NO BAD FAITH IN BATTERED BENTLEY CASE DUE TO INSURED’S FAILURE TO COOPERATE & MSJ GRANTED FOR CARRIER

A federal judge in Dallas granted summary judgment last week in favor of an auto carrier, dismissing all of a policyholder's extra-contractual claims in an auto damage dispute. In Alhamzawi v. GEICO Casualty Co., N0. 3:15-CV-3295-K, 2016 WL 6277809 (N.D. Tex. Oct. 25, 2016), the insured's Bentley was damaged in a hail storm.  GEICO inspected the vehicle, estimated repairs at $6,000, and paid the insured accordingly.  Alhamzawi disagreed and submitted three additional estimates from three body shops ranging from $26,000 to $32,000. Alhamzawi then took his car to his brother's shop and paid his brother $30,500 in cash to repair the car, without giving GEICO an opportunity to conduct a re-inspection.  The insured produced a cashier's check written to his brother for $15,000, which had not been cashed.

Not surprisingly, GEICO issued a reservation of rights and began an investigation of the insured's failure to comply with the policy terms by having the Bentley repaired without allowing GEICO to re-inspect it.  GEICO ultimately denied the claim, citing Alhamzawi's failure to cooperate with the investigation and failure to produce material information. In the resulting bad faith suit, GEICO moved for summary judgment on all claims.

Relying on well-established Texas law holding that a mere bona fide dispute does not constitute bad faith, and equally established law holding if there is no common-law bad faith there can be no Insurance Code violation for the same conduct, the court granted GEICO's motion for summary judgment as to all of Alhamzawi's claims except breach of contract.  The court specifically noted that it was reserving the right to also dismiss the breach of contract claim at a later time – an unusual move which suggests the court is seriously considering dismissal.  The court observed that merely submitting three additional estimates, including the one from his brother noting that all repairs had been completed, not only failed to create a fact issue as to whether coverage was reasonably clear – it affirmatively proved he failed to comply with GEICO's supplement procedures by having the Bentley repaired without allowing GEICO an opportunity to re-inspect.  Although Alhamzawi testified that he made the vehicle available for re-inspection before repairing it, there was no other evidence supporting this claim, and the court refused to consider the plaintiff's own self-serving testimony to defeat summary judgment.