Dismissal of bad faith charges against Nationwide affirmed

A federal appeals court on Wednesday affirmed dismissal of bad faith litigation against a Nationwide Mutual Insurance Co. unit that was filed in connection with payment for a fire loss.

In July 2019, a fire caused by a tenant’s negligence destroyed an apartment building in Chambersburg, Pennsylvania, owned by Bedford, Pennsylvania-based Washington Street LLC.

Nationwide made an initial payment of $376,342.95, according to the ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Washington Street LLC v. Nationwide Property & Casualty Insurance Co.

An umpire eventually entered an award for Washington Street that exceeded Washington’s $939,700 policy limit. The insurer paid the full policy amount, plus an additional $15,000 stemming from a subrogation action against the tenant who had caused the fire.

Washington Street sued Nationwide in U.S. District Court in Philadelphia, charging bad faith, alleging the insurer had “repeatedly and purposely delayed” its insurance payments.

The district court dismissed the case, and was affirmed by a three-judge appeals court panel.  None of the allegations “has enough support in isolation or in the aggregate, to demonstrate bad faith, and the District Court did not err in so holding,” the ruling said.

Attorneys in the case did not respond to requests for comment.