FEBRUARY 2013 BAD FAITH CASES: COURT DENIES BAD FAITH CLAIM BECAUSE INSURED’S POOR ENGLISH SKILLS DID NOT EQUATE TO DECEPTIVE CONDUCT BY CARRIER, WHICH WOULD REQUIRE COURT TO LOOK BEYOND PLAIN MEANING OF POLICY IN A REASONABLE EXPECTATIONS ANALYSIS (Philadelphia Federal)

In Mabrat v. Allstate Ins. Co., the court heard cross motions for summary judgment filed by an insured and his homeowner’s insurance carrier in a suit for breach of contract and bad faith. The dispute arose after a fire damaged the second floor of a property owned by the insured. The carrier denied coverage because the insured rented the unit to a third-party and coverage was conditioned upon the building’s use as the insured’s primary residence.

However, the insured was an Ethiopian immigrant with poor English skills, who applied for insurance through his real estate broker and was unable to read the language of the policy. The insured claimed that the carrier’s deceptive practices should force the court to look past the plain meaning of the policy and effectuate his reasonable expectations.

The court disagreed, finding that the insured’s lack of English proficiency and the carrier’s knowledge that two units existed in the insured’s property were not sufficient to look past the plain meaning of the policy. Moreover, the court ruled that the carrier’s residency requirement was not a hidden term in the policy such that the insured’s reasonable expectations should apply to the policy.

The court also ruled that the Brakeman Doctrine, which precludes the denial of coverage for late notice of a claim, was inapplicable.

Because the insured was unable to succeed on the coverage action, summary judgment was entered on his bad faith claim.

Date of Decision: December 12, 2012

Mabrat v. Allstate Ins. Co., NO. 12-1293, 2012 U.S. Dist. LEXIS 176386, U.S. District Court for the Eastern District of Pennsylvania (E.D. Pa. Dec. 12, 2012) (Baylson, J.)