JULY 2008 BAD FAITH CASES
INSURER’S MOTION FOR PARTIAL SUMMARY JUDGMENT DENIED WHERE UIM CLAIM UNDERVALUED (Western District)

This bad faith claim brought in the United States District Court for the Western District of Pennsylvania arose from an automobile accident involving Plaintiff-driver and another driver. Plaintiff sought coverage of $100,000 from his insurer based on an underinsured motorist provision in their policy. The insurer refused to make this payment because it determined that Plaintiff’s claim was worth less than $200,000, which is the amount that triggered plaintiff’s UIM coverage.

However, three years after the insurer refused to pay, Plaintiff was awarded $650,000 by an arbitration panel. After this award the insurer paid plaintiff $100,000 in underinsured motorist benefits. Plaintiff filed a bad faith claim with regard to the handling and denial of her Underinsured Motorist Claim.

The insurer filed a motion for partial summary judgment and argued that Plaintiff cannot prove by clear and convincing evidence that it acted unreasonably in the handling of her claim.

The court found that a reasonable juror could determine under the clear and convincing standard that the insurer did not have a reasonable basis for denying Plaintiff’s claim. Plaintiff provided sufficient evidence for a reasonable juror to find bad faith such as insurer’s refusal to assign a monetary value to plaintiff’s claim because it did not know the amount of the first level of UIM coverage. It is also possible that a reasonable juror could find that the insurer did not act in bad faith, and therefore the matter needs to be submitted to a jury.

Date of Decision: April 7, 2008

McCrory v. State Farm Mut. Auto. Ins. Co., 2008 U.S. Dist. LEXIS 28397 (W.D. Pa. Apr. 4, 2008) (Lancaster,G.)

J.M.A.