In Belsito v. Allstate Property & Casualty Insurance Company, the U.S. District Court for the Northern District of Ohio denied the carrier’s motion for summary judgment that it did not act in bad faith when using fraud as a basis to deny coverage for a fire loss.

The Insured, Sam Belsito, suffered a fire to his home that constituted a total loss. Mr. Belsito filed a claim with his homeowner’s insurance carrier, Allstate Property and Casualty Insurance Company (“Allstate”). Because he paid a premium for insurance coverage, Mr. Belsito expected Allstate to honor the contract and provide coverage for his covered loss. Although Allstate paid Mr. Belsito a $5,000 advance and some funds for living expenses, Allstate ultimately denied the claim. Allstate claimed that Mr. Belsito made material misrepresentations regarding the fire and submitted a fraudulent property damage insurance claim.

Mr. Belsito sued Allstate for breach of contract and bad faith. Allstate filed a partial motion for summary judgment on the bad faith count. The District Court of Ohio denied Allstate’s motion on the following grounds:

The court was not persuaded, based on the record before it, that there was no genuine issue of material fact that Allstate denied Belsito’s claim in good faith, as Allstate had not provided sufficient evidence of any material misrepresentations or fraud. Furthermore, Allstate had not pointed out or offered any evidence that Belsito lacked sufficient evidence to prevail on his bad faith claim. Therefore, Allstate had failed to meet its initial burden on summary judgment.

This case serves as a reminder that policyholders and their attorneys should always carefully evaluate a motion for summary judgment – or any dispositive motion – filed by a carrier. Whether the carrier’s motion has any teeth, can only be determined by exercising due diligence in carefully evaluating whether there are arguments and evidence that can persuade the court to deny the motion.

Please keep in mind that the decision above is specific to the U.S. District Court for the Northern District of Ohio. Other jurisdictions may hold either similarly or very differently.