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Preview: LexisNexis® Mealey's™ Insurance Bad Faith Legal News

LexisNexis® Mealey's™ Insurance Bad Faith Legal News



Headline Insurance Bad Faith Legal News from LexisNexis®



 



Water Leakage, Seepage Excluded Under Homeowners Insurance Policy, Judge Says
MISSOULA, Mont. - The efficient proximate cause of homeowners' loss was repeated seepage or leakage of water over an extended period of time, which is an excluded peril under a homeowners insurance policy, a Montana federal judge ruled Feb. 5 (Tafford and LaRayne Oltz v. Safeco Insurance Company of America, No. 16-124, D. Mont., 2018 U.S. Dist. LEXIS 18743).



Insured's Bad Faith, Breach Of Contract Claims Fail As A Result Of Appraisal Payment
SAN ANTONIO - The Fourth District Texas Court of Appeals on Jan. 31 reversed and remanded a trial court's denial of summary judgment in favor of an insured on breach of contract and bad faith claims after determining that the insurer's timely payment of the insured's property damage claim following an appraisal proceeding extinguished the insured's claims for breach of contract and bad faith (Wellington Insurance Co., et al. v. Victor Banuelos, No. 04-17-00365, Texas App., 4th Dist., 2018 Tex. App. LEXIS 848).



Insureds' Claims For Contract Breach, Bad Faith Can Stand, Federal Judge Determines
TULSA, Okla. - An Oklahoma federal judge on Feb. 2 denied an insurer's motion for summary judgment on breach of contract and bad faith claims in a dispute over coverage for earthquake and mold damages after determining that the insureds offered sufficient evidence to support their claims (Larry W. Thomas, et al. v. Farmers Insurance Co., No. 16-17, N.D. Okla., 2018 U.S. Dist. LEXIS 17418).



Summary Judgment Ruling In Flood Insurance Suit Affirmed By 3rd Circuit
PHILADELPHIA - A federal district court did not err in granting summary judgment in favor of an insurer in an insurance breach of contract and bad faith lawsuit because an insurer's lawsuit against his flood insurance provider was time-barred since he filed the suit outside the one-year statute of limitations for standard flood insurance policies (SFIP), a Third Circuit U.S. Court of Appeals panel ruled Jan. 31 in affirming (Anthony Migliaro v. Fidelity National Indemnity Insurance Co., No. 17-1434, 3rd Cir., 2018 U.S. App. LEXIS 2097).



Judge Erred In Finding That Dispute Existed In Bad Faith Suit, Panel Rules
ATLANTA - A federal district court erred in ruling that a bona fide dispute existed as to whether a woman was the proper beneficiary to her deceased husband's life insurance policies, an 11th Circuit U.S. Court of Appeals panel ruled Feb. 5 in vacating and remanding the action to the district court (Anne Mangano v. Jackson National Life Insurance Company, No. 16-11685-C, 11th Cir.).



Jury Finds Insurer Acted In Bad Faith In Handling Auto Injury Claim
JACKSONVILLE, Fla. - A Florida state jury on Jan. 26 entered a verdict against an insurer after determining that the insurer acted in bad faith in handling an auto injury claim on behalf of its insured and in exposing the insured to an excess judgment of approximately $8 million (Kevin Whitney v. Mercury Insurance Company of Florida, No. 16-2016-CA-000925, Fla. Cir., Duval Co.).



Insurer Found To Have Cured Bad Faith Claim Pleading Deficiencies
PHILADELPHIA - In amending his insurance breach of contract and bad faith complaint against his automobile insurance provider, an insured cured the pleading deficiencies that led to a previous dismissal of the bad faith claim, a federal judge in Pennsylvania ruled Jan. 29 in denying the insurer's motion to dismiss (Kevin Irving v. State Farm Mutual Automobile Insurance Co., No. 17-1124, E.D. Pa., 2018 U.S. Dist. LEXIS 14163).



Insured Provides Sufficient Facts In Support Of Bad Faith Claim, Judge Says
HARTFORD, Conn. - A Connecticut judge on Jan. 2 determined that an insured's bad faith claim should not be dismissed because the insured sufficiently alleged that the insurers had a dishonest purpose in adjusting the claim for underinsured motorist benefits (Michael K. Rood v. Covenant Insurance Co., et al., No. 156059856S, Conn. Super., 2018 Conn. Super. LEXIS 3).



Insured Failed To Prove Insurer Acted In Bad Faith In Handling Auto Claim
MONROE, La. - A Louisiana federal judge on Jan. 25 determined that an insured's bad faith claim cannot stand because the insured failed to provide evidence supporting her contentions that the insurer failed to timely tender underinsured motorists benefits and that the insurer's unconditional tender of benefits was "abusively low" (Cindy Samberg v. Progressive Paloverde Insurance Co., No. 16-1754, W.D. La., 2018 U.S. Dist. LEXIS 14917).



Protective Order, Compel Motions Partly Granted In Accident Coverage Dispute
OKLAHOMA CITY - In a Feb. 2 discovery order, an Oklahoma federal judge partly granted an injured motorist's motion to compel certain claims and training materials from her employer's insurer, deeming some irrelevant to her underinsured motorist (UIM) claim and finding some to be likely protected by attorney-client privilege (Nickie Amber O'Brien v. Travelers Property Casualty Company of America, et al., No. 5:16-cv-01176, W.D. Okla., 2018 U.S. Dist. LEXIS 17421).



Texas Federal Judge Denies Motion To Remand, Dismisses Adjuster As A Defendant
FORT WORTH, Texas - A Texas federal judge on Jan. 25 denied an insured's motion to remand in a property damage coverage dispute after determining that the insured failed to support its allegations that the claims adjuster breached the duty of good faith and fair dealing (University Baptist Church v. Lexington Insurance Co., et al., No. 17-962, N.D. Texas, 2018 U.S. Dist. LEXIS 12057).



Insurer Had No Duty To Pay Until After Reasonable Costs Were Determined, Panel Says
SEATTLE - A trial court did not err in granting summary judgment in favor of an insurer on an insured's bad faith claim because the trial court properly determined that the insurer had no duty to pay its insured's defense costs until after a determination on the reasonableness of the costs was made, the Division I Washington Court of Appeals said Jan. 29 (National Surety Corp. v. Immunex Corp., No. 75674-5-I, Wash. App., Div. 1, 2018 Wash. App. LEXIS 210).



Judge: Insurer Breached Duty To Defend, Acted In Bad Faith In Denial Of Suit
SEATTLE - An insurer's denial of defense, unsupported by evidence from a complaint against an insured, was a breach of its duty to defend, a Washington federal judge ruled Feb. 5, also finding that the insurer acted in bad faith despite its "later change of heart" (2FL Enterprises LLC v. Houston Specialty Insurance Co., No. 17-676, W.D. Wash., 2018 U.S. Dist. LEXIS 18605).



Theft Over Multiple Days Constitutes 1 Occurrence, 9th Circuit Affirms
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on Feb. 5 affirmed a lower court's ruling in favor of a business insurer on insureds' claims for breach of contract and bad faith, finding that theft of business merchandise over the course of multiple days is still considered to be one "occurrence" under the insurance policy (Patrick E. Patterson, et al. v. American Economy Insurance Co., No. 16-16445, 9th Cir., 2018 U.S. App. LEXIS 2846).



Federal Judge Enters Amended Judgment After Parties Drop Appeal Of Coverage Suit
SAN FRANCISCO - Five days after a boat business insured and its insurer stipulated to a voluntary dismissal of the insured's appeal in the Ninth Circuit U.S. Court of Appeals challenging a no-coverage ruling, a California federal judge on Jan. 29 entered an amended judgment ordering the insured to pay $24,870.71 in costs to its insurer (Pacific Marine Center, Inc. v. Philadelphia Indemnity Insurance Co., No. 13-00992, E.D. Calif.).



Pennsylvania Federal Judge Allows Class To Add Bad Faith Claim Against Life Insurer
PHILADELPHIA - In a consolidated class action against a life insurer for breaches of its policies through consideration of lower investment income and higher reinsurance costs, a Pennsylvania federal judge on Feb. 1 allowed the class to amend its complaint to add a tortious breach of good faith and fair dealing claim on behalf of a California sub-class (In re: Lincoln National Co. Litigation, No. 16-06605, E.D. Pa., 2018 U.S. Dist. LEXIS 16355).



Appeals Panel Says Questions Of Fact Exist On Insured's Bad Faith, Fraud Claims
INDIANAPOLIS - The Indiana Court of Appeals on Jan. 16 reversed a trial court's ruling in favor of insurers on fraud and bad faith claims because the insured's claims are based on the behavior of the insurer defendants in a separate breach of contract lawsuit and were not filed in an attempt to impermissibly attack the judgment in the breach of contract lawsuit (Kimberly S. Earl,et al., v. State Farm Mutual Automobile Insurance Co., No. 36A01-1703-CT-542, Ind. App., 2018 Ind. App. LEXIS 9).



Panel Reverses Ruling, Says Questions Of Fact Exist On Insured's Bad Faith Claim
ATLANTA - The 11th Circuit U.S. Court of Appeals on Jan. 16 vacated and remanded a district court's judgment in favor of an insurer on the basis that genuine issues of material fact exist as to whether the insurer acted in bad faith by failing to pay the full uninsured motorist (UM) benefit to the insured who was injured in an auto accident (Ethel Cousin v. GEICO General Insurance Co., No. 16-10113, 11th Cir., 2018 U.S. App. LEXIS 1072).



Bifurcation Warranted, Federal Magistrate Judge Says In Granting Insurer's Motion
ALBUQUERQUE, N.M. - A New Mexico federal judge on Jan. 17 bifurcated an insured's breach of contract claim from the insured's bad faith claim in an auto coverage dispute after determining that bifurcation is warranted because under New Mexico law, a finding of breach of contract is necessary for a bad faith claim to survive (Steve P. Shultzaberger v. State Farm Mutual Automobile Insurance Co., No. 17-1028, D. N.M., 2018 U.S. Dist. LEXIS 7915).



Federal Judge Says Injured Claimant Has Standing To Bring Claims Against Insurer
BATON ROUGE, La. - A third-party claimant who was assigned an insured's rights to pursue damages against an insurer has standing to maintain claims against the insurer for allegedly failing to act in good faith in defending its insured in an underlying suit arising out of an auto accident, a Louisiana federal judge said Jan. 22 (Brian Richard, et al. v. USAA Casualty Insurance Co., No. 17-175, M.D. La., 2018 U.S. Dist. LEXIS 9676).



Ohio Federal Judge Rejects Recommendation That Bad Faith Suit Be Remanded
DAYTON, Ohio - An Ohio federal judge on Jan. 22 rejected a magistrate judge's recommendation that an insured's bad faith suit be remanded to Ohio state court where an underlying wrongful death suit against the insured is pending because the federal court is better equipped to address any issues arising out of federal aviation regulations as they apply to whether the insured's airplane was unlawfully used by the insured's son (Peter H. Heins v. Commerce and Industry Insurance Co., et al., No. 17-0110, S.D. Ohio, 2018 U.S. Dist. LEXIS 9931).



Judge: Cracks In Concrete Excluded Under Homeowners Policy's Collapse Provision
NEW HAVEN, Conn. - Cracks in concrete for the foundation of a home do not qualify as a "collapse" under a homeowners insurance policy's collapse provision because an insured has not shown that the collapse was "abrupt" or that she is unable to occupy the home for its intended purpose, a federal judge in Connecticut ruled Jan. 24 in granting an insurer's motion to dismiss (Gail M. Chernosky v. Amica Mutual Insurance Co., No. 17-1047, D. Conn., 2018 U.S. Dist. LEXIS 11285).



Good Faith Investigation Is Not A Condition Precedent To Invoking Appraisal Clause
SHERMAN, Texas - A Texas federal judge on Jan. 22 granted an insurer's motion to compel appraisal after rejecting the insured's argument that the insurer's failure to complete a good faith investigation of the insured's property damage claim precludes the insurer from invoking appraisal (Darold Adami v. Safeco Insurance Company of Indiana, No. 17-574, E.D. Texas, 2018 U.S. Dist. LEXIS 9486).



Insureds' Bad Faith, Breach Of Contract Claims Barred By Statute Of Limitations
LOS ANGELES - A California federal judge on Jan. 16 granted an insurer's motion to dismiss claims for breach of contract and bad faith alleged by insureds seeking coverage for property damages to their home after determining that the claims are barred by the applicable one-year statute of limitations (Rosalie Rains v. Allstate Insurance Company, et al., No. 17-301, C.D. Calif., 2018 U.S. Dist. LEXIS 7594).



Oregon Supreme Court: Bad Faith Claim Does Not Constitute Elder Financial Abuse
SALEM, Ore. - Answering a certified question from the Ninth Circuit U.S. Court of Appeals, the Oregon Supreme Court on Jan. 19 found that bad faith allegations that an insurer delayed the processing of claims and refused to pay benefits owed to vulnerable persons under long-term care insurance policies do not state a claim under the state's Elder Financial Abuse Statute (Lorraine Bates, et al. v. Bankers Life and Casualty Company, et al., No. SC S064742, Ore. Sup., 362 Ore. 337; 2018 Ore. LEXIS 7).



Bad Faith Claim Based On Alleged Failure To Notify Insured Survives Dismissal
JACKSON, Miss. - A Mississippi federal judge on Jan. 22 dismissed a number of an insured's claims alleged against its insurer in a mold coverage dispute on the basis that the policy's organic pathogen exclusion precludes coverage but refused to dismiss the insured's claim for breach of the duty of good faith and fair dealing after determining that the insured stated a plausible bad faith claim regarding the insurer's alleged failure to notify the insured of the claim denial (Heritage Properties Inc. v. Ironshore Specialty Insurance Co., et. al., No. 17-637, S.D. Miss., 2018 U.S. Dist. LEXIS 9598).



Question Of Fact Exists On Insurer's Initial Adjustment Of Property Damage Claim
DENVER - A Colorado federal judge on Jan. 23 refused to dismiss an insured's bad faith claim alleging that an insurer unreasonably adjusted its claim for property damages caused by a hailstorm because a question of fact exists regarding the insurer's initial adjustment of the insured's claim (Provincetown Landing II Association LLC v. American Family Mutual Insurance Co., No. 16-1403, D. Col., 2018 U.S. Dist. LEXIS 10537).



Magistrate Bifurcates Bad Faith Claim In Dispute Over Alleged Concert Injuries
LOUISVILLE, Ky. - Refusing to go down the rabbit hole of "what ifs" in a coverage dispute arising from underlying injuries sustained at a concert, a Kentucky federal magistrate judge on Jan. 3 granted an insurer's motion to bifurcate a bad faith from the other claims for discovery and trial purposes (Live Nation Worldwide, Inc. v. Secura Insurance, et al., No. 17-216, W.D. Ky., 2018 U.S. Dist. LEXIS 872).



Subrogation Of Claims Violated State Law, Judge In Bad Faith Suit Rules
MISSOULA, Mont. - An insurer violated provisions of Montana state law by subrogating its insureds' property damages claims without properly investigating whether the insureds had unrecovered losses, a federal judge in Montana ruled Dec. 28 in denying the insurer's motion to dismiss (Seth Konecky, et al. v. Allstate Fire & Casualty Insurance Co., et al., No. 17-10, D. Mont., 2017 U.S. Dist. LEXIS 212636).



Abatement Of Bad Faith Claims More Appropriate, Federal Judge Rules
TAMPA, Fla. - A federal judge in Florida on Dec. 22 denied motions to dismiss filed by insurers in an insurance bad faith lawsuit, ruling that abatement of the bad faith claims against the insurers is a more appropriate decision than dismissal (Mark Yencarelli v. USAA Casualty Insurance Co., et al., No. 17-2029, M.D. Fla., 2017 U.S. Dist. LEXIS 210873).



Panel Affirms Summary Judgment Ruling In Favor Of Insurer In Bad Faith Suit
RICHMOND, Va. - Ruling that it has found no reversible error, a Fourth Circuit U.S. Court of Appeals panel on Dec. 22 affirmed a federal court's order granting summary judgment in favor of an insurer in an insurance breach of contract and bad faith lawsuit (Dominant Investments 113 LLC v. United States Liability Insurance Co., No. 17-1517, 4th Cir., 2017 U.S. App. LEXIS 26394).



Claims In Bad Faith Suit Found To Be Preempted By Federal Law
SAN FRANCISCO - Insureds' claims in an insurance breach of contract and bad faith lawsuit over coverage under a homeowners insurance and a standard flood insurance policy (SFIP) are preempted by federal law, a federal judge in California ruled Jan. 10 in granting the insurer's motion to dismiss (Alicia Martin, et al. v. CSAA Insurance Exchange, No. 17-4066, N.D. Calif., 2018 U.S. Dist. LEXIS 4675).



3rd Circuit Panel Affirms Summary Judgment Ruling In Bad Faith Lawsuit
PHILADELPHIA - A federal district court did not err in granting summary judgment in favor of an insurer in an insurance breach of contract and bad faith lawsuit because the insurer paid full coverage limits for mold remediation under the terms of a homeowners insurance policy and, thus, could not have acted in bad faith, a Third Circuit U.S. Court of Appeals panel ruled Jan. 10 in affirming (Mary Ann Andrews, et al. v. Merchants Mutual Insurance Co., No. 17-1413, 3rd Cir., 2018 U.S. App. LEXIS 637).



Federal Judge Allows Common-Law Bad Faith Claim To Proceed
CHARLESTON, W.Va. - A West Virginia federal judge on Dec. 28 dismissed an insured's breach of contract claim, but refused to dismiss a portion of the insured's bad faith claim on the basis that common-law bad faith damages are premised on a delay in settlement and not on a formal denial of coverage (Linda Blevins v. Nationwide General Insurance Co., No. 17-3692, S.D. W.Va., 2017 U.S. Dist. LEXIS 212386).



Federal Judge Adopts Recommendation Denying Dismissal Of Bad Faith Claim
PORTLAND, Ore. - An Oregon federal judge on Jan. 8 adopted a magistrate judge's recommendation that an insurer's motion to dismiss the insureds' claim alleging bad faith and unfair dealing be denied, agreeing with the magistrate judge's determination that the insurer breached its extracontractual duty of care in its handling of the insureds' claim for water damages (Craig Barnard et al., v. State Farm Fire & Casualty Co., No. 17-1340, D. Ore., 2017 U.S. Dist. LEXIS 214701).



Judge Finds Fact Issues Exist On Whether Foundation Damage Was Covered By Policy
NEW HAVEN, Conn.- A Connecticut federal judge on Dec. 29 refused to grant summary judgment on a breach of contract claim asserted by insureds, finding that genuine issues of fact exist on when damage to a property's foundation occurred, but the judge found no evidence to support their claims for violation of Connecticut law or to show that the insurer acted in bad faith (Raymond G. Gabriel v. Liberty Mutual Fire Insurance Co., No. No. 3:14-cv-01435, D. Conn., 2017 U.S. Dist. LEXIS 213202).



Bad Faith Claim Dismissed; Federal Judge Says Date Of Demand Is Not Clear
MEMPHIS, Tenn. - A Tennessee federal judge on Dec. 28 adopted a magistrate judge's recommendation that an insured's bad faith claim should be dismissed, agreeing with the magistrate judge that it is not clear from the complaint whether the insureds waited the required 60 days after filing a formal demand upon the insurer before filing suit (Anthony Shelby, et al. v. Northfield Insurance Co., No. 17-2418, W.D. Tenn., 2017 U.S. Dist. LEXIS 212332).



New Trial Ordered On Bad Faith Claim; Post-Litigation Conduct Is Relevant
DES MOINES, Iowa - The Iowa Court of Appeals on Dec. 20 reversed a jury verdict entered in favor of an insurer on an insured's bad faith claim and remanded the insured's suit for a new trial after determining that the trial court erred in excluding evidence of the insurer's post-litigation conduct (B&F Jacobson Lumber & Hardware LLP v. Acuity, No. 16-1134, Iowa App., 2017 Iowa App. LEXIS 1256).



Federal Judge Dismisses Bad Faith, Contract Breach Claims In Life Insurance Suit
TRENTON, N.J. - A New Jersey federal judge on Dec. 28 dismissed state law claims for breach of contract and bad faith in a dispute over survivorship benefits under a life insurance policy after determining that the state law claims are preempted by the Employee Retirement Income Security Act (Jody Rizzo v. First Reliance Standard Life Insurance Co., et al., No. 17-745, D. N.J., 2017 U.S. Dist. LEXIS 212484).



5th Circuit Says Genuine Dispute Exists As To Cause Of Disability
NEW ORLEANS - After finding that a disability claimant raised a genuine dispute of material fact as to the cause of his disability, the Fifth Circuit U.S. Court of Appeals on Dec. 29 reversed a district court's ruling against the claimant on a breach of contract claim (David M. Cox v. Provident Life and Accident Insurance Company, No. 16-60831, 5th Cir., 2017 U.S. App. LEXIS 27036).



Damage-To-Property Policy Exclusion Applies To Bar Coverage, 7th Circuit Says
CHICAGO - The Seventh Circuit U.S. Court of Appeals on Dec. 18 found that because an insurance policy's damage-to-property exclusion barred excess coverage for a property damage claim arising from an April 27, 2010, grain elevator explosion, the insurer had no duty to act in good faith in responding to an offer to settle the claim (West Side Salvage, Inc. v. RSUI Indemnity Co., No. 16-3928, 7th Cir., 2017 U.S. App. LEXIS 25533).



Insurer Says No Coverage Due In Yahoo Email Scanning Suits
SAN JOSE, Calif. - A commercial general liability (CGL) insurer on Jan. 4 moved for summary judgment in California federal court in a coverage dispute with Yahoo! Inc., arguing that its duty to indemnify was never triggered in underlying privacy lawsuits over the internet firm's former email-scanning practices because no damages award was levied against Yahoo (Yahoo! Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 5:17-cv-00489, N.D. Calif.).



Exclusion's 'Derivative Claim Exception' Does Not Apply, 9th Circuit Affirms
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on Dec. 27 affirmed a lower federal court's finding that the "derivative claim exception" to an insurance policy's "insured vs. insured" exclusion does not apply, finding that there is no coverage for an underlying lawsuit that an insured's CEO breached his fiduciary obligations (Sunrise Specialty Co. Inc., et al. v. Scottsdale Insurance Co., No. 16-16856, 9th Cir., 2017 U.S. App. LEXIS 26860).



Judge Dismisses Reinsurer, Related Entities From Breach Of Contract Case
SALT LAKE CITY - A Utah federal judge on Dec. 19 dismissed a reinsurer and other related entities from a breach of contract and bad faith lawsuit over denied coverage under a professional liability policy because there is no personal jurisdiction (Allegis Investment Services LLC, et al. v. Arthur Gallagher & Co., et al., No. 17-515, D. Utah, 2017 U.S. Dist. LEXIS 209257).