Unusual Insurance Case to Feature New Claim

(CN) - A man who claims that his $9 million worth of Picassos, Rembrandts and gold coins were either stolen or destroyed in a fire can add a bad-faith claim against the insurer that thinks he's lying, a federal judge ruled.

Having contracted with State Farm Fire & Casualty Co. for more than 30 years, Timothy Kump upped his coverage to $550,000 in early 2010 for his home and $1.5 million for the collectibles therein, plus a $435,000 personal articles policy (PAP), according to the complaint.

Kump nonetheless valued his collection - with 153 Picasso pieces, 61 Rembrandt etchings and 21 Frederick Elliot Hart sculptures worth over $3.12 million - at more than $9 million.

The collection also allegedly included hundreds of rare coins and $1,000 bills; $200,000 in cash; documents from the Revolutionary War; and Civil War guns, swords, and rare firearms.

Soon after Kump increased his coverage, he also told State Farm that he wanted to add to the policy 14 gold coins from his grandmother worth more than $4.8 million, the complaint states.

Within months, Kump's home was broken into and set afire, so many of his valuables were allegedly either stolen or destroyed by the flames in late April 2010.

State Farm paid Kump about $815,000 for his lost home and personal articles, an amount $170,000 less than stated on his policy.

Kump capped off the year with a breach-of-contract suit against State Farm in Bradford County, Pa.

In addition to removing the case to U.S. District Court for the Middle District of Pennsylvania, State Farm began investigating Klump's claims about his collection. It announced in July 2013 that neither Mr. Kump, nor the 17 he claimed could substantiate his claims, could authenticate the artwork he allegedly owned.

Kump then moved to file a supplemental complaint and briefs, alleging that State Farm's "biased" investigation was fraught with intimidated witnesses, lack of legal research, and unreasonable interpretations of his policy,

U.S. District Judge Malachy Mannion agreed Monday that Kump has alleged enough new facts to support a state-law bad faith claim.

"The plaintiff's central assertion is that the defendant's July 2013 letter denying coverage as to the paintings ripened his bad faith claim," Mannion wrote. "The court agrees. The plaintiff's allegations contained in his proposed supplemental complaint are mostly events or occurrences that came to light after the original complaint was filed."

Kump's motion is granted with respect to that claim alone, however, since Mannion said his breach-of contract claims are "all adequately covered" in the initial complaint.

"Although his allegations are vague, the plaintiff has already sufficiently claimed that the defendant breached both the homeowner's policy and the PAP coverage," Mannion wrote. "There are no transactions, occurrences, or events that happened after the date of the original complaint that would change the nature of the existing breach of contract claim."

Kump also cannot add two breach-of-contract implied-in-fact claims.

"Again, the plaintiff does not explain how events that occurred after the date of his original complaint brought these causes of action to light," Mannion wrote. "Moreover, there is nothing before the court to show that subsequent investigation uncovered these previously unknown claims."

That it took Kump nearly 2 1/2 years to try to file additional claims is "unjustified and unexplained," according to the ruling.

"It appears that the plaintiff, realizing that he could and possibly should have pleaded valid alternative theories of recovery, now wishes to use Rule 15(d) as a backdoor way of amending his complaint," Mannion wrote.

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