JANUARY 2010 BAD FAITH CASES
COURT SUSTAINS INSURER’S MOTION TO DISMISS INSURED’S BAD FAITH CLAIM FOR OBVIOUS POLICY EXCLUSION (C.C.P. Somerset County)

In Kister v. W.N. Tuscano Agency, Inc., the insured, a business that provides home heating fuel to residential customers, purchased an insurance policy from the insurer to cover its business operations. The policy included a standard exclusion for any pollution, however, the insured purchased an endorsement titled “Pollution Liability-Limited Coverage for Covered Autos Subject to Aggregate Limit,” which provided coverage in the event a covered vehicle was “upset or overturned in the course of transit or was involved in a collision with another object while in the course of transit.”

The insured was sued by a customer, after the customer discovered fuel on the ground and around the tank where the fuel had been transferred. The insured filed a claim, and the insurer denied the claim on the basis that the incident was excluded under the policy’s pollution exclusion.

The insured sued for bad faith, among other causes of action. The insurer filed preliminary objections in the nature of a demurer (i.e. a motion to dismiss) to the insured’s bad faith claim.

The court stated the test for granting preliminary objections in the nature of a demurrer is “whether it is clear from all of the facts pleaded that the pleader will be unable to prove facts legally sufficient to establish his or her right to relief.” The court found that the policy did not provide coverage for the incident for which the insured sought coverage. The court noted that the insured failed to show or bring forth any evidence to prove that the insurer did not have a reasonable basis for denying the claim. Accordingly, the court sustained the insurer’s preliminary objections and dismissed the bad faith claim.

Date of Decision: August 26, 2009

Kister v. W.N. Tuscano Agency, Inc., No. 791 CIVIL 2008, Common Pleas Court of Somerset County, Pennsylvania, 2009 Pa. Dist. & Cnty. Dec. LEXIS 96, (C.C.P. Somerset August 26, 2009) (Klementik, J.).