Worldwide, Inc. v. Westchester Fire Ins. Co., 2012 U.S. Dist. LEXIS 143932 (Northern Dist. of Ohio, Oct. 4, 2012)

Defendant’s motion for summary judgment was denied, in part, where both parties raised plausible coverage arguments. However, motion was granted with respect to plaintiff’s bad faith claim.

The United States District Court for the Northern District of Ohio, Eastern District, considered the defendant’s motion for summary judgment. This matter arose from the defendant insurer’s decision to deny coverage under an umbrella insurance policy. The issue was whether the defendant was obligated to reimburse the plaintiffs for a portion of the settlement payment and defense costs they had incurred in connection with the underlying lawsuit. The underlying claim involved a group of investors who alleged that they had lost the use of tangible property. The condominiums the investors had purchased were to be developed and converted into high-end condos. The plaintiff’s umbrella insurer denied coverage on the basis that the claim did not fit the definition of loss of use of tangible property as provided by the policy and because the cause of the alleged damage did not qualify as “an occurrence” under the contract. The defendant claimed that the alleged loss was merely a loss of anticipated investment value, which is a “non-occurrence,” rather than an “occurrence.” The defendant argued that the investors had the exact same property they had originally purchased and that no accident or occurrence had affected the property. The plaintiffs argued that the investors’ decision to abandon the project constituted an occurrence or accident within the meaning of the policy. The court held that both parties had established plausible arguments as to coverage. Thus, there were genuine issues of material fact relating to coverage, and the defendant’s motion for summary judgment was denied. However, the court held that, because there could reasonably be a finding for either party based on the facts presented, and because the plaintiffs had failed to provide evidence supporting a finding of bad faith, the plaintiffs’ claim for bad faith was dismissed. Thus, the defendant’s motion was granted as to the bad faith claim.

Case Law Alert - 1st Quarter 2013