Cofield v. Allstate Indem. Co., No. 1:12–cv–02100–HGD, 2014 WL 310447 (N.D. Ala. Jan. 28, 2014).

Northern District of Alabama finds no bad faith where insurer employed multiple adjusters and a Licensed Professional Engineer to investigate claim of damage to mobile home, and paid for portion of damages, the cause of which could not be determined with certainty.

Christopher Cofield’s mobile home allegedly was damaged dur- ing a storm on April 27, 2011.  At that time, Cofield’s mobile home was covered by a Manufactured Home Policy of Insurance issued by Allstate.  Shortly after the storm, Cofield notified Allstate of the damage to his mobile home and Allstate began an investigation of his claim.  After three adjusters and a Licensed Professional Engineer inspected the mobile home  and determined that much of the damage was unrelated to the storm and instead attributable to events not covered under the policy, Allstate issued a check to Cofield for the covered dam- age.  Cofield disagreed with the determination that most of the damage was not related to the storm, returned the check, and filed suit in Alabama state court alleging (1) breach of contract, (2) fraud, (3) bad faith, and (4) negligence and wantonness in investigating his claim.  Allstate removed to federal district court and then moved for partial summary judgment on all counts except the claim for breach of contract.  The district court granted Allstate’s motion.

Cofield alleged that Allstate acted in bad faith in refusing to provide him with benefits under the contract of insurance suffi- cient to repair all of the damage to his mobile home.  He asserted that Allstate failed to determine whether there was a reasonably legitimate, arguable, or debatable reason to refuse to pay his claim, and that Allstate failed to investigate properly the damage to his mobile home.

The court, citing Alabama precedent, explained that to prevail on a bad faith claim for failure to properly investigate an insured’s claim, the insured must show “(1) that the insurer failed to properly investigate the claim or to subject the results of the investigation to a cognitive evaluation and review, and (2) that the insurer breached the contract for insurance cover- age with the insured when it refused to pay the insured’s claim.”

Here, Allstate undertook a thorough investigation of the claim by having three different adjusters and a Licensed Professional Engineer inspect and assess the damage to Cofield’s mobile home before making a coverage decision on Cofield’s claim. The Licensed Professional Engineer concluded that much of the damage was caused by racking and warping of the mobile home’s frame and was not attributable to the storm.  The Licensed Professional Engineer, however, was unable to deter- mine with certainty whether the storm damaged the metallic skirt around the bottom of the mobile home, and therefore rec- ommended that Allstate repair the skirt and level the mobile home.  Allstate accepted this recommendation and issued a check for payment for damage to the metallic skirt and for the re-leveling of the mobile home.

The court explained that bad faith “is not simply bad judgment or negligence,” but instead “imports a dishonest purpose and means a breach of known duty, i.e., good faith and fair dealing, through some motive of self-interest or ill will.” The court noted that Cofield had failed to submit any evidence that Allstate intentionally or recklessly failed to subject his claim to a cognitive evaluation or review, and had not provided any evi- dence of a lack of a debatable reason for Allstate’s decision. The court also noted that Allstate did not refuse to pay the claim; it simply tendered less than the amount Cofield believed was owed under the policy. The court therefore ruled that Cofield had failed to establish a bad faith claim and entered summary judgment for Allstate.