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Insurer that Pays Limit of Policy After Appraisal Did not Breach The \\nCovenant of Good Faith & Fair Dealing\\n\\nWashington Street, LLC ("Washington Street") appealed a District Court \\norder granting summary judgment to Nationwide Property and Casualty \\nInsurance Company ("Nationwide"), which ended Washington Street\'s claims\\n that Nationwide proceeded in bad faith in delaying claim payments \\nfollowing a fire that damaged Washington Street\'s property.\\n\\nIn Washington Street, LLC v. Nationwide Property & Casualty \\nInsurance Company, No. 22-3396, United States Court of Appeals, Third \\nCircuit (September 13, 2023) the Third Circuit resolved the dispute.\\n\\nBACKGROUND\\n\\nIn July 2019, a fire caused by a tenant\'s negligence destroyed an \\napartment building owned by Washington Street. \\n\\nThat initial payment ($376,342.95) was, as Nationwide acknowledged, \\nincomplete, as it was subject to change based on additional repairs or \\ndamage found. In October 2019, in January 2020, estimating the total \\ncost of repairs to be $635,898.86, after which Nationwide paid an \\nadditional $208,555.91, an amount the parties accepted as bringing the \\ntotal payments to $584,907.68.\\n\\nIn November 2020, the umpire entered an award for Washington Street: \\n$859,670.03 for dwelling loss, $7,720.05 for business personal property,\\n $35,306.40 for debris removal, and $74,200 for loss of income. The \\ntotal amount exceeded Washington Street\'s policy limit of $854,700 for \\ndwelling loss, $60,000 for business income, and $25,000 for debris \\nremoval, and Nationwide paid the full policy amount.\\n\\nDuring the appraisal, on June 3, 2020, Nationwide filed a subrogation \\nlawsuit against the tenant who had negligently caused the fire. The \\nsubrogation investigation began in July 2019, but Nationwide did not \\ninform Washington Street of the lawsuit until January 14, 2021. \\nEventually, Nationwide obtained a settlement that resulted in Washington\\n Street receiving an additional $15,000, an amount Washington Street \\ndescribed as "fair and acceptable."\\n\\nWashington Street sued. After discovery, Nationwide moved for summary \\njudgment and the District Court granted it. The Court held that \\nNationwide\'s handling of Washington Street\'s claim was "by no means a \\nmodel of perfection" but it did not constitute bad faith.\\n\\nDISCUSSION\\n\\nWashington Street claims that Nationwide demonstrated bad faith by \\ndelaying six weeks to make its first partial payout, failing to make \\nfurther estimates until Washington Street pressed for progress, hiring a\\n building consultant for the alleged purpose of further delaying the \\nprocess, making a still-deficient payment six months after the fire, \\nknowingly misrepresenting its appraisal policy, delaying its policy \\nreformation request, and filing its subrogation action prematurely.\\n\\nPennsylvania provides a statutory remedy if an insurer acts in bad faith\\n toward the insured. Bad faith requires evidence so clear, direct, \\nweighty and convincing as to enable a clear conviction, without \\nhesitation, about whether or not the defendants acted in bad faith. At \\nthe summary judgment stage, the insured\'s burden in opposing a summary \\njudgment motion brought by the insurer is commensurately high because \\nthe court must view the evidence presented in light of the substantive \\nevidentiary burden at trial.\\n\\nTherefore, Washington Street did not show by clear and convincing \\nevidence - the applicable standard of proof - that Nationwide acted in \\nbad faith in processing Washington Street\'s insurance claim.\\n\\nZALMA OPINION\\n\\nThe tort of bad faith requires a breach of contract by an insurer that \\nprovides clear, direct, weighty and convincing evidence sufficient to \\nenable a clear conviction, without hesitation that the insurer acted in \\nbad faith. The evidence did not exist to establish the required clear \\nand convincing evidence of wrong doing it only reflected a claim that \\ntook time and expertise to resolve.\\n\\n(c) 2023 Barry Zalma & ClaimSchool, Inc.