• • • Trip Insurance Purchased
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A recent opinion by United States District Judge Graham Mullen, W.D.N.C., is another example in a long line of insurance bad faith decisions in which a first-party insured’s extracontractual claims fail to survive the pleading and summary judgment stages. The main lesson, often taught, is that an insurer may reasonably dispute a claim without incurring extracontractual (bad faith or UDTP) liability.

Prosperity Vill. Townhome Ass’n, Inc. v. State Farm Fire & Cas. Co., No. 3:13-CV-00363, 2014 WL 4311498 (W.D.N.C. Aug. 29, 2014), involves an insurance dispute arising out of hail damage to the roofs of some residential condominiums in Charlotte, North Carolina. The court found that State Farm made a prompt and thorough inspection of the damage and that State Farm paid the undisputed part of the claim in good faith. The court held that, as a matter of law, State Farm did not engage in unfair and deceptive trade practices.

The plaintiff was a condominium homeowners’ association (HOA). The condominiums, consisting of thirty buildings, were insured against hail damage by defendant State Farm Fire & Casualty Co. The condo roofs were damaged by hail on May 11, 2011. The HOA filed an insurance claim with State Farm on October 12, 2011. State Farm inspected the property and estimated the covered damage amount as $73,720.03. State Farm paid that amount to the HOA on November 12, 2011, one month after the claim was filed. State Farm heard nothing else from the HOA for six months.

Six months later, State Farm received a claim from the HOA’s public adjuster in the amount of $1,428,209.72, which included the cost of complete replacement of all thirty roofs. State Farm hired a five-person team, including engineers and a roof consultant, to reinspect every roof and building envelope. The team found problems, unrelated to hail damage, with the 10-13 year-old roofs. The team also found some uncovered cosmetic damage caused by hail. The new inspection supported the contention that State Farm had made an adequate payment for the hail damage.

The HOA sued State Farm in Mecklenburg County for breach of contract. The HOA also alleged the extracontractual claims of breach of fiduciary duty, bad faith, and unfair and deceptive trade practices. State Farm removed the case to federal court.

After State Farm moved for partial summary judgment on all of the extracontractual claims, the HOA dropped its claims for breach of fiduciary duty and bad faith. That left the UDTP claim as the only remaining extracontractual claim.

In deposition, the HOA president said he had no personal knowledge of anything that State Farm did that violated North Carolina’s unfair claims settlement practices act—the HOA president testified that he relied on statements from the HOA’s public adjuster for that information.

In turn, the public adjuster testified in deposition that he had no criticism of State Farm’s handling of the claim other than the fact that State Farm disputed the amount of the claim. (The public adjuster later signed an affidavit that criticized State Farm’s claim handling, but the court refused to accept the later self-contradiction.)

The court found, as a matter of law, that State Farm did not violate the UDTP and granted State Farm’s motion for partial summary judgment.
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Raleigh, North Carolina attorneys David Stradley and Robert Holmes at White & Stradley, PLLC, represent policyholders and insureds in insurance bad faith cases.

Call 844-361-7511

Representing Clients in North Carolina and throughout the US

Every day, millions of people around the country sign contracts with insurance companies with the intention of protecting the things they care about in life, like their auto, home, or business. These trusting policyholders make monthly payments in exchange for the peace of mind that comes with knowing an insurer is there to help them recover when unexpected loss occurs. Unfortunately, it is not uncommon for all types of insurance companies to ignore their contractual obligations to policyholders for the simple aim of saving a buck. The results can be devastating for families, but there is hope. Nationwide bad faith insurance lawyers like the team at White & Stradley are constantly working against corrupt and underhanded insurance companies to ensure their clients get the treatment and benefits they need to get back on their feet.

What is “Bad Faith?”

When an individual or business enters into a contact for an insurance policy, they expect the insurer to act “in good faith,” which means to fulfill their obligations to compensate policyholders for covered losses. An insured person may have a bad faith claim against its insurer when the insurance company fails to pay claims that it should owe as stated in the policy through delay or outright denial, or if the company fails to provide policyholders with competent legal defense. By failing to uphold their end of the bargain, the insurer is not acting in good faith, which in legal terms is known as a case of  “bad faith” with grounds for legal action. Bad faith insurance disputes happen with every type of insurance that can be purchased, including:

• Auto insurance including liability, collision, uninsured motorist coverage
• Short- and long-term disability insurance in the event of a disabling condition
• Homeowner’s insurance to protect against risk of risk of property injury lawsuits or home damage/loss
• Life insurance and health insurance disputes

Failing to honor policyholders’ contracts is not only bad business, it can have serious financial consequences for the families affected by car accidents, home damage, business loss, and other issues. A skilled attorney team can help you identify and evaluate the amount of damages you can likely recover through legal action.

Legal Remedies for Insurance Disputes

The attorneys at White & Stradley, PLLC investigate cases of breach of contract and bad faith for clients willing to fight for what’s fair.

If you or someone in your family has purchased insurance and is being denied the proper protection in exchange for your paid premiums, our skilled nationwide bad faith insurance lawyers can help. We represent individuals and businesses dealing with delays, claim denials, underpayments, and other bad faith practices

To learn more about bad faith insurance, please contact the experienced attorneys at White & Stradley, PLLC today. We offer free consultations and will come to you if you need.