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Lehigh County Judge Slams Insurer for Failure to Pay in Insurance Dispute (PA)

November 5, 2020

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<p style="text-align: justify;">The Pennsylvania Court of Common Pleas in Lehigh County ordered an insurer to pay $900,000.00 in punitive damages for denying its insured’s claim in bad faith.  In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2020/11/David-Unterberg-and-Heidi-Unterberg-v.-Mercury-Insurance-Company-of-Florida.pdf">David Unterberg and Heidi Unterberg v. Mercury Insurance Company of Florida</a></em>, the plaintiffs filed a lawsuit alleging breach of contract and bad faith against their insurance company after their vehicle was stolen and damaged.</p>
<p style="text-align: justify;">The underlying incident occurred when the plaintiffs’ 2009 Buick Enclave was stolen from their home in November of 2015.  At that time, the vehicle was worth about $13,000.00.  Approximately three weeks later, the police recovered the heavily damaged vehicle.  At the time of the theft, the plaintiffs were insured by Mercury Insurance Company of Florida (“Mercury Insurance”).  After the plaintiffs filed their claim with Mercury Insurance, the insurer denied the claim stating that there was insufficient evidence that the vehicle was stolen.  Among other things, Mercury Insurance claimed that the vehicle did not show signs of any forced entry.  Additionally, Mercury Insurance attempted to show that the plaintiffs were “uncooperative” with the investigation for conduct such as properly rescheduling an examination under oath and providing redacted tax returns despite such redactions being permitted.</p>
<p style="text-align: justify;">After the denial, the plaintiffs filed a lawsuit against Mercury Insurance which included claims for breach of contract and bad faith.  Ultimately, the court decided that the plaintiffs were entitled to damages as a result of the breach of contract claim in the amount of $16,469.72.  This amount included the value of the vehicle, the towing costs, and the storage fees.  The court determined that there was no reasonable basis for Mercury Insurance to deny the claim and that it was required to consider the claim under comprehensive coverage pursuant to vandalism and malicious mischief.</p>
Additionally, the court concluded that Mercury Insurance acted in bad faith when it denied the plaintiffs’ claim. As such, it was determined that the plaintiffs were entitled to statutory damages pursuant to the finding of bad faith.  The court scheduled a follow-up hearing to determine the proper award that the plaintiffs were entitled to for the bad faith action.

During the hearing, the court ordered Mercury Insurance to pay $900,000.00 in punitive damages for its “flagrant, deceitful and outrageous” conduct.  The court opined that Mercury Insurance engaged in “trickery” in its fight to avoid paying out the plaintiffs’ claim as well as attempted to improperly paint the plaintiffs as uncooperative with the investigation.  Additionally, the court ordered Mercury Insurance to pay $186,879.00 in attorneys’ fees, $3,595.00 in court costs, and $7,427.00 in interest.  Overall, the court issued a significant payout from the insurer for its repeated acts of reckless indifference toward the plaintiffs.

Thanks to Zhanna Dubinsky for her contribution to this post. Any questions, please contact <a href="mailto:gcoats@wcmlaw.com">Georgia Coats</a>.

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