Bad Faith Blog

The Western District of Pennsylvania held that an insurer did not act in bad faith but was well within its rights in denying an insured’s claim and voiding his policy.  The insured’s material misrepresentations caused the court to find that no reasonable jury could conclude that the insurer acted in bad faith in denying the claim. Mr. Felix submitted a homeowner’s insurance claim in excess of $1 million after a fire ravaged his home. The insurer assigned the case to a special investigations unit after identifying several “red flags” suggesting fraud. 

Injured logger, as an assignee of claims by a timber lessee and land owner, brought an action against his employer’s liability insurer to recover a consent judgment for the $1M policy limits. After the trial court entered summary judgment in favor of the logger, the employer’s insurer appealed. The Supreme Court of Appeals of West Virginia found the consent judgment was not binding on the insurer because it was not a party to the underlying suit and the settlement and assignment were void for fraud and collusion.

Summary: Dismissal of the mortgagor’s claim for breach of the implied covenant of good faith and fair dealing was affirmed on appeal. Under Pennsylvania law, there is no cognizable claim for breach of the implied covenant of good faith and fair dealing separate from a breach of contract claim.

Summary: In August 2012 a fire destroyed thirty-six apartment units owned by Summit Park Apartments, LLC (“Summit Park”). Great Lakes Reinsurance (“Great Lakes”) insured Summit Park and the policy provided for construction costs, loss of business income, and out-of-pocket expenses. The policy also obligated Great Lakes to pay out claims within thirty days.

Summary: After its insured, Lawrence Saks, wrongfully obtained disability benefits under his insurance policy, National Life Insurance Company sued Saks for fraud. Saks counterclaimed with a claim for breach of good faith and fair dealing. At trial, the jury returned a verdict in favor of National Life on its fraud claim and a zero-dollar verdict in favor of Saks on his counterclaim. Both sides appealed.