Article by Adam Murdock, Esq.
The Western District of Pennsylvania recently granted an insurer’s motion for summary judgment and dismissed claims for breach of contract and statutory bad faith after finding that the insured’s breach of contract claim was time-barred and that the insurer’s conduct did not constitute bad faith. The Court also dismissed a claim for violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) after finding that the insurer’s slogan and agent’s assertions did not constitute deception under the UTPCPL. Nelson v. State Farm Fire & Cas. Co., 2023 WL 2668922 (W.D. Pa. Mar. 28, 2023).
In Nelson, the insured maintained a homeowners insurance policy issued by the insurer, which provided coverage for accidental and direct physical loss to the property. The policy included a provision that required lawsuits against the insurer to be started “within one year after the date of loss or damage.”
On April 3, 2018, the insured noticed damage to her kitchen wall and contacted a contractor to have it repaired, but she did not move forward with repairs at this time. It was not until December 2018 when the insured hired a contractor who informed her that a gutter had pulled away from her roof, resulting in water channeling into the flashing around the windows which saturated the drywall from the inside out. The insured subsequently hired a public adjuster to communicate with the insurer regarding the damage, and the contract between the insured and public adjuster listed April 3, 2018, as the date of loss. The insured retained a water remediation company to inspect, estimate, and repair the damage. Water remediation work was completed on January 7, 2019. A representative of the insurer inspected the property a couple of days later.
After the inspection, the insurer sent a letter to the insured stating that the date of loss was identified as April 3, 2018, that a one-year limitation to bring suit existed in the policy, and that the claim remained open due to their ongoing investigation. The insurer continued its investigation and concluded that the damage was not an accidental and direct physical loss and was therefore not covered by the policy. The insurer denied coverage of the loss via letter dated March 29, 2019. After the insured’s counsel demanded coverage, the insurer offered to pay the costs of the remediation work as a compromise. This offer was rejected, and the insured filed suit on May 22, 2019.
The insurer filed a motion for summary judgment to dismiss the breach of contract, statutory bad faith, negligent misrepresentation, and UTPCPL claims asserted against it. The Court granted the insurer’s motion and dismissed all claims against the insurer.
The Court held that the breach of contract claim was time-barred after finding that the date of loss was April 3, 2018—the date the insured noticed that she sustained water damage to her kitchen. Pursuant to the suit limitation clause in the policy, the insured had one year from April 3, 2018, to commence a lawsuit against the insurer. Because suit was not filed until May 22, 2019, the insured’s breach of contract claim was time-barred. While the insured argued that the suit limitation clause did not apply because of the discovery rule, the Court rejected this argument since the insured acknowledged the April 3, 2018 date of loss in her contract with the public adjuster. With respect to the insured’s argument that the insurer had waived the suit limitation provision, the Court found that there was no evidence to establish that the insured had reasonable grounds to believe that the insurer would not strictly enforce the suit limitation provision.
The Court dismissed the bad faith claim after finding that the record is “bereft of evidence sufficient to allow a jury to conclude that [the insurer’s] investigation involved bad faith.” The Court pointed to the fact that the insurer first learned of the loss in December 2018, communicated with the insured’s public adjuster, made attempts to contact the insured’s contractor, and conducted a “thorough investigation,” all of which occurred over a period of approximately three months. While the insured may disagree with the insurer’s conclusion, she failed to present any evidence that the insurer acted in bad faith.
The Court dismissed the negligent misrepresentation claim after finding that the insured abandoned the claim.
Finally, the Court dismissed the insured’s UTPCPL claim after finding that reliance on the insurer’s slogan was unjustifiable because it consisted of “unactionable puffery.” Moreover, the insurance agent’s statement that the insurer “would take great care of her” was “far too general and vague to constitute a deceptive statement upon which [the insured] could justifiably rely.”