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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®



 



Idaho Supreme Court Majority Reverses, Remands Breach Of Contract Ruling
BOISE, Idaho - The majority of the Idaho Supreme Court on May 11 reversed a judgment entered in favor of an insurer after determining that the trial court erred in finding that the insurer did not breach its contract or act in bad faith in its handling of its insureds' claim for the repair of a motor home (Joel W. Harmon et al., v. State Farm Mutual Automobile Insurance Co., No. 43802, 2017, Idaho Sup., 2017 Ida. LEXIS 127).



Federal Judge Stays Bad Faith Suit Pending Appeal In Underlying Action
SEATTLE - A stay of proceedings in an insurance breach of contract and bad faith lawsuit is proper because the stay will not substantially injure the plaintiffs, a federal judge in Washington ruled May 8 in granting an insurer's motion in a third-party automobile insurance dispute (Kathleen Link, et al. v. American Family Mutual Insurance Co., No. 16-1117, W.D. Wash., 2017 U.S. Dist. LEXIS 70046).



Judge Dismisses Bad Faith Claim In Class Action Suit Against Automobile Insurer
SCRANTON, Pa. - A Pennsylvania federal judge on May 10 granted an automobile insurer's motion to dismiss bad faith and other claims in a class action brought by a woman claiming that she was wrongfully denied medical benefits coverage following an automobile accident, but allowed claims brought under the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) to proceed (Sayles v. Allstate Insurance Co., No. 16-1534, M.D. Pa., 2017 U.S. Dist. LEXIS 71760).



Judge Green-Lights Expert Opinions In Bad Faith Insurance Action
TAMPA, Fla. - Experts for both a driver injured in a crash and an insurance company accused of acting in bad faith in not settling the driver's claim can offer their opposing opinions based on their qualifications and sound methodology, as long as the opinions are not legal in nature, a Florida federal judge held May 12 (Nicky B. Dudash v. Southern-Owners Insurance Co., No. 8:16-cv-290, M.D. Fla., 2017 U.S. Dist. LEXIS 73002).



California Appellate Panel Affirms Dismissal Of Bad Faith Suit As Time-Barred
LOS ANGELES - A state trial court's dismissal of an insured's breach of contract and bad faith claims in a homeowners insurance dispute was proper because the insured's claims were filed after the claims' one-year statute of limitations had run, a California appellate panel ruled in affirming on May 12 (Heather A. Smillie v. State Farm General Insurance Co., No. B268353, Calif. App., 2nd Dist., Div. 8, 2017 Calif. App. Unpub. LEXIS 3252).



Claims In Hurricane Irene Dispute Are Time-Barred, 4th Circuit Says In Reversal
RICHMOND, Va. - The Fourth Circuit U.S. Court of Appeals on May 3 held that a breach of contract and bad faith lawsuit against a federal flood insurer arising from Hurricane Irene damage is barred by the one-year statute of limitations pursuant to its Standard Flood Insurance Policy (SFIP), reversing a lower court's ruling that awarded the insureds $233,398 for breach of contract, $700,194 for bad faith and $63,962.50 in attorney fees (Gary Woodson, et al. v. Allstate Insurance Co., Nos. 16-1935 and 16-2018, 4th Cir., 2017 U.S. App. LEXIS 7862).



Texas Panel Refuses To Revisit Ruling In Favor Of Insurer, Adjuster
FORTH WORTH, Texas - A Texas appeals panel on May 4 denied insureds' motion to reconsider a Feb. 9 ruling that found they failed to produce competent evidence to raise a genuine issue of material fact regarding whether their property damage loss occurred during their homeowners insurance policy period (Richard Seim, et al. v. Allstate Texas Lloyds, et al., No. 02-16-00050, Texas App., 2nd Dist., 2017 Tex. App. LEXIS 4068).



Amount In Controversy In Bad Faith Suit Exceeds Statutory Limit, Judge Rules
HOUSTON - Remand of an insurance breach of contract and bad faith lawsuit to state court is not proper because the amount in controversy exceeds the statutory limit, a federal judge in Texas ruled May 5 in denying an insured's motion (Pamela Crouch v. Nationwide General Insurance Co., No. 17-634, S.D. Texas, 2017 U.S. Dist. LEXIS 68814).



Issues Of Fact Exist In Water, Mold Damage Suit, 10th Circuit Majority Says
DENVER - The majority of the 10th Circuit U.S. Court of Appeals on May 4 agreed with an insured that a Utah federal magistrate judge erred in granting judgment in an insurer's favor because genuine issues of material fact exist regarding whether water and mold damage occurred over an extensive period of time and whether the damage was caused by a sudden and accidental escape of water (Thomas Wheeler v. Allstate Insurance Co., et al., No. 15-4159, 10th Cir., 2017 U.S. App. LEXIS 7954).



Judge Dismisses Bad Faith Claims As Untimely In Dispute Over $15.1M Judgment
BIRMINGHAM, Ala. - An Alabama federal judge on May 11 dismissed insureds' bad faith claims as untimely against two insurers in the insureds' lawsuit seeking indemnification for an underlying $15,150,000 judgment that arose from a fatal car accident involving intoxicated minors (Ibrahim Sabbah v. Nationwide Mutual Insurance Co., No. 15-1772, N.D. Ala., 2017 U.S. Dist. LEXIS 71726).



Adjuster Was Improperly Joined To Coverage Dispute Over Storm Damage, Judge Says
SHERMAN, Texas - A Texas federal judge on May 16 denied insureds' motion to remand their breach of contract and bad faith lawsuit arising from storm damage, finding that they failed to allege a claim that is plausible on its face against an insurance adjuster (Hidden Cove Park and Marina, et al. v. Lexington Insurance Co., et al., No. 17-00193, E.D. Texas, 2017 U.S. Dist. LEXIS 74097).



Insured May Be Able To Recover Against Adjuster In Bad Faith Suit, Judge Rules
DALLAS - A federal judge in Texas on May 10 ruled that remand of an insurance breach of contract and bad faith lawsuit to state court is warranted because an insured has shown that it may recover against the adjuster for failing to offer a fair settlement on a commercial property insurance claim (Arlington Heights Memorial Post No. 8234 Veterans Of Foreign Wars of the United States, Fort Worth, Texas, v. Covington Specialty Insurance Co., et al., No. 16-3112, N.D. Texas, 2017 U.S. Dist. LEXIS 71125).



California Federal Judge Allows Counterclaims In Sewage Spill Coverage Suit
LOS ANGELES - A California federal judge on May 4 partially granted a motion to assert breach of contract and bad faith counterclaims against an insurer in a coverage dispute arising out of a sewage spill after determining that the insurer would not be prejudiced if the counterclaims were asserted by the defendants (Travelers Property Casualty Company of America v. Mountain Movers Engineering Contactors Inc., No. 16-2127, S.D. Calif.; 2017 U.S. Dist. LEXIS 68575).



Legal Conclusions Out, Rest Of Testimony In, Judge Says In Coverage Row
MOBILE, Ala. - The legal nature of the opinions of one expert witness for an insurer in a coverage dispute over underlying trademark infringement claims precludes the expert from testifying about such opinions, but the expert's other opinions, and those of a second expert for the insurer, are admissible under Daubert, an Alabama federal judge held May 12 (Hibbett Patient Care, LLC, et al. v. Pharmacists Mutual Insurance Co., No. 16-0231, S.D. Ala., 2017 U.S. Dist. LEXIS 72786).



No Support For Breach Of Contract Tied To Payment Of Reinsurance Deductible
NEW YORK - In support of a breach of contract claim in an insurance coverage dispute over flood damage at a construction site, construction companies failed to show that their insurer's settlement caused them to pay a $50,000 deductible under a captive reinsurance agreement, a New York federal judge ruled May 4, dismissing the complaint (Keller Foundations LLC, et al. v. Zurich American Insurance Co., No. 16-6751, S.D. N.Y., 2017 U.S. Dist. LEXIS 68902).



Panel Affirms Dismissal Of Bad Faith Lawsuit Against Automobile Insurer
ATLANTA - A federal district court did not err in excluding certain testimony from an insurer's adjusters in an insurance bad faith lawsuit because an insured failed to show that the excluded testimony was a legally permissible opinion, an 11th Circuit U.S. Court of Appeals panel ruled April 20 in affirming (John F. Hooks v. GEICO General Insurance Co., No. 16-16767, 11th Cir., 2017 U.S. App. LEXIS 6860).



Judge Refuses To Dismiss Bad Faith Claims In Vehicle Accident Coverage Case
TAMPA, Fla. - A Florida federal judge on May 1 denied an insurer's motion to dismiss bad faith claims against it in relation to coverage for an automobile accident, finding that the question of whether the insurer acted in bad faith when it failed to participate in settlement negotiations should be decided by a jury (Nicky B. Dudash v. Southern-Owners Insurance Co., No. 16-290, M.D. Fla., 2017 U.S. Dist. LEXIS 65367).



Federal Judge Remands Bad Faith Suit Based On Amount In Controversy
DALLAS - A Texas federal judge on April 21 remanded an insured's suit alleging bad faith and breach of contract after determining that the amount in controversy does not meet the jurisdictional minimum to remain in federal court (Doris Marie Washington v. Geico General Insurance Co., No. 17-961, N.D. Texas, 2017 U.S. Dist. LEXIS 60828).



Judge: Insurer In Bad Faith Suit Failed To Show Why Offer Was Appropriate
SPOKANE, Wash. - A federal judge in Washington on April 27 partially granted an insured's summary judgment motion in an insurance bad faith lawsuit, ruling that an insurer, in offering a settlement on an underinsured motorist claim, failed to provide any explanation as to why it felt the settlement amount it was offering was a fair value (Richard H. Phillips III v. USAA Casualty Insurance Co., No. 16-0381, E.D. Wash., 2017 U.S. Dist. LEXIS 64081).



Nevada Federal Judge Finds No Bad Faith, Says Policy Excluded Off-Road Vehicles
LAS VEGAS - An insurer did not act in bad faith in denying a claim for uninsured/underinsured motorist benefits because the insurer investigated the claim and reasonably denied coverage based on the policy's exclusion for off-road vehicles, a Nevada federal judge said April 26 (Jennifer Walker, et al. v. State Farm Mutual Automobile Insurance Co., No. 16-986, D. Nev., 2017 U.S. Dist. LEXIS 63269).



Judge Declines To Remand Insurance Bad Faith Lawsuit To State Court
LAS VEGAS - Remand of an insurance breach of contract and bad faith lawsuit to state court is not warranted because the amount in controversy exceeds statutory limits and because an insured brought his motion to remand pursuant to the wrong rules, a federal judge in Nevada ruled April 26 in denying the insured's motion (Robert Conway v. National General Insurance Co., No. 17-748, D. Nev., 2017 U.S. Dist. LEXIS 63147).



Federal Magistrate Judge Says Bifurcation Could Delay Resolution Of Insureds' Suit
ALBUQUERQUE, N.M. - A New Mexico federal judge on April 24 denied an insurer's motion to bifurcate insureds' extracontractual claims from a breach of contract claim after determining that bifurcation could result in a significant delay of the resolution of the case (Lisa Yazzie, et al. v. Government Employees Insurance Co., et al., No. 16-1085, D. N.M., 2017 U.S. Dist. LEXIS 61459).



Insurer Did Not Act In Bad Faith In Storm Damage Dispute, 10th Circuit Affirms
DENVER - The 10th Circuit U.S. Court of Appeals on April 19 rejected insureds' argument that an insurer acted in bad faith by unreasonably delaying an appraisal and by failing to conduct an adequate claim investigation, affirming a lower federal court's ruling in favor of the insurer (Hayes Family Trust, et al. v. State Farm Fire and Casualty, No. 15-6231, 10th Cir., 2017 U.S. App. LEXIS 6713).



Bad Faith, Breach Of Fiduciary Duty Claims Severed In Coverage Suit
NEWARK, N.J. - A New Jersey federal judge on April 25 denied an insurer's motion to dismiss but stayed the insured's claims for bad faith and breach of fiduciary duty until the insured's declaratory judgment and breach of contract claims are resolved after determining that staying those claims will better help to manage the case (Port Liberte Homeowners Association Inc. v. Lexington Insurance Co., No. 16-7934, D. N.J., 2017 U.S. Dist. LEXIS 63394).



Judge Refuses To Revisit Ruling In Coverage Dispute Over $2.6M In Punitives
PHILADELPHIA - A Pennsylvania judge on March 21 rejected the appeal of a Jan. 20 ruling that a commercial umbrella liability insurer has no duty to indemnify its insured against $2.6 million in punitive damages that it paid to settle an underlying wrongful death and survival action (Bensalem Racing Association, Inc., et al. v. Ace Property and Casualty Insurance Co., No. 4858, Pa. Comm. Pls., Philadelphia Co.).



California Federal Judge Tosses Intentional Infliction Of Emotional Distress Claims
SACRAMENTO, Calif. - A California federal judge on April 20 dismissed with prejudice an elderly man's claims of intentional infliction of emotional distress (IIED) against Mutual of Omaha because the man has not identified "any extreme and outrageous conduct" by the defendant (Donald Mann v. Mutual of Omaha, et al., No. 16-2560, E.D. Calif., 2017 U.S. Dist. LEXIS 60579).



Washington High Court Majority Says Coverage Owed For Negligent Installation
SEATTLE - The majority of the Washington Supreme Court on April 27 determined that an insurer has a duty to defend underlying claims arising out of carbon monoxide poisoning because the efficient proximate cause of the loss was the negligent installation of a hot water heater, which is a covered occurrence under the policy (Zhaoyun Xia, et al. v. ProBuilders Specialty Insurance Co., et al., No. 92436-8, Wash. Sup., 2017 Wash. LEXIS 443).



N.J. Panel: Broker Had No Duty To Provide Quotes For Higher Policy Limits
TRENTON, N.J. - A New Jersey panel on May 1 rejected a tool manufacturer insured's argument that its insurance broker breached a duty to provide additional flood quotes for its Harrison, N.J., commercial facilities, affirming a lower court's ruling in favor of the broker in a dispute arising from Superstorm Sandy flood damage (C.S. Osborne & Co., Inc. v. The Charter Oak Fire Insurance Co., et al., No. A-2182-15T4, N.J. Super., App. Div., 2017 N.J. Super. Unpub. LEXIS 1051).



Parties Debate Whether Defendant Pleaded Negligence Claim In Insurance Dispute
NEW ORLEANS - Parties in an insurance dispute recently asked the Fifth Circuit U.S. Court of Appeals to determine whether a federal district court erred in ruling that a third-party defendant failed to properly plead her negligence claim against an insurer and abused its discretion in denying the defendant's motion for leave to amend her complaint to add a claim for bad faith (Jenny Berry v. Banner Life Insurance Co., No. 16-51198, 5th Cir.).



9th Circuit Asked To Decide Whether Summary Judgment Was Proper In Bad Faith Suit
SAN FRANCISCO - Parties in an insurance dispute asked the Ninth Circuit U.S. Court of Appeals recently to determine whether a federal district court erred in granting an insurer's motion for summary judgment on claims that it breached its duty to defend and acted in bad faith in denying coverage under an indemnity insurance policy (Sunrise Specialty Co. Inc., et al. v. Scottsdale Insurance Co., No. 16-16856, 9th Cir.).



Judge Finds Bad Faith Claim Insufficient In Auto Insurance Dispute
PHILADELPHIA - An insured has failed to plead whether his insurance bad faith claim is a common-law contract law claim or a statutory claim, a federal judge in Pennsylvania ruled April 10 in dismissing the bad faith claim with leave to amend (Jeremy Z. Mittman v. Nationwide Affinity Insurance Co., No. 16-04658, E.D. Pa., 2017 U.S. Dist. LEXIS 54220).



Bad Faith Claim Against Insurer Is Not Supported, Federal Magistrate Judge Says
HARRISBURG, Pa. - A review of the communications between an insurer and its insured's counsel after the insurer was notified that the insured was pursuing a claim for underinsured motorist benefits does not support a claim of bad faith against the insurer, a Pennsylvania federal magistrate judge said April 10 in granting the insurer's motion for summary judgment (Tracey Ridolfi v. State Farm Mutual Automobile Insurance Co., No. 15-859, M.D. Pa., 2017 U.S. Dist. LEXIS 54267).



Insured's Bad Faith Suit Barred By Statute Of Limitations, Judge Rules
TAMPA, Fla - An insured's bad faith claim is based on his insurer's alleged breach of its fiduciary duty to him and is, thus, subject to a four-year statute of limitations, a federal judge in Florida ruled April 18 in granting the insurer' motion to dismiss (Waldermar Baranowski v. GEICO General Insurance Co., No. 17-301, M.D. Fla., 2017 U.S. Dist. LEXIS 5885).



Failure To Pay Judgment Constitutes Bad Faith, Federal Judge Determines
SEATTLE - A Washington federal judge on April 19 granted an insured's motion for summary judgment after determining that the insured presented sufficient evidence that the insurer's failure to pay a judgment entered in favor of the insured constitutes bad faith (Arika Prince v. State Farm Mutual Automobile Insurance Co., No. 16-563, W.D. Wash., 2017 U.S. Dist. LEXIS 59794).



Oklahoma Federal Judge Says Insureds' Bad Faith Claim Is Not Supported By Facts
TULSA, Okla. - An Oklahoma federal judge on April 7 granted an insurer's motion to dismiss claims of bad faith and intentional infliction of emotional distress alleged by insureds seeking coverage for damages to their home sustained by high winds after determining that the insureds failed to provide any facts in support of either claim (Lance W. Hightower, et al. v. USAA Casualty Insurance Co., et al., No. 16-274, N.D ..Okla., 2017 U.S. Dist. LEXIS 53645).



In Remanded False Claims Act Suit, Discovery Limited To Identified Properties
GULFPORT, Miss. - In a case concerning an insurer's False Claims Act (FCA) violations on Hurricane Katrina claims, a Mississippi federal judge on April 12 granted the parties' motions to reopen the case, which was remanded after a U.S. Supreme Court ruling, limiting initial discovery on those purported violations to properties previously identified in a list provided by the insurer (United States, ex rel. Cori Rigsby, et al. v. State Farm Fire & Casualty Co., No. 1:06-cv-00433, S.D. Miss.).



Texas Federal Judge Says Insurer Had Reasonable Basis For Denying Claim
WACO, Texas - Because a property insurer had a reasonable basis to deny an insured's claim for roof damages incurred as the result of a hailstorm, a Texas federal judge on April 6 granted the insurer's motion for summary judgment as it pertained to the insured's claims for bad faith and violations of the Texas Insurance Code and Texas Deceptive Trade Practices Act (Stephen Hahn v. United Fire and Casualty Co., No. 15-218, W.D. Texas, 2017 U.S. Dist. LEXIS 53178).



New York Federal Judge Grants Insurers' Motion To Withdraw Bankruptcy Reference
NEW YORK - A New York federal judge on April 17 granted a motion filed by two insurers to withdraw an insured's adversary proceeding from bankruptcy court because the bankruptcy court does not have the authority to decide the breach of contract and bad faith claims alleged against the insurers in the adversary proceeding (Phillip Michael Scott v. AIG Property Casualty Co., et al., No. 17-1052, S.D. N.Y., 2017 U.S. Dist. LEXIS 58339).



Bad Faith Counterclaim Based On Same Facts As Breach Of Contract Claim, Justice Says
NEW YORK - A New York justice on April 11 dismissed a counterclaim for bad faith alleged against an insurer because the bad faith counterclaim is premised on the same set of facts as the breach of contract counterclaim (Travelers Property Casualty Company of America, et al. v. ICCO Cheese Co. Inc., No. 652787/2016, N.Y, Sup., New York Co., 2017 N.Y. Misc. LEXIS 1363).



Judge: Insured Failed To Show Reconsideration In Bad Faith Suit Warranted
INDIANAPOLIS - An insured failed to show that any manifest error of law or fact exists that would require amendment of three previous orders in an insurance bad faith lawsuit, a federal judge in Indiana ruled April 18 in denying the insured's motion for reconsideration of three earlier rulings in the suit (H.E. McGonigal Inc. v. Harleysville Lake States Insurance Co., et al., No. 15-549, S.D. Ind., 2017 U.S. Dist. LEXIS 58782).



Insurer Estopped From Use Of Subcontractors Exception Based On Improper Info
PHOENIX - An insurer is estopped from asserting a coverage defense to a homeowner's breach of contract and bad faith lawsuit based on the subcontractors exclusion because the information relevant to that defense was improperly disclosed by an insured contractor's counsel, a visiting Alaska federal judge to the Arizona federal court ruled April 10 (Karen Cosgrove v. National Fire & Marine Insurance Co., No. 14-2229, D. Ariz., 2017 U.S. Dist. LEXIS 54479).



Forty Niners' Insurer Appeals Ruling Ordering It To Equally Contribute To Defense
PASADENA, Calif. - The San Francisco Forty Niners Football Co.'s primary commercial general liability insurer on April 12 filed a notice of appeal in the Ninth Circuit U.S. Court of Appeals challenging a lower federal court's finding that it has duty to contribute by equal shares with another insurer to defense costs in an underlying lawsuit against the football team and others (First Mercury Insurance Co. v. Great Divide Insurance Co., No. 17-1511, 9th Cir.).



Judge Allows Testimony On Cause Of Damages In Bad Faith Suit Against Insurer
CHARLESTON, S.C. - An additional insured may offer layman testimony about the cause of damages or cost of repairs at a condominium association for purposes of its bad faith lawsuit against an insurer, a South Carolina federal judge ruled April 6 (UFP Eastern Division Inc. f/k/a Universal Forest Products Eastern Division Inc. v. Selective Insurance Company of South Carolina, No. 15-2801, D. S.C., 2017 U.S. Dist. LEXIS 53190).



Judge: Fact Issues Exist On If Independent Counsel Is Required For Insured's Defense
CHICAGO - In an insured's breach of contract and bad faith lawsuit against its commercial general liability insurer, an Illinois federal judge ruled April 11 that the parties failed to provide evidence to clear up genuine issues of material fact regarding whether independent counsel should be appointed for an insured in an underlying construction defects case (DePasquale Steel Erectors Inc. v. Gemini Insurance Co., No. 16-10892, N.D. Ill., 2017 U.S. Dist. LEXIS 54917).



Louisiana Federal Judge Says Insured Failed To Prove Damage Was Covered
NEW ORLEANS - Because an insured failed to prove that heavy rains caused engine damage to a recreational vehicle and because the insured failed to submit a proof of loss for the claim, a Louisiana federal judge on April 19 granted the insurer's motion for summary judgment on the insured's claims for breach of contract and bad faith (Henry Rosenthal v. Allstate Property and Casualty Insurance Co., No. 16-13732, E.D. La., 2017 U.S. Dist. LEXIS 59564).



No Claim For Wrongful Act; No Coverage, Insurer Argues To Federal Court
TULSA, Okla. - An insurer recently argued to an Oklahoma federal court that an underlying breach of contract lawsuit brought against its insured by a former business partner fails to allege a wrongful act to trigger coverage under a professional liability insurance policy (Doug Schwegman, d/b/a Schwegman Insurance and Financial Services v. Continental Casualty Co., No. 16-0730, N.D. Okla.).