Caputo, J.)
