MARCH 2011 BAD FAITH CASES
COURT DENIES MOTION FOR RECONSIDERATION AFTER GRANTING SUMMARY JUDGMENT TO INSURED ON BAD FAITH BASED ON UNREASONABLE CONDUCT IN HANDLING CLAIM (Western District)

The insured was involved in a motor vehicle accident in 2001, suffering injuries to both of her knees. She filed a claim with her insurer, whose adjuster initially believed the First Party Medical Benefits limit under the policy to be $5,000, and the insurer paid the insured’s medical bills for months until it reached that limit.

The insured then submitted a claim for uninsured motorist benefits after hiring an attorney and learning that the tortfeasor responsible for the accident (the driver of the other automobile) was not insured. Additionally, although she initially did not mention any wage losses, the insured in her second application also submitted a claim for income loss, alleging that she worked for the U.S. Postal Service. After an investigation, the original adjuster for the insurer offered to settle the uninsured motorist claim for $7,798, and the insurer denied the income loss claim. The case was then referred to a more experienced adjuster, who determined the policy limits to be $50,000 and eventually increased the settlement offer to $9,000. The insured then filed suit after obtaining new counsel, asserting claims for breach of contract and bad faith. Before the trial occurred, the insurer realized that due to stacking, the policy limit would actually be $100,000, and it made a settlement offer for that amount, but the case proceeded to trial.

The insured had alleged that the insurer acted in bad faith in handling both the first party income loss claim and the uninsured motorist claim. The court granted summary judgment to the insurer on the count concerning income loss, as it felt that the insurer’s requesting of further documentation before providing an answer was reasonable, and based on the evidence the insurer could have reasonably denied the wage loss claim.

Concerning the uninsured motorist claim, however, the court granted summary judgment to the insured, as the insurer’s conduct was “intentional and unreasonable and [the insured showed] by clear and convincing evidence that [the insurer] did act in bad faith in regard to the handling and settlement of her claim.” It specifically determined that the insurer acted in bad faith by “misrepresenting the uninsured motorists policy coverage limits; by refusing to arbitrate [the insured’s] uninsured motorist claim in direct conflict with its own policy language; by misleading [her] regarding their intentions to appeal an arbitration award; by proffering unreasonably low settlement offers; and in unreasonably delaying payment of the settlement funds and attempting to have [her] waive future claims against them for bad faith.”

The insurer then filed a motion for reconsideration, which the current opinion addressed. In a short opinion, the court denied the insurer’s motion. It felt that the insurer simply presented the same arguments and evidence that it did previously, with a couple small and unimportant differences that did not convince the court to change its ruling. Therefore, the court upheld its granting of summary judgment to the insured on the bad faith claim relating to the insurer’s handling of the uninsured motorist claim.

Date of Decision: March 16, 2011

Wisinski v. Am. Commerce Group, Inc., Civil No. 07-346 Erie, United States District Court for the Western District of Pennsylvania, 2011 U.S. Dist. LEXIS 26846, (Mar. 16, 2011) (Cohill, Jr., J.)