No Good Deed by an Insurer Goes Unpunished
Post 4968
See the full video at https://rumble.com/v67hqvy-no-good-deed-by-an-insurer-goes-unpunished.html and at https://youtu.be/cA8sIUf_ggA
State Farm Fire and Casualty Company (“State Farm”) moved the USDC for partial summary judgment on plaintiff’s bad faith claims.
In Gentilly, LLC v. State Farm Fire And Casualty Company, Civil Action No. 23-262, United States District Court, E.D. Louisiana (December 30, 2024) the USDC resolved the motion.
BACKGROUND
This case arose out of alleged damage to plaintiff Gentilly, LLC’s (“Gentilly) insured commercial development, the Gentilly Shopping Center (“GSC”). State Farm insured the property under a business-owners commercial policy that scheduled the insured property as 13 different spaces. The policy covered accidental direct physical loss to the property (ACPC), subject to certain exclusions and limitations including wear and tear. The policy does not cover interior rain damage “unless the building . . . first sustains damage by a Covered Cause Of Loss to its roof, outside walls, or outside building glass through which the rain . . . enters.”
On September 7, 2021, GSC submitted a claim to State Farm for damage to its insured property caused by Hurricane Ida. State Farm and Gentilly, over a long period of time mutually inspected the property. The inspections were conducted by Gentilly’s public adjuster, State Farm’s adjuster, and various experts retained by both parties from September 28, 2021 in multiple visits through November 2022. After each inspecition State Farm made additional payments based on the results of the inspections and the opinions of the experts retained by State Farm.
On March 29, 2023, State Farm received another estimate from Property Damage Consultants (“PDC”) for replacing the roofs of all thirteen buildings. The estimate was in the amount of $12,509,747.72. This estimate did not explain why the roofs required replacement or outline the damage caused by the storm.
Held completed this estimate on September 18, 2024, and it exceeded the amount of loss estimated by State Farm based on the FAEC report. On October 10, 2024, State Farm tendered Gentilly the difference between the JS Held estimate and the estimate based on the FAEC report, which amounted to $370,204.66.
THE MOTION
State Farm moved to dismiss plaintiff’s bad faith claims. It argued that it timely issued payments consistent with the opinions of its experts, and that it had a reasonable basis for disputing the damages it did not pay. Plaintiff opposed the motion claiming there was an undue delay in retaining an engineer to inspect the property, and that the October 10 tender is per se evidence of bad faith.
DISCUSSION
Louisiana Revised Statute Sections 22:1892 and 22:1973 govern bad faith insurance claims under Louisiana law.
A claimant is entitled to penalties if, after satisfactory proof of loss, the insurer fails to pay a claim within thirty days, and the failure is deemed arbitrary, capricious, or without probable cause.
To establish a cause of action a claimant must show that:
an insurer has received satisfactory proof of loss,
the insurer failed to tender payment within thirty days of receipt thereof, and
the insurer’s failure to pay is arbitrary, capricious or without probable cause.
State Farm did not finalize the estimate unduly late given that it had to inspect the property over multiple sessions. There was no evidence that State Farm engaged in vexatious conduct to hamper or delay the inspection or payout; the timeline played out because of limitations on both sides’ availability.
Finally, plaintiff argued that State Farm’s most recent payment of over $370,000 is per se evidence of bad faith because it demonstrates that State Farm under-scoped the damage at the outset of the claim. The USDC concluded that this payout does not amount to bad faith. Defendant’s actions were consistently in line with its expert appraisals. State Farm was not dilatory in payment after the scope of loss was determined. When its inspector returned an estimate, State Farm paid the amount due within thirty days. The USDC refused to evaluate a bad faith claims by hindsight. The USDC also concluded that the final payout did not indicate arbitrary or capricious behavior.
Although the payout process was protracted by the scope and complexity of the insured loss plaintiff failed to raise a genuine issue of material facts indicating that State Farm’s actions were arbitrary, capricious, or without probable cause. Because there is no evidence that defendant engaged in vexatious conduct in evaluating and paying plaintiffs claim, the Court granted summary judgment on plaintiffs bad faith claims. For the foregoing reasons, the Court granted defendant’s motion for partial summary judgment on plaintiffs bad faith claims.
This claim grew like Topsy. Each inspection found damage which, when discovered, State Farm immediately paid after a prompt inspection. After the claims were paid in different months the insured decided to increase their claims in multiple million dollar amounts that were not capable of being established. State Farm paid what it though it owed and refused further. State Farm’s proper claims handling and prompt payments was honored with a bad faith suit. The Court, in a lengthy opinion outlining each inspection and each payment concluded there was no bad faith conduct and stopped the punishment of State Farm by granting the motion for summary judgment.
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