Kim Morgan and Michael Morgan sued Allstate after the insurer allegedly performed an inadequate investigation and assessment of damage to their South Carolina residence during Hurricane Helene on September 27, 2024. The couple admits receiving partial payment for their loss but claims additional money is owed under their policy, leading them to file breach of contract and insurance bad faith claims seeking the unpaid amounts plus attorneys' fees.
Judge Anderson rejected Allstate's core argument that partial payment automatically defeats bad faith liability. "Allstate's entire argument rests upon the premises that it made payment to Plaintiffs for the loss at issue and therefore there can be no bad faith," Anderson wrote. "However, the allegations in the complaint, which must be accepted as true, tell a different story." The court found the Morgans had alleged "not just a difference in evaluation, but a pattern of unreasonable delay, inadequate investigation, underscoping of damages, and failure to timely and fully adjust a covered loss."
Anderson delivered particularly pointed criticism of Allstate's position, writing that the insurer's "contention that partial payment absolves them of liability is unavailing." The judge emphasized that South Carolina courts "have long held that insurers may be liable for bad faith if the insured can demonstrate 'unreasonable action by the insurer in processing a claim under their mutually binding insurance contract.'"
The case reached Judge Anderson after Allstate moved for judgment on the pleadings or summary judgment, seeking dismissal of the bad faith claim and its resulting attorneys' fees. The insurer argued the dispute "boils down to a difference in scope and valuation by the Parties, which is not an adequate basis for bad faith." Anderson noted that Allstate's alternative request for summary judgment was inappropriate because "the record before the court contains no evidence regarding Plaintiff's contested claims of inadequate investigation or the assessment of the damages at issued."
Allstate contended that partial payment provided "dispositive evidence of an absence of bad faith," but Anderson found this argument legally insufficient. The court applied the four-element test for bad faith insurance claims under South Carolina law, which requires showing the existence of an insurance contract, refusal to pay benefits due, resulting from bad faith or unreasonable action breaching the implied covenant of good faith, and resulting damages to the insured.
The Morgans' complaint specifically alleged that "Defendant, without valid justification, disputed the cause of the Plaintiffs' damages, failed to properly investigate the full extent of the Plaintiffs' damages, unreasonably disputed the scope and value of the loss, and refused to adequately indemnify the Plaintiffs under the terms of the policy." Anderson found these allegations sufficient to state a plausible bad faith claim that could survive the motion to dismiss.
With Allstate's motion denied, Anderson declared the case "ready for trial" and ordered the parties to confer on trial logistics. The parties must provide the court with the number of days needed for trial and proposed dates during the July/August 2026 term, with jury selection already scheduled for July 7, 2026. Their joint response is due by April 24, 2026.