This is the case of Michalek v. Nationwide Mutual Fire Insurance Company, U.S. District Court Western District of Pennsylvania No. CV 19-351, 2022 WL 1046440.

This case was filed in 2019, by Plaintiff, Mark Michalek alleging that Nationwide improperly denied coverage for water damage that it said was considered “foundation seepage” and therefore excluded from coverage.

The Plaintiff brought a breach of contract and bad faith complaint against Nationwide, who then moved for summary judgment on both claims, arguing that no coverage was due under the policy, and that there was no bad faith because the coverage denial was reasonable.

On April 7, 2022, the court entered its decision, finding that there could have been coverage for most of the plaintiff’s losses, and denied most of the Nationwide’s breach of contract summary judgment motion.

As to the claim of bad faith, Western District Judge Flowers Conti remarked in her decision, that Nationwide’s motion for summary judgment on the bad faith claim was wholly dependent upon [it] obtaining summary judgment on the breach of contract claim.

Nationwide argued that “’there is no coverage pursuant to a plain meaning of a policy and relevant exclusions and definitions, then the insurer could not have acted in bad faith in denying coverage.’” Thus, “Because [the insurer] is not entitled to summary judgment on the breach of contract claim, except with respect to the ALE claim, its motion for summary judgment on the bad faith claim, for the reasons set forth above, will also be denied.”

Although Nationwide did not rely on an inadequacy of bad faith facts plead in the complaint to support its request for summary judgment, Judge Flowers Conti inserted a footnote, stating “that the [insureds] pointed to circumstances from which bad faith might be inferred: (1) [the insurer] denied coverage for the November 6, 2017 incident without performing an inspection and [the insurer] investigator asked a leading question to set up the “seepage” exclusion; (2) there was a lengthy delay before [the insurer] provided any payment; (3) [the insurer’s] initial payment omitted the overhead and profit line item (which represented about 20% of the claim); and (4) [the insurer] was not proactive in arranging an emergency service vendor or other mitigation assistance.”

Nationwide's motion for summary judgment was GRANTED as to the plaintiff’s claim for additional living expenses (ALE) and DENIED in all other respects.

Date of Decision: April 7, 2022

MICHALEK v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, U.S. District Court Western District of Pennsylvania No. CV 19-351, 2022 WL 1046440 (W.D. Pa. Apr. 7, 2022) (Flowers Conti, J.)