On February 16, 2022, the U.S. District Court for the Middle District of Louisiana granted summary judgment in favor of PMB’s client, a homeowners insurer, dismissing the plaintiff’s entire case. In a recent case involving an insurance client, the plaintiff alleged that a May 2020 hailstorm damaged the roof of her property and that her homeowners insurer wrongfully denied coverage for the hail damage, citing the policy’s wear, tear, and deterioration exclusion. Three months later, Hurricane Laura made landfall and caused significant damage to the plaintiff’s property. As part of a Hurricane Laura claim, the insurer paid for extensive repairs to the plaintiff’s property, including a new roof.
Following Hurricane Laura, the plaintiff filed suit, alleging that the insurer violated Louisiana’s bad faith statutes, La. R.S. 22:1892 and La. R.S. 22:1973, in failing to cover the roof replacement after the hailstorm and before Hurricane Laura. The plaintiff further alleged that if the roof had been covered as part of the hailstorm claim, the plaintiff would have replaced the roof prior to Hurricane Laura, and the new roof would have protected the property from the damage it sustained during the hurricane. Under La. R.S. 22:1973, the plaintiff sought double the damages sustained during Hurricane Laura as a penalty on the hailstorm claim, plus attorneys’ fees and costs.
After extensive fact and expert discovery, an insurance client filed a motion for summary judgment, arguing that, at the very least, there was a reasonable basis for the insurance client to deny the hailstorm claim based on the inspection report of its independent adjuster. The Court agreed with the insurance client’s position and dismissed the bad faith claim with prejudice:
“The Court determines that the Estate has failed to establish a genuine dispute that [the insurance client’s] refusal to pay its initial claim for roof damage was arbitrary and capricious, and will dismiss the Estate's bad faith claim on this basis alone. To the contrary, the summary judgment evidence shows that, at all times, [the insurance client] endeavored to promptly and fairly settle Mrs. Christman's original hail damage claim.”
Because the insurance client paid for a new roof as part of the plaintiff’s Hurricane Laura claim, the Court also dismissed plaintiff’s contractual claims under the homeowners policy finding that “the double recovery rule bars the Estate from obtaining any additional compensation under Mrs. Christman's original hail damage claim.”
The decision confirms that an insurer does not act in bad faith when there is a reasonable and legitimate question regarding the extent and causation of a claim and rejects ongoing efforts from the plaintiffs’ bar to redefine the meaning of bad faith.
For more information, please contact any of the attorneys involved in the case.