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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®



 



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).



Federal Judge Says Amount In Controversy Could Exceed $75,000 If Bad Faith Is Proven
CAMDEN, N.J. - Although an insured's claim for breach of contract does not exceed the federal jurisdictional minimum amount in controversy of $75,000, a New Jersey federal judge on Sept. 12 refused to dismiss the insured's complaint, noting that if the insured is successful in proving that the insurer acted in bad faith in handling an underinsured motorist claim, the amount in controversy could exceed $75,000 (Beth Gussman v. Government Employees Insurance Co., No. 16-8563, D. N.J., 2017 U.S. Dist. LEXIS 146995).



Federal Judge Determines Bifurcation Of Bad Faith Claims Not Warranted
WILLIAMSPORT, Pa. - A Pennsylvania federal judge on Sept. 18 denied an automobile insurer's motion to sever and stay its insureds' bad faith claim after determining that bifurcation would not promote judicial economy and that the insurer would not be prejudiced if the claims are tried together (David Newhouse et al. v. GEICO Casualty Co., No. 17-477, M.D. Pa., 2017 U.S. Dist. LEXIS 150793).



Bifurcation Of Bad Faith Claims Not Warranted In Auto Coverage Dispute
BILLINGS, Mont. - Bifurcation of a declaratory judgment claim from bad faith claims is not warranted because the question of whether the claimant, who is seeking uninsured motorist benefits, was injured in an accident is relevant to the question of whether the insurer acted in bad faith in its handling of the claim, a Montana federal judge said Sept. 14 (Bradley D. Routh v. Travelers Casualty Insurance Company of America, No. 17-42, D. Mont., 2017 U.S. Dist. LEXIS 149406



Nevada Federal Judge Says Bad Faith Claim, Unfair Practices Claim Can Stand
LAS VEGAS - A Nevada federal judge on Sept. 19 denied an insurer's motion for summary judgment as it pertained to a plaintiff's claims for unfair settlement practices and bad faith because the plaintiff provided sufficient evidence to support the claims (Melinda Booth Dogra et al., v. Liberty Mutual Fire Insurance Co., No. 14-1841, D. Nev., 2017 U.S. Dist. LEXIS 151542).



Bad Faith, Breach Of Contract Claims Dismissed; Policy Was Canceled Before Fire Loss
BIRMINGHAM, Ala. - An Alabama federal magistrate judge on Sept. 13 dismissed an insured's suit seeking coverage for fire damage to the insured's home after determining that the insured's claims for breach of contract and bad faith cannot stand because the evidence shows that the policy at issue was canceled before the fire occurred (Elizabeth Davis v. State Farm Fire and Casualty Co., No. 15-2226, N.D. Ala., 2017 U.S. Dist. LEXIS 147897).



Insured Offered Sufficient Evidence In Support Of Breach Of Contract, Bad Faith Claims
SCRANTON, Pa. - A Pennsylvania federal judge on Sept. 19 denied an insurer's motion to dismiss as it pertained to the insured's claims for breach of contract and bad faith because the insured presented sufficient evidence that she sustained damages as a result of the insurer's conduct in the handling of her property damage claim (Jennifer Pratts v. State Farm Fire and Casualty Co., No. 16-2385, M.D. Pa., 2017 U.S. Dist. LEXIS 151650).



Workers' Comp Insurer Promptly Investigated Claim After Receiving Notice
PHOENIX - An Arizona federal judge on Sept. 6 granted a workers' compensation insurer's motion for summary judgment on an insured's bad faith claim after determining that there is no evidence proving that the insurer failed to promptly investigate the claim after receiving notice of the insured's injury (Manuel Roman v. Berkshire Hathaway Homestate Insurance Co., No. 15-2447, D. Ariz., 2017 U.S. Dist. LEXIS 144132).



Judge Refuses To Strike Class Allegations, Finds UCL Claims Are Representative
SAN FRANCISCO - Since a construction company seeks to assert claims for violation of California's unfair competition law (UCL) as representative claims under state law, rather than as class claims under federal law, a California federal judge on Sept. 12 denied an insurer's motion to strike parts of the company's complaint filed against it in relation to its issuance of general liability insurance policies (Albert D. Seeno Construction Company, et al. v. Aspen Insurance UK Limited, No. 17-cv-03765, N.D. Calif., 2017 U.S. Dist. LEXIS 147646).



Kansas Federal Judge Allows Insured To Add Breach Of Contract, Bad Faith Claims
WICHITA, Kan. - An insured seeking coverage for hailstorm damage to two commercial buildings is permitted to amend its complaint to add claims for breach of contract and bad faith because the addition of the claims would not be futile and the insurers will not be prejudiced as a result of the amendment, a Kansas federal judge said Sept. 8 (Flex Financial Holding Co. v. OneBeacon Insurance Group LLC et al., No. 15-7205, D. Kan., 2017 U.S. Dist. LEXIS 145349).



Tennessee Federal Judge Says Bifurcation Appropriate For Trial Of Bad Faith Claim
MEMPHIS, Tenn.- Bifurcation of a bad faith claim for trial in a coverage dispute over damaged computer hard drives is appropriate because judicial economy will be promoted and prejudice against the insurer will be avoided, a Tennessee federal judge said Sept. 18 in granting the insurer's motion to bifurcate the bad faith claim (Periodontal Associates of Memphis v. Peerless Indemnity Insurance Co., No. 16-2751, W.D. Tenn., 2017 U.S. Dist. LEXIS 150989).



Company Urges 9th Circuit To Reverse; Says Insurance Policy Should Cover Gas Leak
SAN FRANCISCO - A company that takes raw landfill gas and purifies it into pipeline quality natural gas is asking the Ninth Circuit U.S. Court of Appeals to reverse a ruling by a district court judge that high velocity landfill gas was not an "external cause" of damage at the company's plant, and therefore coverage under the company's insurance policy was not available (Ingenco Holdings LLC, et al. v. Ace American Insurance Company, No. 16-35792, 9th Cir.).



Judge: Insureds Sufficiently Allege Insurer Considered Higher Reinsurance Costs
PHILADELPHIA - A class of owners of life insurance policies adequately alleged that a life insurer's admitted consideration of lower investment income and higher reinsurance costs constituted breaches of the policies, a Pennsylvania federal judge ruled Sept. 11 (In re: Lincoln National Co. Litigation, No. 16-06605, E.D. Pa., 2017 U.S. Dist. LEXIS 146904).



Panel: State Trial Court Properly Denied Summary Judgment In Bad Faith Suit
LAKE CHARLES, La. - In a split decision, a Louisiana appellate panel on Aug. 31 upheld a state court's ruling that an insurer is not entitled to summary judgment on an insured's bad faith claim, finding that the trial court failed to properly make a factual determination regarding the "reasonableness of the liability dispute" being argued (Trae Thibodeaux v. Steven Arvie Jr., et al., No. 17-625, La. App., 3rd Cir., 2017 La. App. LEXIS 15520).



Judge: Plaintiff Properly Pleaded Elements Of Insurance Bad Faith Claim
RENO, Nev. - An insurer is not entitled to judgment on the pleadings on claims that it breached its contract and acted in bad faith in its handling of an underinsured motorist claim because a plaintiff has properly pleaded the elements of her claims, a federal judge in Nevada ruled Aug. 31 in denying the insurer's motion for judgment on the pleadings (Michael Wurm, et al. v. Markel Insurance Co., No. 16-0244, D. Nev., 2017 U.S. Dist. LEXIS 140487).



Judge Dismisses Remaining Claims In Third-Party Insurance Bad Faith Suit
SAN ANTONIO - Third-party claimants may not bring a claim for insurance bad faith against an automobile insurance provider because they have failed to show that a duty under G.A. Stowers Furniture Co. v. American Indemnity Co. existed between the insurer and its insured since the claimants had failed to make any settlement demand within the insured's policy limits, a federal judge in Texas ruled Aug. 29 in granting the insurer's motion for judgment on the pleadings (Amanda Montoya, et al. v. State Farm Mutual Automobile Insurance Co., No. 16-0005, W.D. Texas, 2017 U.S. Dist. LEXIS 138991).



Pennsylvania Judge: Court Should Affirm Judgment For Insurer That Tried To Settle
PHILADELPHIA - A Philadelphia County Court of Common Pleas judge on Aug. 17 issued an opinion concluding that the Pennsylvania Superior Court should affirm a trial court's order granting an insurer's motion for summary judgment in a bad faith suit stemming from a motor vehicle accident, finding that the insurer attempted to settle and that the difference between the offer and the subsequent arbitration award is immaterial (Gregory Boleslavsky v. Travco Insurance Company, No. 151000886, Pa. Comm. Pls., Philadelphia Co., 2017 Phila. Ct. Com. Pl. LEXIS 257).



North Carolina Federal Judge: No Evidence That Insurer Refused To Pay Valid Claim
STATESVILLE, N.C. - A North Carolina federal judge on Sept. 1 dismissed a bad faith claim alleged against an insurer in an automobile coverage suit after determining that there is no evidence that the insurer recognized that the insured's claim was a valid claim under the policy and then refused to pay (New Hickory Pizza Inc., d/b/a Domino's Pizza v. TIG Insurance Co., No. 16-164, W.D. N.C., 2017 U.S. Dist. LEXIS 142091).



Judge: Insureds Did Not Show That Insurer Conducted Bad Faith Investigation
NASHVILLE, Tenn. - Insureds failed to show that their automobile insurance provider acted in bad faith or breached its contract with the insureds in its handling of an underinsured motorist claim, a federal judge in Tennessee ruled Aug. 25 in granting the insurer's motion to dismiss for failure to state a claim for relief (Hanan Endrawes, et al. v. Safeco Insurance Co., No. 17-0929, M.D. Tenn., 2017 U.S. Dist. LEXIS 137040).



Judge Dismisses Bad Faith Claim In Homeowners Insurance Coverage Dispute
PHOENIX - An insurer acted "reasonably" in its handling of an investigation of a homeowners insurance claim, and insureds have failed to show that the insurer acted in bad faith in any way, a federal judge in Arizona ruled Aug. 25 in granting in part and denying in part the insurer's motion for summary judgment in an insurance breach of contract and bad faith lawsuit (Charles Mastowski, et al. v. American National Property and Casualty Co., No. 15-1893, D. Ariz., 2017 U.S. Dist. LEXIS 136862).



No Coverage For Cracking, Crumbling Foundation, Connecticut Federal Judge Says
NEW HAVEN, Conn. - No coverage is owed for an insured's foundation damage caused by a chemical reaction because the damage was not sudden and accidental as required by the policy's exception to the collapse exclusion, a Connecticut federal judge said Aug. 29 in dismissing the insured's claims of breach of contract and bad faith (Daniel Adams v. Allstate Insurance Co., No. 16-1360, D. Conn., 2017 U.S. Dist. LEXIS 139998).



Bad Faith Claim Dismissed, Breach Of Contract Claim Stands In Coverage Dispute
NEW HAVEN, Conn. - A Connecticut federal judge on Aug. 28 held that despite the court's rejection of a homeowners insurer's coverage position regarding concrete wall cracks in the insureds' basement, the evidence on record is insufficient for a reasonable jury to find that the insurer denied the insureds' claim in bad faith (Michael Roberts v. Liberty Mutual Fire Insurance Co., No. 13-0435, D. Conn., 2017 U.S. Dist. LEXIS 137412).



Connecticut Federal Judge Finds No Coverage Owed For Foundation Damages
NEW HAVEN, Conn. - A Connecticut federal judge on Aug. 29 granted an insurer's motion to dismiss breach of contract and bad faith claims in a suit seeking coverage for a cracked foundation after determining that the cause of the foundation loss was not sudden and accidental as required for coverage to exist under the policy (Sandra Miller v. Allstate Insurance Co., No. 16-2059, D. Conn., 2017 U.S. Dist. LEXIS 140023).



Judge Finds Failing Concrete Walls Not Covered In Home's Insurance Policy
NEW HAVEN, Conn. - An insurer did not breach its contract when it refused to pay to correct structural concrete issues caused by a chemical reaction because under the policy a home's walls must actually fall, a federal judge in Connecticut held Aug. 28 (Barry Agosti, et al. v. Merrimack Mutual Fire Insurance Co., et al., No 16-1686, D. Conn., 2017 U.S. Dist. LEXIS 137411).



No Sudden Or Accidental Damage, Federal Judge Says In Dismissing Bad Faith Claim
NEW HAVEN, Conn. - No coverage is afforded for damage to the foundation walls of an insured home because the damage was not sudden and accidental as required by the terms of the policy at issue, a Connecticut federal judge said Aug. 29 in dismissing the insureds' claims for breach of contract and bad faith (Linda Clough, et al. v. Allstate Insurance Co., et al., No. 17-140, D. Conn., 2017 U.S. Dist. LEXIS 140009).



Pennsylvania Federal Judge: Insured Failed To Prove Carrier Acted In Bad Faith
PHILADELPHIA - A Pennsylvania federal judge on Aug. 25 granted an insurer's motion for partial summary judgment on a bad faith claim after determining that the insured, seeking coverage for water damages, failed to show by clear and convincing evidence that State Farm acted unreasonably in its denial of his insurance claim (Darryl Brodzinski v. State Farm Fire and Casualty Co., No. 16-6125, E.D. Pa., 2017 U.S. Dist. LEXIS 136644).



Professional Services Exclusion Bars Coverage, Pennsylvania Court Affirms
HARRISBURG, Pa. - A Pennsylvania court on Aug. 23 affirmed a lower court's finding that an insurer has no duty to defend or indemnify against an underlying negligence lawsuit because the allegations arise from a bodily injury that was sustained as a result of the insured's rendering of or failure to render professional services (Debra M. Campayno, et al. v. Auto-Owners Insurance, et al., No. 1210 WDA 2016, No. 1255 WDA 2016, Pa. Super., 2017 Pa. Super. Unpub. LEXIS 3195).



Federal Judge Refuses To Reconsider Ruling In Equitable Indemnification Dispute
SACRAMENTO, Calif. - A California federal judge on Aug. 21 denied an insurer's motion to reconsider the court's denial of its summary judgment motion in an equitable indemnification dispute between it and another insurer (Public Service Mutual Insurance Co. v. Liberty Surplus Insurance Corp., No. 14-00226, E.D. Calif., 2017 U.S. Dist. LEXIS 134339).



Federal Magistrate: Claims That Insured Failed To Pay Wages Do Not Trigger Coverage
SAN JOSE, Calif. - A California federal magistrate judge on Aug. 31 held that a professional liability insurer owes no coverage for underlying class action claims alleging that its staffing services company insured failed to pay wages (W.G. Hall, LLC v. Zurich American Insurance Co., No. 17-00646, N.D. Calif., 2017 U.S. Dist. LEXIS 141389).