MAY 2015 BAD FAITH CASES: SUMMARY JUDGMENT GRANTED BECAUSE PRIOR WORKERS’ COMPENSATION DECISION ESTABLISHED REASONABLE BASIS FOR INSURER’S APPLICATION OF EXCLUSION (Philadelphia Federal)

In Gibble v. Cincinnati Insurance Companies, the court found that the plaintiff did not produce sufficient evidence from which a reasonable jury could find in his favor on a bad faith claim, and granted the insurer summary judgment.

In this case, the policy exclusion relied upon by the carrier to exclude coverage was that the person driving the insured’s truck, i.e., the employee-plaintiff in this case, was “without a reasonable belief that they have authority to do so.” The court found that the insurer had a reasonable basis to exclude payment to the an employee of the insured, even if that basis ultimately proves incorrect.

There had been a prior workers’ compensation decision, finding that the plaintiff-employee of the insured was not acting in the scope of employment at the time he was injured, while driving his employer’s truck. The testimony and evidence in that matter provided a reasonable basis for insurer to believe that unless the injured employee was acting within the scope of his employment, he was not permitted to drive the truck; and that the employee knew that to be the case.

This provided the insurer with a reasonable basis to deny coverage, because the employee arguably appeared to lack a reasonable belief that he was entitled to be driving the truck at the time of the accident. Thus, the statutory bad faith claim could not get beyond Terletsky’s reasonableness prong. Nor was there any evidence in the record of reckless disregard, to meet the second prong. The court’s finding was further bolstered the plaintiff’s need to meet the clear and convincing evidence standard, if the case were to proceed.

Date of Decision: April 30, 2015

Gibble v. Cincinnati Ins. Cos., CIVIL ACTION No. 14-0739, 2015 U.S. Dist. LEXIS 57190 (E.D. Pa. April 30, 2015) (Pratter, J.)