Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

DENC, LLC v. Philadelphia Indemnity Insurance Company

United States District Court, M.D. North Carolina

December 5, 2019

DENC, LLC, Plaintiff,
v.
PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          CATHERINE C. EAGLES, DISTRICT JUDGE.

         On January 14, 2018, there was a party at an apartment complex owned by the plaintiff, DENC, LLC. During the party, the breezeway in one of the buildings collapsed. After the defendant, Philadelphia Indemnity Insurance Company, denied DENC's insurance claim, DENC sought a declaratory judgment as to coverage and asserted various state law claims for damages. The Court has previously granted summary judgment for DENC on its coverage claim and, as to liability, on its breach of contract claim, Doc. 44; 2019 WL 5195888 (M.D. N.C. Oct. 15, 2019), and now addresses the remaining aspects of the pending summary judgment motions.

         Discussion

         A. Breach of the covenant of good faith and fair dealing

         Philadelphia has moved for summary judgment on DENC's claim for breach of the covenant of good faith and fair dealing. Philadelphia contends that since there is no coverage, DENC's extra-contractual claims fail as a matter of law. As the Court has concluded there is coverage, this argument is without merit. Philadelphia otherwise does not identify, much less address, the elements of a claim for breach of the covenant of good faith and fair dealing, see LR 56.1(e), or make any other argument as to why DENC cannot be successful on this claim as a matter of law. Philadelphia's motion for summary judgment as to this claim will be denied.

         B. Common-law bad faith refusal to settle or provide coverage

         Philadelphia has moved for summary judgment on DENC's claim for common-law bad faith refusal to settle or provide coverage. As Philadelphia points out, Doc. 32 at 26-27, there is no liability for bad faith refusal to settle when there is an honest disagreement. See, e.g., Blis Day Spa, LLC v. Hartford Ins. Grp., 427 F.Supp.2d 621, 631 (W.D. N.C. 2006) (citing Newton v. Standard Fire Ins. Co., 291 N.C. 105, 229 S.E.2d 297 (1976)).

         Philadelphia has presented evidence of an honest disagreement. In response, DENC addresses only the Chapter 75 claims analyzed infra and does not discuss the common law claim. See Doc. 38. It does not identify the specific, authenticated facts in the record, see LR 56.1(e), that support a finding that Philadelphia engaged in “fraud, malice, gross negligence, insult, rudeness, oppression, or wanton and reckless disregard of plaintiff's rights, ” which is a necessary part of this claim. Lovell v. Nationwide Mut. Ins. Co., 108 N.C.App. 416, 422, 424 S.E.2d 181, 185, aff'd per curiam, 334 N.C. 682, 435 S.E.2d 71 (1993); see also Dailey v. Integon Gen. Ins. Corp., 75 N.C.App. 387, 394, 331 S.E.2d 148, 154 (1985).

         The Court will grant Philadelphia's motion for summary judgment as to this claim.

         C. Chapter 75 - Unfair and Deceptive Trade Practices Act

         Both parties have moved for summary judgment on DENC's Chapter 75 claims, which are all based on alleged violations of North Carolina statutes governing conduct of insurance companies when settling claims. See N.C. Gen. Stat. § 58-63-15(11). To establish a violation of N.C. Gen. Stat. § 75-1.1, DENC must show: “(1) an unfair or deceptive act or practice, (2) in or affecting commerce, and (3) which proximately caused injury to plaintiffs.” Gray v. N.C. Ins. Underwriting Ass'n, 352 N.C. 61, 68, 529 S.E.2d 676, 681 (2000).[1]

         Section 58-63-15(11) contains a number of subsections setting forth different examples of ways an insurance company commits an unfair trade practice. A violation of any one of these subsections constitutes an unfair or deceptive act or practice under Chapter 75. Elliott, 883 F.3d at 396; Gray, 352 N.C. at 67, 529 S.E.2d at 680-81; Country Club of Johnston Cty., Inc. v. U.S. Fidelity & Guar. Co., 150 N.C.App. 231, 246, 563 S.E.2d 269, 279 (2002).[2] Determining whether certain conduct is “an unfair or deceptive practice” under N.C. Gen. Stat. § 75-1.1 “is a question of law for the court.” Gray, 352 N.C. at 68, 529 S.E.2d at 681.

         The Court will examine the evidence as to each subsection separately. The specific language of the relevant statutory subsection is recited in the heading.

         1. N.C. Gen. Stat. § 58-63-15(11)(n): “Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement”

         For claims under this subsection, courts consider whether an insurance defendant promptly initiated an investigation and then provided a detailed explanation of its results, preferably with supporting documentation. See Majstorovic v. State Farm Fire & Cas. Co., No. 5:16-CV-771-D, 2018 WL 1473427, at *7 (E.D. N.C. Mar. 24, 2018); Cent. Carolina Bank & Trust Co. v. Sec. Life of Denver Ins. Co., 247 F.Supp.2d 791, 804 (M.D. N.C. 2003); Country Club, 150 N.C.App. at 247, 563 S.E.2d at 279-80. While a claimant's mere disagreement with the insurance company's decision does not prove a violation of this subsection, Cent. Carolina Bank, 247 F.Supp.2d at 804, the insurance company's failure to clarify which policy provisions led to a denial and why- ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.