In Condi v. State Farm Ins. Co., the insureds’ home suffered water damage. The insureds alleged that there was a storm, and a tree fell blocking a gutter which then acted to funnel water into the home cause damage. The insurer took the position that the water infiltration was caused by winds, and was thus excluded under the policy. The insured brought breach of contract and bad faith actions.

On the bad faith action, the insureds alleged that the carrier had no evidence to support its position, and there was thus no reasonable of sufficient basis to apply the wind exclusion and deny the claim. The court found the alleged facts were sufficient to support a bad faith claim. The court inferred from the complaint that the carrier ignored the real cause of the damage so that an exclusion of the policy would apply, while knowing the real cause of the damage. Thus, it had no reasonable basis for denying the claim, and knew that it had no such basis.

However, the court did dismiss the breach of contract claim because the insureds failed to bring the claim within the contractually required one year limitation period running from the date of damage to the insured.

Thus, this was a case where a bad faith claim remained viable even though there was no duty to provide coverage, in this case because of the technical statute of limitations argument rather than a finding on the merits. Compare Doylestown Electrical Supply Co. v. Maryland Casualty Ins. Co., 942 F. Supp. 1018 (E.D. Pa. 1996); March v. Paradise Mutual Ins. Co., 646 A.2d 1254 (Pa. Super. 1994), appeal denied, 540 Pa. 613, 656 A.2d 118 (1995); Schindler v. Berkshire Life Ins. Co., No. 98-5049, 1999 U.S. Dist. LEXIS 10414 (E.D. Pa. Jul. 9, 1999).

Date of Decision: August 26, 2013

Condi v. State Farm Ins. Co., No. 3:13cv1100, 2013 U.S. Dist. LEXIS 120873 (M.D.Pa. August 26, 2013) (Munley, J.)