Roemer v Allstate Indem. Ins. Co., 2018 NY Slip Op 05392 (3d Dept. 2018)
(1) “A covenant of good faith and fair dealing is implicit in every insurance contract and encompasses not only any promise that a reasonable promisee would understand to be included, but also that “a reasonable insured would understand that the insurer promises to investigate in good faith and pay covered claims” (New York Univ. v Continental Ins. Co., 87 NY2d 308, 318 [1995]; accord Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 194 [2008]; see Gutierrez v Government Empls. Ins. Co., 136 AD3d 975, 976 [2016]). In turn, “consequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting” (Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d 200, 203 [2008] [internal quotation marks and citations omitted]; accord Yar-Lo, Inc. v Travelers Indem. Co., 130 AD3d 1402, 1403 [2015]). As relevant here, to establish a prima facie case of bad faith, it must be established “that the insurer’s conduct constituted a gross disregard of the insured’s interests — that is, a deliberate or reckless failure to place on equal footing the interests of its insured with its own interests when considering a settlement offer” (Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 453 [1993]; see Smith v General Acc. Ins. Co., 91 NY2d 648, 653 [1998]). In establishing a claim for bad faith, although not an exhaustive list, “the courts will consider the facts and circumstances surrounding the case, including whether liability is clear, whether the potential damages far exceed the insurance coverage and any other evidence which tends to establish or negate the insurer’s bad faith in refusing to settle”
(2) “Defendant contends that there is no evidence in the record demonstrating that it acted in bad faith or engaged in conduct constituting a gross disregard of its insured’s interests such that it established its entitlement to summary judgment dismissing the complaint. We disagree. In support of its motion, defendant submitted, among other things, a copy of plaintiff’s summons and complaint and plaintiff’s verified bill of particulars. A review of the insurance claim process as set forth therein demonstrates that, the day after plaintiff’s residence was destroyed by fire, plaintiff submitted a standard fire claim form notifying defendant of the loss and defendant thereafter commenced an investigation. While the investigation was pending, defendant advanced plaintiff $5,000 for the removal of debris from the property pursuant to its insurance policy. The Warren County Fire Investigation Office subsequently determined that the cause of the fire was accidental such that there appears to be no dispute that the accident is covered by the insurance policy. Additionally, for the following 12 months, defendant paid plaintiff for additional living expenses in accordance with the terms and coverage limits provided for in its insurance policy. When initial settlement negotiations thereafter proved unsuccessful, plaintiff commenced the appraisal process pursuant to the terms of the insurance policy, and each party thereafter hired their own independent appraiser to determine the amount of loss. In June 2011, the appraisers mutually agreed upon the amount of loss; however, on July 1, 2011 — 16 months after plaintiff’s residence was destroyed by fire — defendant unexpectedly disclaimed coverage on the basis that plaintiff did not have insurable interest in the property.
We find that defendant failed to present any admissible evidence in support of its motion to explain why, after 16 months of investigation (see generally Insurance Law § 2601 [a] [4]), it only disclaimed coverage after the parties’ independent appraisers had reached a mutual agreement as to the amount of loss incurred. At no point prior to paying plaintiff various benefits to which he was otherwise entitled under the insurance policy, or during settlement negotiations or the appraisal process, did defendant ever indicate to plaintiff that coverage might ultimately be denied because he was apparently not the titled owner of the property — a fact of which plaintiff avers he made his insurance agent aware prior to purchasing the subject policy.
