Insured’s Count for Bad Faith Stripped from Claim
The insurer's motion for partial summary judgment challenging the insured's bad faith claim was successful. Baker v. Allstate Index. Co., 2024 U,.S. Dist. LEXIS 227802 (N.D. Miss. Dec. 17, 2024).
Teresa Baker alleged that the roof of her rental property sustained wind and rain damage during a storm. She further contended that the interior of the property, as well as items inside, were destroyed from rain coming through the roof.
Baker filed a claim with Allstate. The claim was assigned to Shelley Anderson, a catastrophic property adjuster with Allstate. A third-party inspector, Justin Warren, was sent to the property by Allstate. Warren submitted a report stating that there was no evidence of hail or wind damage to Baker's roof. During their depositions, Anderson and Warren both testified that they could not specifically recall whether Anderson participated virtually in the inspection, though the submitted form appeared to indicate that she did. The submitted inspection form included one photograph of Baker's roof.
Allstate denied the claim based on its determination that the damage was not caused by excluded perils. Anderson signed the denial letter and did not indicate if all or only certain exclusions were the basis for the denial During her deposition, Anderson testified that the denial could "fall under all categories" when asked how an Allstate customer would know specifically under which exclusion the claim was being denied.
Baker called Anderson, who told Baker she did not have wind and rain protection under her policy. The denial letter did not indicate that Baker's claim was denied due to the lack of wind and rain coverage. Baker then spoke with Anderson's manager, Jonathan Glen, who evaluated the claim file and ultimately agreed with Anderson's decision to deny the claim. Gien told Anderson on the phone that her claimed damage was not a covered loss because the roof exhibited signs of wear and tear, and required maintenance.
Baker alleged that Allstate failed to properly and thoroughly investigate her claim and denied coverage in bad faith. She contended that the reasons Allstate gave for denying the claim were incorrect and inconsistent,. She filed suit against Allstate for negligence, bad faith, and breach of contract. Allstate filed a motion for partial summary judgment to dismiss the bad faith claim.
Under Mississippi law, the insured could support a bad faith claim by showing the insurer lacked an arguable basis for denying the claim. While the denial letter listed seven exclusions, Allstate stated its arguable basis for denial fell under the wear and tear exclusion. Warren's inspection report and photographs of the property were ample evidence to support the denial.
Baker did not rebut Allstate's contention that the wear and tear exclusion provided an arguable basis for the denial. The Mississippi Supreme Court and the Fifth Circuit had held that insurers may properly rely on the findings of adjusters, investigators, or other professionals in denying claims.
Here, Gien testified that he determined that Anderson was correct in her decision denying the claim because he found that the roof showed signs of deterioration, wear and tear, and required maintenance based on his review of the report and accompanying photograph. Warren's report also concluded that the damage was not a result of hail or wind. The report and photograph of the roof were credible evidence that supported the conclusions reached by Gien. Accordingly, the court found that Allstate had an arguable basis to deny Baker's claim.
Baker did not meet her burden of proving Allstate had no arguable basis to deny the claim. While she would have an opportunity to prove her breach of contract claim, she failed to oppose Allstate's motion for partial summary judgment by showing that Allstate lacked an arguable basis for the denial.
