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Thorne v. Member Select Ins. Co.

United States District Court, N.D. Indiana, Hammond Division

September 22, 2014

DAVID THORNE, Plaintiff,
v.
MEMBER SELECT INSURANCE COMPANY, Defendant

Page 995

For David Thorne, Plaintiff: Jeffrey S Wrage, Nathan D Vis, LEAD ATTORNEYS, Blachly Tabor Bozik & Hartman LLC, Valparaiso, IN.

For Member Select Insurance Company, Defendant: Edward W Hearn, Susan Kathleen Swing, LEAD ATTORNEYS, Johnson & Bell Ltd - CP/IN, Crown Point, IN.

Page 996

OPINION and ORDER

JAMES T. MOODY, UNITED STATES DISTRICT JUDGE

This matter is before the court on plaintiff David Thorne's (" Thorne" ) " Motion for Reconsideration" (DE #40) in which he requests the court to reverse its decision which granted summary judgment to defendant MemberSelect Insurance Company (" MemberSelect" ) on Thorne's claim for bad-faith denial of coverage for a fire that destroyed his house. Although no mention of a " motion for reconsideration" is made in the Federal Rules of Civil Procedure, they are well-known in practice and serve a useful--but limited--purpose. " It is well established that a motion to reconsider is only appropriate where a court has misunderstood a party, where the court has made a decision outside the adversarial issues presented to the court by the parties, where the court has made an error of apprehension (not of reasoning), where a significant change in the law has occurred, or where significant new facts have been discovered." Broaddus v. Shields, 665 F.3d 846, 860 (7th Cir. 2011), overruled on other grounds by Hill v. Tangherlini, 724 F.3d 965, 967 n.1 (2013).

Thorne argues that two items constituting new evidence have come to light which now at least create issues of fact requiring that a jury decide whether Member Select acted in bad faith. The standard applicable to bad faith claims in Indiana, as summarized in the court's prior order on summary judgment, bears repeating:

A claim for bad faith is not generated by every erroneous denial of an insurance claim. [ Erie Ins. Co. v .] Hickman, 622 N.E.2d [515] at 520 [Ind. 1993]. Insurers may dispute a claim in good faith, erroneously deny a claim, fail to diligently investigate a claim, or even breach a contract without committing an act of bad faith. Id.; Allstate Ins. Co. v. Hennings, 827 N.E.2d 1244, 1250 (Ind.Ct.App. 2005). Bad faith does not exist when an insurer rests its coverage decision upon a rational basis. Masonic Temple Ass'n of Crawfordsville v. Ind. Farmers Mut. Ins. Co., 779 N.E.2d 21, 29-30 (Ind.Ct.App. 2002); Patel v. United Fire & Cas. Co., 80 F.Supp.2d 948, 958 (N.D. Ind. 2000); Colley, 691 N.E.2d at 1261 (insurer not liable for bad faith if it denies liability with a rational, principled basis for doing so).
In sum, as this court, speaking through the Hon. Theresa L. Springmann, J., has explained, " a successful bad faith claim is composed of an objective element (such as the lack of a reasonable basis to deny a claim) and a subjective element (such as the knowledge of the lack of a reasonable basis to deny a claim)." Balzer v. Am. Family Ins. Co., 805 F.Supp.2d 618, 624-25 (N.D. Ind. 2011). To succeed on a bad faith claim at trial, a plaintiff must produce evidence establishing that there was no reasonable basis to deny the claim and that the insurer knew that there was no reasonable basis. Id.

(DE #34 at 12.) This is the standard which determines whether Thorne's " new evidence" merits reconsideration of the court's previous ruling.

First, in its prior ruling the court's reasoning in part was based on the fact that MemberSelect's claims investigator, Keith Quintaville (" Quintaville" ) found it suspicious that Thorne refused to consent to a credit check or to release his cellular

Page 997

phone records. Thorne has now reviewed a recorded interview (which had been requested earlier in discovery but not received) in which Quintaville informed Thorne that he was not a suspect and that he was not obligated to produce those items (" I would be requesting, and again, you know this is entirely up to you..." ). (DE #40 at 9; DE #40-13 at 1.) Thorne argues both that it was not suspicious for him to act consistently with Quintaville's advice, and that it was deceptive for Quintaville to give that advice then consider action in accordance therewith as suspicious.

Member Select argues that the recorded conversation is not new evidence Thorne can now rely on, and that it makes no difference anyway. Obviously, Thorne knew (or should have remembered) that he had given a recorded statement to Quintaville, and so his attorney could have obtained it in time to respond to Member Select's motion for summary judgment. Reconsideration need not turn on that, however, because the statement simply makes no difference. When the statement quoted above from Thorne's brief is read in context (Thorne's Ex. K, DE #40-13), it is clear that the entire interview was contentious, that Quintaville made it clear that he wanted the information, and that Thorne would not provide it. For example, shortly after the quoted statement, Quintaville reiterates " Okay, now I'm requesting that if I send you forms to sign for us to pull credit check and we would like copies of your cell phone bills for the month of February, January and February [sic], would you provide those?" (DE #40-13 at 3.) Thorne responds: " No, not at this time. I'm tired of proving I'm innocent." ( Id.) Thus, there is no reason to second-guess Quintaville's belief that ...


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