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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®



 



District Court Properly Found Insurer Did Not Act In Bad Faith, Panel Says
NEW YORK - A district court properly found that an insurer did not act in bad faith when handling an insurer's claim related to the settlement of an underlying personal injury suit arising out of a boating accident because the insured failed to prove that the insurer acted with gross disregard of the insured's interest, the Second Circuit U.S. Court of Appeals said Oct. 27 (Sea Tow International Inc. v. St. Paul Fire & Marine Insurance Co., et al., No. 16-3672, 2nd Cir., 2017 U.S. App. LEXIS 21308).



Question Of Fact Exists Regarding Agent's Statement In Auto Dispute, Judge Says
SCRANTON, Pa. - A Pennsylvania federal judge on Oct. 25 denied an insurer's motion for summary judgment on an insured's bad faith claim in an auto coverage dispute after determining that a question of fact exists as to whether the insurer's claims agent purposefully misstated the amount of a medical lien assessed against the insured in hopes of effectuating a settlement below the policy limits or simply made an honest mistake in communicating the amount of the medical lien to the insured (David Farrell v. United Financial Casualty Co., No. 16-2180, M.D. Pa., 2017 U.S. Dist. LEXIS 177042).



Judge: Regular Use Exception Precludes Coverage In Insurance Bad Faith Suit
PHILADELPHIA - An insurer did not breach its contract or act in bad faith when denying coverage under an automobile insurance policy for an insured who was injured in an automobile accident while traveling in a work vehicle because the accident was subject to a "regular use exception" in the policy, a federal judge in Pennsylvania ruled Oct. 30 in granting the insurer's summary judgment motion (Douglas Reeves v. The Travelers Companies, No. 16-6448, E.D. Pa., 2017 U.S. Dist. LEXIS 179720).



Judge Denies Summary Judgment Motions In Insurance Bad Faith Suit
NEW ORLEANS - Ruling that summary judgment in an automobile insurance dispute is inappropriate in an insurance bad faith lawsuit because the record fails to show when an insurer received the necessary proof of loss during discovery to trigger an unconditional tender under the policy's underinsured motorist provision, a federal judge in Louisiana on Oct. 24 denied summary judgment motions filed by both parties (Ralph Sacks v. Allstate Property and Casualty Insurance Co., No. 16-16578, E.D. La., 2017 U.S. Dist. LEXIS 175798).



Insurer's Motion To Remove Bad Faith Suit Was Not Timely, Federal Judge Says
SEATTLE - A Washington federal judge on Oct. 25 granted an insured's motion to remand in an auto coverage suit after determining that the insurer's notice of removal was not timely filed because the insurer had knowledge when the insured filed the complaint in state court that the damages would exceed the federal jurisdictional minimum amount of $75,000 (Anthony Grazia v. Safeco Insurance Company of Illinois, No. 17-1130, W.D. Wash., 2017 U.S. Dist. LEXIS 177179).



Potential For Bad Faith Damages Does Not Change Actual Amount In Controversy
LAS VEGAS - A Nevada federal judge on Oct. 30 rejected an insurer's argument that because an insured asserted a claim of bad faith against the insurer, which could subject the insurer to pay additional damages, the federal minimum amount in controversy has been met even though the insured's actual damages are only $11,500 (Ashley Gugino v. Government Employees Insurance Co., No. 17-2431, D. Nev., 2017 U.S. Dist. LEXIS 180385).



Insurance Adjuster Improperly Joined In Bad Faith Suit, Judge Rules
FORT WORTH, Texas - Remand of an insurance breach of contract and bad faith lawsuit to state court is not necessary because insureds improperly joined an insurance adjuster in an attempt to defeat federal court jurisdiction, a federal judge in Texas ruled Oct. 27 in denying the insureds' motion (Cheryl Fernandez, et al. v. Allstate Texas Lloyds, et al., No. 17-729, N.D. Texas, 2017 U.S. Dist. LEXIS 178273).



Bad Faith Claim Survives Dismissal In Homeowners Insurance Dispute
OKLAHOMA CITY - Insureds have pleaded minimally sufficient facts to support their insurance bad faith claim against their homeowners insurance provider for its alleged failure to properly investigation their claim and provide coverage under the policy, a federal judge in Oklahoma ruled Oct. 24 in denying the insurer's motion to dismiss the bad faith claim (Daniel E. Lang, et al. v. Farmers Insurance Co. Inc., No. 17-0919, W.D. Okla., 2017 U.S. Dist. LEXIS 175858).



Judge Awards Summary Judgment To Insurer On Bad Faith Claim
HUNTSVILLE, Ala. - A federal judge in Alabama on Oct. 25 awarded summary judgment to an insurer on a man's cause of action for bad faith, holding that the company had a legitimate reason for denying his claim for wind and water damage because the leak occurred due to the deterioration of his roof (Roger Walker v. Auto-Owners Insurance Company, No. 16-cv-448-CLS, N.D. Ala., 2017 U.S. Dist. LEXIS 176703).



Ohio Federal Magistrate Recommends Remanding Insured's Bad Faith Suit
DAYTON, Ohio - An Ohio federal magistrate judge on Oct. 24 recommended remanding an insured's bad faith suit to Ohio state court, where an underlying wrongful death suit against the insured is pending, because both cases hinge on 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, 2017 U.S. Dist. LEXIS 175672).



Disability Insurer Did Not Act In Bad Faith In Failing To Pay Disability Claim
MOBILE, Ala. - A disability insurer did not act in bad faith in investigating and in failing to pay a disability claim because the insurer conducted an extensive investigation into the claim and had an arguable and debatable reason for denying the claim, an Alabama federal judge said Oct. 24 in granting the insurer's motion for summary judgment (Scott R. Weisberg, M.D., v. Guardian Life Insurance Company of America et al., No. 16-568, N.D. Ala., 2017 U.S. Dist. LEXIS 176021).



Insurance Policy Does Not Bar 'Faulty Construction,' Federal Judge Concludes
SEATTLE - An insurance policy does not exclude and, thus, covers the perils "faulty construction," "faulty maintenance" and "wet or dry rot," a Washington federal judge ruled Oct. 31, granting in part summary judgment to an insured (Westridge Townhomes Owners Association v. Great American Assurance Co., et al., No. 16-1011, W.D. Wash., 2017 U.S. Dist. LEXIS 180373).



Florida Panel Reverses Dismissal Of Bad Faith Suit In Hurricane Wilma Dispute
WEST PALM BEACH, Fla. - A Florida appeals panel on Oct. 18 found that a bad faith lawsuit should not have been dismissed because the record undisputedly establishes that an insurer received an insured's civil remedies notice (CRN) in a Hurricane Wilma coverage dispute nearly four years before the insured filed its bad faith suit and responded to the CRN without challenging its service (Evergreen Lakes HOA, Inc. v. Lloyd's Underwriters at London, No. 4D16-2657, Fla. App., 4th Dist., 2017 Fla. App. LEXIS 14833).



Wisconsin Federal Judge: Insurer Breached Policy By Failing To Pay Fire Claim
MILWAUKEE - In a dispute where a state insurance fund argued that a policy above its own was reinsurance, a Wisconsin federal judge ruled Oct. 31 that an insurer breached an agreement with the fund by failing to pay a fire claim (State of Wisconsin Local Government Property Insurance Fund v. Lexington Insurance Co., et al., No. 15-142, E.D. Wis., 2017 U.S. Dist. LEXIS 180096).



Nevada High Court Majority Upholds Verdict, Judgment In Misrepresentation Suit
CARSON CITY, Nev. - The majority of a Nevada Supreme Court panel on Sept. 28 affirmed a trial court's motion for judgment in favor of an insurer and upheld a jury's award of an additional $56,000 after determining that the trial court did not abuse its discretion and that the insured failed to prove that there was any negligent misrepresentation regarding the availability of coverage (MG&S Enterprise, LLC v. Travelers Casualty Insurance Company of America, et al., No. 69622, Nev. Sup., 2017 Nev. App. Unpub. LEXIS 673).



11th Circuit Says Insurer Did Not Act In Bad Faith In Handling Of Auto Claim
ATLANTA - An insurer did not act in bad faith in its handling of settlement negotiations because no reasonable jury could conclude that the insurer's potential negligence caused a failure to settle a claim arising out of an auto accident, the 11th Circuit U.S. Court of Appeals said Oct. 10 (Dennis Lee Kemp v. USAA Casualty Insurance Co., et al., Nos. 16-15087, 16-15169, 11th Cir., 2017 U.S. App. LEXIS 19753).



Insured's Breach Of Contract, Bad Faith Suit Remanded To Pennsylvania State Court
PHILADELPHIA - A Pennsylvania federal judge on Oct. 12 remanded an insured's suit alleging claims for breach of contract and bad faith against an auto insurer and the insured's insurance agent after determining that the agent was not fraudulently joined to defeat jurisdiction (Melinda Bradley-Williams v. Agency Insurance Company of Maryland Inc., et al., No. 17-3755, E.D. Pa., 2017 U.S. Dist. LEXIS 169264).



Dismissal Of Bad Faith Claim In Auto Coverage Dispute Is Appropriate, Judge Says
ORLANDO, Fla. - A Florida federal judge on Oct. 17 dismissed an insured's bad faith counterclaim against an auto insurer because under Florida law, a bad faith claim cannot be alleged until a determination of the insured's damages has been made (Owners Insurance Co. v. Michael Berke, No. 17-1505, M.D. Fla., 2017 U.S. Dist. LEXIS 171454).



Insurer Acted In Good Faith In Handling Underinsured Motorist Claim, Judge Rules
TAMPA, Fla. - An insured failed to show that injuries he sustained in an automobile accident were permanent in nature during negotiations with his automobile insurance provider, and thus, the insurer did not act in bad faith in the handling of his claim, a federal judge in Florida ruled Oct. 13 in granting the insurer's summary judgment motion (David Duncan v. GEICO General Insurance Co., No. 17-40, M.D. Fla., 2017 U.S. Dist. LEXIS 169347).



Bad Faith Claim Alleged Against Auto Insurer Is Not Ripe For Adjudication
ORLANDO, Fla. - A Florida federal judge on Oct. 11 dismissed an insured's claim for bad faith alleged against an insurer in an auto coverage dispute after finding that the bad faith claim is not ripe for adjudication and will not be ripe for adjudication until after the insured's breach of contract claim is decided (Gordon McBride v. Liberty Mutual Fire Insurance Co., No. 17-1639, M.D. Fla., 2017 U.S. Dist. LEXIS 167901).



Auto Insurer Will Not Be Prejudiced If Bad Faith Claim Is Not Severed
SCRANTON, Pa. - An auto insurer failed to prove that it will be prejudiced if an insured's bad faith claim is tried at the same time as the insured's breach of contract claim, a Pennsylvania federal judge said Oct. 11 in denying the insurer's motion to sever and stay the claim (Sandra Mulgrew v. Government Employees Insurance Co., et al., No. 16-2217, M.D. Pa., 2017 U.S. Dist. LEXIS 167770).



Bad Faith Claim Dismissed Without Prejudice To Refile After Auto Claim Is Resolved
JACKSONVILLE, Fla. - After determining that a bad faith claim is premature, a Florida federal judge on Oct. 13 granted an insurer's motion to dismiss the bad faith claim without prejudice to the insured to refile the claim after the insured's claim for uninsured motorist benefits is resolved (Kelsa Toburen v. State Farm Mutual Automobile Insurance Co., No. 17-955, M.D. Fla., 2017 U.S. Dist. LEXIS 169642).



Evidence Supports Insured's Claims For Bad Faith Against Auto Insurer, Judge Says
SCRANTON, Pa. - An insured seeking uninsured motorist benefits for injuries sustained in a hit-and-run accident provided sufficient evidence in support of claims for bad faith against the auto insurer, a Pennsylvania federal judge said Oct. 10 in denying the insurer's motion to dismiss (Thomas Meyers, et al. v. Protective Insurance Co., No. 16-1821, M.D. Pa., 2017 U.S. Dist. LEXIS 166955).



Panel: Method Of Calculating Estimated 'Actual Cash Value' Does Not Breach Contract
ST. LOUIS - The Eighth Circuit U.S. Court Appeals on Sept. 25 found that a homeowners insurer's method of determining an insured's estimated "actual cash value" does not breach its replacement cost contract, further finding that there is no basis to certify a class of insureds who incurred "unique, individual covered losses" and no basis to sustain a special master's "burdensome classwide discovery orders" in a hailstorm coverage dispute (In re: State Farm Fire and Casualty Company, Nos. 16-3185 and 16-3562, 8th Cir., 2017 U.S. App. LEXIS 18457).



Insured Breached Cooperation Clause, Cannot Maintain Bad Faith Claims Against Insurer
LAS VEGAS - An insured's breach of an insurance policy's cooperation clause by failing to provide the insurer with needed information about a vehicle theft claim precludes the insured from alleging claims of breach of contract and bad faith against the insurer, a Nevada federal judge said Sept. 28 (Edward Stolz v. Safeco Insurance Company of America, No. 14-2060, D. Nev., 2017 U.S. Dist. LEXIS 162532).



Bad Faith Suit Over Property Insurance Claim Remanded To State Court
OXFORD, Miss. - Remand of an insurance breach of contract and bad faith lawsuit to state court is proper because an insured has shown that the amount in controversy in the action will not exceed statutory limits, a federal judge in Mississippi ruled Oct. 17 in granting the insured's motion to remand (Strawberry Missionary Baptist Church v. Church Mutual Insurance Company Foundation Inc., No. 17-155, N.D. Miss., 2017 U.S. Dist. LEXIS 171545).



Bifurcation Of Bad Faith Claim For Trial Permitted In Asbestos Coverage Dispute
NEWPORT NEWS, Va. - Bifurcation of a bad faith claim in an asbestos coverage dispute is appropriate for trial but not for discovery as the issue of coverage intertwines and overlaps with the issue of bad faith, a Virginia federal magistrate judge said Oct. 2 (Hopeman Brothers Inc. v. Continental Casualty Co., et al., No. 16-187, E.D. Va., 2017 U.S. Dist. LEXIS 164434).



Additional Insured's Bad Faith, Breach Of Contract Claims Survive Dismissal
LAS VEGAS - An additional insured sufficiently alleged breach of contract and bad faith claims against an insurer for improperly denying a construction defects claim, a Nevada federal judge ruled Sept. 29, declining to dismiss the claims (Centex Homes v. Everest National Insurance Co., et al., No. 16-01275, D. Nev., 2017 U.S. Dist. LEXIS 162687).



Federal Judge Says Insurer Did Not Act With Malice In Handling Fire Loss Claim
LOUISVILLE, Ky. - A Kentucky federal judge on Sept. 22 granted an insurer's motion for summary judgment on a bad faith claim alleged by insureds whose home was destroyed by a fire after determining that there is no evidence that the insurer acted with malice or reckless disregard when it failed to pay the full amount of damages demanded by the insureds (Rama Arla, et al. v. Peerless Insurance Co., No. 15-596, W.D. Ky., 2017 U.S. Dist. LEXIS 155174).



Judge Remands Insurance Bad Faith Suit To Oklahoma State Court
TULSA, Okla. - Although an insurer's removal of an insurance bad faith lawsuit was not untimely, it failed to show that the amount in controversy exceeded the jurisdictional amount, a federal judge in Oklahoma ruled Sept. 25 in remanding the action to state court (Rafel G. McDougal v. GEICO Casualty Insurance Co., No. 17-449, N.D. Okla., 2017 U.S. Dist. LEXIS 156299).



Insureds Presented Sufficient Facts To Support Bad Faith Claim, Federal Magistrate Says
PITTSBURGH - A Pennsylvania federal magistrate judge on Sept. 29 recommended that an auto insurer's motion to dismiss be denied because the insureds sufficiently stated facts in support of their claims for breach of contract and bad faith (Linda L. Winschell, et al. v. Encompass Home and Auto Insurance Co., No. 17-522, W.D. Pa., 2017 U.S. Dist. LEXIS 162384).



Insured's Bad Faith Claim Inadequate In Auto Insurance Dispute, Judge Rules
LAS VEGAS - An insured has failed to plead sufficient facts to support his claims in an insurance breach of contract and bad faith lawsuit against his automobile insurance provider who the insured alleged failed to properly compensate him under the terms of the underinsured motorist (UIM) provision in his policy, a federal judge in Nevada ruled Sept. 25 in granting the insurer's motion to dismiss (Wayne Yoshimoto v. Safeco Insurance Co. of Illinois, No. 17-0382, D. Nev., 2017 U.S. Dist. LEXIS 156232).



Georgia's Bad Faith Statute Does Not Preclude Fraud, RICO Claims, Federal Judge Says
COLUMBUS, Ga. - Georgia's bad faith statute does not preclude insureds from alleging claims for fraud and violations of the Georgia Racketeer Influenced and Corrupt Organizations Act (RICO) because the fraud and RICO claims are not based on the insurer's failure to pay a claim, a Georgia federal judge said Oct. 3 in refusing to dismiss the RICO and fraud claims (Holly Steigel, et al. v. USAA Casualty Insurance Co., et. al., No. 16-346, M.D. Ga., 2017 U.S. Dist. LEXIS 163341).



Summary Judgment Motion In Bad Faith Lawsuit Over Auto Insurance Claim Denied
DENVER - Genuine issues of material fact exist as to the exact amount of medical expenses an insured incurred as a result of an automobile accident with an underinsured motorist and whether an insurer acted in bad faith in its handling of the claim, a federal judge in Colorado ruled Sept. 27 in denying the insured's summary judgment motion (Cort Dennis v. American Mutual Insurance Co., No. 15-2562, D. Colo., 2017 U.S. Dist. LEXIS 159510).



Bifurcation Is Not Warranted In Property Damage Coverage Dispute, Federal Judge Says
LAS CRUCES, N.M. - A New Mexico federal judge on Sept. 26 denied a motion to bifurcate and stay discovery of the extracontractual claims at issue in a property damage coverage dispute because bifurcation would prolong the case and the insurer would not be prejudiced if the claims were tried together (Welcome Properties 201 LLC v. National Fire & Marine Insurance Co., No. 16-1301, D. N.M., 2017 U.S. Dist. LEXIS 157541).



Severing Bad Faith Claims Promotes Judicial Efficiency, Federal Magistrate Judge Says
NEWARK, N.J. - Severing and staying an insured's bad faith claims in a storm-related damage coverage suit would promote judicial efficiency and avoid prejudice against the insurer, a New Jersey federal magistrate judge said Sept. 26 in granting the insured's motion to bifurcate the bad faith claims (Legends Management Co. v. Affiliated FM Insurance Co., No. 16-1608, D. N.J., 2017 U.S. Dist. LEXIS 158898).



Illinois Federal Judge Decides Admissible Evidence In Bad Faith Coverage Dispute
CHICAGO - An Illinois federal judge on Sept. 27 determined that an insured's claims for punitive damages and attorney fees should be withheld from a jury but that evidence related to how long the insurer took to process the insured's claim is relevant for the jury to hear as it pertains to the insured's claim for bad faith arising out of a dispute for lost business property and income caused by the contamination of the insured's property and business with lead dust (Jordan Mozer & Associates Ltd. v . General Casualty Company of Wisconsin, No. 14-10264, N.D. Ill., 2017 U.S. Dist. LEXIS 159518).



Pa. High Court Says Proof Of Insurer's Ill Will Is Not Required To Prove Bad Faith
PITTSBURGH - The Pennsylvania Supreme Court on Sept. 28 determined that the imposition of a recklessness standard when deciding whether an insurer acted in bad faith is consistent with the intent of Pennsylvania's bad faith statute, but said proof of an insurer's motive of self-interest or ill-will is not required to recover damages under Pennsylvania's bad faith statute (Matthew Rancosky v. Washington National Insurance Co., No. 28 WAP 2016, Pa. Sup., 2017 Pa. LEXIS 2286).



Judge: 'Deleterious Substances' Exclusion Bars Coverage For Insured's Grout Dust Work
PHILADELPHIA - A commercial general liability insurer did not breach its insurance contract nor did it act in bad faith in denying a claim, a Pennsylvania federal judge ruled Sept. 29 because "deleterious substances" exclusion precluded coverage for grout dust from construction work that led to property damage (Collin R. Ginther v. Preferred Contractors Insurance Company Risk Retention Group LLC, No. 16-686, E.D. Pa., 2017 U.S. Dist. LEXIS 161720).



Judge: Disagreement And Lawsuit Are Not 'Interrelated Wrongful Acts' Under Policy
SIOUX FALLS, S.D. - A South Dakota federal judge on Sept. 22 held that a 2013 disagreement and a 2015 lawsuit are not "interrelated wrongful acts" under an insurance policy and, therefore, the insured is owed directors, officers and entity liability coverage for the underlying lawsuit brought against it, its CEO and certain of its board members (South Dakota Network, LLC v. Twin City Fire Insurance Company Co., No. 16-04031, D. S.D., 2017 U.S. Dist. LEXIS 154886).



Judge Finds Fact Issue On Use Of Reinsurance Costs For Costs Of Insurance Increase
PHILADELPHIA - A Pennsylvania federal judge ruled Sept. 22 that it is not implausible that a provision allowing a life insurer to consider that future "expenses" for a cost of insurance (COI) calculus would not include reinsurance costs (EFG Bank AG, Cayman Branch, et al. v. Lincoln National Life Insurance Co., No. 17-02592, E.D. Pa., 2017 U.S. Dist. LEXIS 154985).