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Breach of contract, bad faith litigation filed against insurer dismissed


A federal appeals court on Tuesday affirmed a lower court ruling dismissing breach of contract and bad faith litigation filed by a construction company against a Selective Insurance Group unit.

Palm Desert, California-based Premier Construction and Remodel Inc. was charged in underlying litigation with failing to return keys and a garage door opener to the owner of a condominium that Premier had been contracted to remodel, according to the ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in Premier Construction and Remodel Inc. v. Mesa Underwriters Specialty Insurance Co.

After the insurer denied coverage, Premier filed suit against Mesa, a unit of Branchville, New Jersey-based Specialty, charging breach of contract, bad faith and negligent misrepresentation, according to the ruling.

The U.S. District Court in Pasadena ruled in the insurer’s favor, and was affirmed by a three-judge appeals court panel.

“Specifically Premier argues that its failure to return the keys and garage door opener may have caused the condo owner to be locked out of his property is a matter constituting a ‘(l)oss of use’ of the condo,” it said.

Because the complaint does not raise a “conceivable theory” that would trigger coverage, the district court properly granted the insurer summary judgment, the panel’s ruling said.

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