Michael Borovsky Goldsmith LLC v. Jewelers Mut. Ins. Co., 359 F. Supp. 3d 306

MB Goldsmiths, a jewelry store in Raleigh, experienced a persistent foul odor and visible mold beginning in fall 2013–2014; a water leak from an adjacent restaurant was first noticed in December 2014.
Mold inspection reported visible mold growth and high interior air mold levels; store closed its Raleigh location in June 2015 and reopened elsewhere in November 2015.
On April 24, 2015 MB Goldsmiths submitted a business-interruption claim to Jewelers Mutual for loss of future business income due to vacating the premises because of mold.
Jewelers Mutual assigned an independent adjuster, who concluded the loss resulted from a long-term water leak and recommended denial under the policy’s continuous-leakage and mold exclusions and for untimely notice.
Jewelers Mutual denied the claim on June 2, 2015; MB Goldsmiths sued for breach of contract, breach of the implied covenant of good faith and fair dealing, and bad-faith refusal to settle.
On cross-motions for summary judgment, the court held there was no genuine dispute that the continuous water leak caused the loss and that the insurer’s denial reflected an honest coverage disagreement; court granted defendant summary judgment and denied plaintiff’s late partial-summary-judgment motion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Coverage — does policy cover MB Goldsmiths’ lost business income?	Loss caused by mold/odor distinct from long-term water leak; coverage for business interruption should apply.	Loss was caused by continuous/repeated water leakage (>14 days) and resulting mold, which the policy excludes; limited coverage inapplicable.	Court: No coverage — evidence shows continuous leak caused mold; exclusion applies.
Timeliness of notice	Borovsky reasonably delayed reporting because he expected landlord to remedy; notice was timely under circumstances.	Insured failed to provide prompt notice as required by policy; untimely notice supports denial.	Court: Insurer permissibly relied on untimely-notice defense among others; plaintiff failed to create a factual dispute.
Breach of implied covenant/good faith	Insurer acted in bad faith by denying claim and refusing settlement.	Denial resulted from a legitimate, honest coverage dispute; not bad faith or aggravating conduct.	Court: No bad faith — insurer had an honest disagreement; summary judgment for defendant.
Bad-faith refusal to settle (tort)	Insurer refused to settle; plaintiff seeks tort damages.	Elements mirror bad-faith covenant claim; insurer’s denial was in good faith.	Court: Claim fails for same reasons as contractual bad-faith claim; summary judgment for defendant.

Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden-shifting framework)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (standard for genuine issue of material fact)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (nonmoving party must produce specific facts)
Scott v. Harris, 550 U.S. 372 (view evidence in light most favorable to nonmovant)
Erie R.R. Co. v. Tompkins, 304 U.S. 64 (apply state substantive law in diversity cases)
Gaston County Dyeing Machine Co. v. Northfield Insurance Co., 351 N.C. 293 (insurance policy interpretation under N.C. law)
Bicycle Transit Authority, Inc. v. Bell, 314 N.C. 219 (implied covenant of good faith and fair dealing)
Lovell v. Nationwide Mutual Insurance Co., 108 N.C. App. 416 (bad faith requires more than honest disagreement)
Topsail Reef Homeowners Ass’n v. Zurich Specialties London, Ltd., [citation="11 F. App'x 225"] (insurer entitled to judgment where honest coverage disagreement exists)