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Summary Judgment Granted After Finding Insurer Reasonably Relied Upon An Independent Expert

The Eastern District of Pennsylvania recently granted an insurer’s Motion for Partial Summary Judgment and dismissed a bad faith claim after finding that an insurer did not act unreasonably by basing its denial of a subsequent similar claim on the results of a second inspection by an independent expert. See Balu, et al. v. The Cincinnati Ins. Co., 2020 WL 1820894 (E.D. Pa., Apr. 9, 2020).

In 2016, the insureds’ home sustained water damage to the roof above their pool and dining room and to the interior walls and ceiling of their pool room. The insureds submitted a claim to the insurer, and the insurer paid for the water damage to the interior of the pool room but retained a forensic engineer to investigate the roof above the dining and pool room. The forensic engineer concluded that the damage above the dining and pool rooms was caused by improper construction of the roof. The engineer further concluded that the interior damage was also a result of improper construction. Based on the engineer’s findings, the insurer denied the insureds’ claim because damage caused by faulty, inadequate, or defective workmanship was explicitly excluded in their homeowner’s insurance policy.

In 2018, the insureds submitted a second claim to the insurer for damages to the same roof and the interior of the pool room. The insurer retained the same forensic engineer it had used for the first claim, and the engineer conducted a second investigation and issued a second report wherein he again concluded that the damage to the interior of the pool room and roof was a result of faulty construction. Consequently, the insurer denied the insureds’ second claim because the damage to the roof was caused by the same faulty construction identified in 2016, which the insureds had not repaired.

The insureds argued that they were not seeking coverage for faulty construction. It was their position that they sought coverage for damage caused by wind, snow, and ice, and an improperly installed roof only made it more susceptible to wind damage. The insureds also submitted their own engineering report.

After the insurer reaffirmed its decision to deny the 2018 claim, the insureds sued the insurer for breach of contract and statutory bad faith. The insurer moved for summary judgment on the bad faith claim. In granting the insurer’s motion, the Court held that whether the insurer correctly identified the cause of damage was not material to the insureds’ bad faith claim. Rather, the relevant inquiry was whether the insureds presented clear and convincing evidence to substantiate their claim that the insurer acted unreasonably.

The Court held that no jury could reasonably find that the insurer acted in bad faith by sending its forensic engineer to perform a second investigation and basing its denial of the 2018 claim on the results of the second investigation. The Court reiterated that, for purposes of defeating a bad faith claim, an insurer may rely on the conclusions of its independent expert.