United States District Court, M.D. North Carolina
MEMORANDUM OPINION AND ORDER
CATHERINE C. EAGLES, DISTRICT JUDGE.
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.
Breach of the covenant of good faith and fair
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.
Common-law bad faith refusal to settle or provide
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)).
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).
Court will grant Philadelphia's motion for summary
judgment as to this claim.
Chapter 75 - Unfair and Deceptive Trade Practices
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).
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). 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
Court will examine the evidence as to each subsection
separately. The specific language of the relevant statutory
subsection is recited in the heading.
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
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-