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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 Denies Untimely Filed Motion In Insurance Bad Faith Suit
SACRAMENTO, Calif. - Denial of an insurer's motion for judgment on the pleadings in an insurance bad faith lawsuit is proper because the insurer filed the motion over a year and a half after the deadline for dispositive motions, a federal judge in California ruled July 24 in denying the motion (Joanne Koegel v. Government Employees Insurance Co., No. 14-0256, E.D. Calif., 2017 U.S. Dist. LEXIS 116322).



Bad Faith Claims Alleged Against Insurer, Law Firm Will Be Tried In State Court
SANTA FE, N.M. - A bad faith lawsuit filed against an insurer and the law firm that represented the insured in an underlying personal injury suit must be remanded to New Mexico state court because complete diversity of citizenship does not exist, a federal circuit judge, sitting by designation, said July 24 (Amanda Jones Worthington, et al. v. MGA Insurance Co. Inc., et al., No. 17-498, D. N.M., 2017 U.S. Dist. LEXIS 116136).



Michigan Panel Says Insured Not Owed UIM Limits Under Auto Policy
DETROIT - The Michigan Court of Appeals on Aug. 3 found no error in a circuit court's conclusion that an insured is not entitled to the underinsured motorist limit of an auto policy for a motorcycle accident because the auto policy provides no coverage for the insured's motorcycle and the insured collected the underinsured motorist limit on a separate motorcycle policy (James V. Toder v. Progressive Michigan Insurance Co., No. 332786, Mich. App., 2017 Mich. App. LEXIS 1239).



Insurer's Motion To Dismiss Granted; Federal Judge Says Negligence Claim Not Allowed
PORTLAND, Ore. - An Oregon federal judge on July 26 granted an insurer's motion to dismiss an insured's claims for declaratory relief and negligence per se after determining that the claim for declaratory relief is not an amended claim and that the negligence per se claim is not permitted under Oregon law (Peggy Foraker v. USAA Casualty Insurance Co., No. 14-87, D. Ore., 2017 U.S. Dist. LEXIS 116895).



Auto Exclusion Bars Claims, Federal Judge Says In Dismissing Assignee's Suit
SAN DIEGO - A California federal judge on July 25 granted an insurer's motion to dismiss an assignee's complaint after determining that the breach of contract and bad faith claims alleged against the insurer could not stand because the insurer had no duty to defend or indemnify its insured in an underlying suit pursuant to the policy's auto exclusion (Zoe Bernstein v. Nautilus Insurance Co., No. 16-2883, S.D. Calif., 2017 U.S. Dist. LEXIS 116343).



Jury Could Find Insurer Acted In Bad Faith, Judge Says In Refusing Summary Judgment
TAMPA, Fla. - Denying an automobile insurer's motion for summary judgment in a bad faith lawsuit, a Florida federal judge on Aug. 4 held that a jury could find that the insurer did not handle a bodily injury claim with the same degree of care that it would have used to handle its own affairs (Richard Soricelli v. GEICO Indemnity Co., No. 16-1535, M.D. Fla., 2017 U.S. Dist. LEXIS 122950).



Appellate Court Applied Right Standard In Reversing Bad Faith Ruling, GEICO Says
TALLAHASSEE, Fla. - A Florida appellate court did not err in reversing a state trial court's denial of a motion for a directed verdict in an insurance bad faith lawsuit because the appellate court properly considered all factors presented and applied the necessary factors in ruling that an insurer was entitled to judgment as a matter of law, the insurer argues in a July 19 answering brief filed in the Florida Supreme Court (James M. Harvey v. GEICO General Insurance Co., No. SC17-85, Fla. Sup.).



Federal Judge Dismisses Disability-Related Coverage Claims As Time-Barred
SAN DIEGO - A California federal judge on Aug. 3 granted an insurer's motion to dismiss claims for breach of contract and fraud in relation to its denial of long-term disability (LTD) benefits for a university employee, finding that all of the employee's claims were untimely (Laurel Davis v. Liberty Life Assurance Company of Boston, No. 3:17-cv-00738, S.D. Calif., 2017 U.S. Dist. LEXIS 122776).



Arizona Federal Judge Denies Motion To Remand Insured's Bad Faith Suit
PHOENIX - An Arizona federal judge on Aug. 4 denied an insured's motion to remand after determining that the insurer has shown by a preponderance of the evidence that the amount in controversy exceeds the federal jurisdictional minimum of $75,000 (Ziva Hoarau v. Safeco Insurance Company of America, No. 17-1594, D. Ariz., 2017 U.S. Dist. LEXIS 123059).



Oklahoma Federal Judge: No Evidence Supports Breach Of Contract, Bad Faith Claims
OKLAHOMA CITY - An Oklahoma federal judge on July 26 granted an insurer's motion for summary judgment after determining that the insured failed to present any evidence that the insurer breached its contract or delayed payment for a vandalism claim in bad faith (Karen Sue Sperling v. CSAA Fire & Casualty Insurance Co., No. 16-101, N.D. Okla., 2017 U.S. Dist. LEXIS 116823).



Judge Grants Motion To Bifurcate Trial And To Hold Bad Faith Issues In Abeyance
LOUISVILLE, Ky. - A Kentucky federal judge on July 18 granted an insurer's motion to bifurcate an insured's bad faith counterclaim from other claims in a hailstorm coverage dispute and to hold the discovery of bad faith issues in abeyance pending the resolution of the other claims (Employers Mutual Casualty Co. v. SG&D Ventures LLC, No. 17-00105, W.D. Ky., 2017 U.S. Dist. LEXIS 111956).



Panel: Insurer Has No Duty To Defend, Indemnify $7M Wrongful Death Judgment
SEATTLE - The Ninth Circuit U.S. Court of Appeals on July 26 affirmed a lower federal court's ruling that a homeowners insurer has no duty to defend or indemnify an underlying $7 million judgment awarded in a wrongful death lawsuit brought against the estate of its insured (Western National Assurance Co. v. Sally Wipf, et al., No. 15-35071, 9th Cir., 2017 U.S. App. LEXIS 13532).



Kentucky Panel Affirms Dismissal Of Third-Party Bad Faith Claim In Malpractice Suit
FRANKFORT, Ky. - A Kentucky appeals panel on July 21 affirmed a lower court's grant of summary judgment in favor of a professional liability insurer in a lawsuit alleging that the insurer breached its duty to deal in good faith with a third party who sued its doctor insured for medical malpractice (Deborah Lemaster v. Medical Protective Insurance Services, Inc., No. 2016-CA-000826, Ky. App., 2017 Ky. App. Unpub. LEXIS 534).



Policyholders Seek Right To Sue For Financial Elder Abuse Under Oregon Law
SALEM, Ore. - An insurer is not exempt from liability under Oregon state law for civil financial elder abuse, individuals who have purchased long-term care insurance policies from Bankers Life and Casualty Co. claim in a May 10 opening brief filed in the Oregon Supreme Court (Lorraine Bates, et al. v. Bankers Life and Casualty Company, et al., No. CA S064742, Ore. Sup.).



11th Circuit Panel Affirms Denial Of Post-Verdict Motion In Bad Faith Suit
ATLANTA - Without providing any further detail, an 11th Circuit U.S. Court of Appeals panel on July 7 affirmed a federal district court's order denying an insurer's motion for judgment notwithstanding the verdict in an insurance bad faith lawsuit (Jesus Camacho, et al. v. Nationwide Mutual Insurance Co., No. 16-14225, 11th Cir.).



Full, Timely Payment Of Appraisal Award Leads To Dismissal Of Insurance Dispute
HOUSTON - Dismissal of an insured's insurance breach of contract claim against his insurer is proper because the insurer made a full and timely payment of benefits following the issuance of an appraisal award in a homeowners insurance dispute, a federal judge in Texas ruled July 14 in granting the insurer's motion for summary judgment and denying a summary judgment motion filed by the insured (Lee Losciale v. State Farm Lloyds, No. 17-0016, S.D. Texas, 2017 U.S. Dist. LEXIS 109389).



Local Franchise Is Proper Defendant; Complete Diversity Does Not Exist, Judge Says
ASHEVILLE, N.C. - A North Carolina federal judge on July 11 granted an insured's motion to remand a complaint to North Carolina state court after determining that a local franchise for a property restoration company recommended by the insurer to remediate damages caused by a chimney fire is a proper defendant and defeats the complete diversity of citizenship required for federal jurisdiction (Elizabeth M.T. O'Nan v. Nationwide Insurance Co. et al., No. 17-5, W.D. N.C., 2017 U.S. Dist. LEXIS 106568).



Complete Diversity Of Citizenship Exists; Insured's Motion To Remand Denied
HOUSTON - A Texas federal judge on July 13 denied a motion to remand after determining that complete diversity of citizenship exists because the insurer's agent is not a proper defendant as the insured failed to state a claim against an insurer's agent for misrepresentation (Howard Johnson II v. Allstate Vehicle and Property Insurance Co., et al, No. 17-1206, S.D. Texas, 2017 U.S. Dist. LEXIS 108530).



California Federal Judge Says No Additional Coverage Owed To Beneficiaries
LOS ANGELES - Beneficiaries of a director of photography who was killed in a helicopter crash while working on the production of a reality television show are not entitled to coverage under an accidental death and dismemberment policy because the insured was not a "participant" on the reality show, a California federal judge said July 7 in granting the insurer's motion for summary judgment on claims for breach of contract and bad faith (Jerie S. Rydstrom, et al. v. Federal Insurance Co., et al., No. 16-2543, 16-2614, C.D. Calif., 2017 U.S. Dist. LEXIS 105473).



California Federal Judge Allows Claims To Stand In Life Insurance Rate Case
LOS ANGELES - A California federal judge on July 10 determined that plaintiffs alleging that a life insurer wrongfully increased monthly deduction rates alleged sufficient facts to support their claims for breach of contract and bad faith (EFG Back AG, Cayman Branch, v. Transamerica Life Insurance Co., No. 16-8104, C.D. Calif., 2017 U.S. Dist. LEXIS 109780).



California Federal Judge Allows Plaintiff To Amend Complaint In Life Insurance Dispute
SACRAMENTO, Calif. - A California federal judge on July 7 granted a life insurance beneficiary's motion to amend a complaint after determining that the amendment addresses the insurer's challenges to the beneficiary's standing to pursue the claims and the insurer's argument that the claims are time-barred (Yegeniy V. Sidorov, in his individual capacity and as administrator of the estate of Natalya N. Natalya, v. Transamerica Life Insurance Company, et al., No. 17-00002, E.D. Calif., 2017 U.S. Dist. LEXIS 105479).



Maryland Federal Magistrate Judge Dismisses Insureds' Bad Faith Claim
BALTIMORE - A Maryland federal magistrate judge on July 13 granted an insurer's motion to dismiss its insureds' claim for bad faith after determining that the insureds failed to exhaust all administrative remedies as required under Maryland law before alleging a claim of bad faith (Bierman Family Farm LLC, et al., v. United Farm Family Insurance Co., No. 17-0004, D. Md., 2017 U.S. Dist. LEXIS 109274).



Judge: Insurer Is Entitled To Rescind Policy In Suit Over Fall From Infinity Pool
MISSOULA, Mont. - A Montana federal judge on July 10 held that an excess insurer has a right to rescind its insurance policy in a coverage dispute over a claim that the insureds' island property was maintained in a dangerous condition that resulted in a catastrophic fall off the edge of an infinity swimming pool (Mount Vernon Fire Insurance Co. v. Jack L. Gabelhausen, Jr., et al., No. 16-91, D. Mont., 2017 U.S. Dist. LEXIS 106125).



Judge Allows First-Party Insured's Bad Faith Claim To Proceed To Trial
SIOUX CITY, Iowa - While dismissing an insured's third-party bad faith claim against an insurer for denied coverage of water damage, an Iowa federal judge on June 30 allowed the insured's first-party bad faith and punitive damages claims to proceed to trial (Tim Van Der Weide v. Cincinnati Insurance Co., No. 14-4100, N.D. Iowa; 2017 U.S. Dist. LEXIS 101735).



Insured Asks 9th Circuit To Find Loss Of Boats Was Due To Theft And Not Scheme
SAN FRANCISCO - A boat business insured has asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court's finding that an insurer did not breach an all-risk policy in bad faith by denying coverage for its theft claim (Pacific Marine Center, Inc. v. Philadelphia Indemnity Insurance Co., No. 17-15897, 9th Cir.).



Parties Ask Federal Court To Dismiss Their Professional Liability Coverage Dispute
TULSA, Okla. - A professional liability insurer and its insured on July 13 filed a stipulation of dismissal of the insured's breach of contract and bad faith lawsuit prompted by an underlying dispute between the insured and a former business partner (Doug Schwegman, d/b/a Schwegman Insurance and Financial Services v. Continental Casualty Co., No. 16-0730, N.D. Okla.).



Judge Dismisses Breach Of Contract Suit By Rehabilitator Against Mortgage Reinsurer
CHICAGO - An Illinois federal judge on July 5 dismissed a rehabilitator's lawsuit accusing a reinsurer of breaching its contract with an insolvent mortgage insurance provider by failing to disclose the benefits it derived from a captive reinsurance arrangement because the contract did not impose such a requirement (People of the state of Illinois, ex rel., Acting Director of Insurance, Jennifer Hammer v. Twin Rivers Insurance Co. f/k/a Cherokee Insurance Co., No. 16-7371, N.D. Ill., 2017 U.S. Dist. LEXIS 103833).



11th Discoverability Of Communications With Reinsurers In Bad Faith Cases
By Robert M. Hall I. Introduction When insureds allege bad faith on the part of their insurers, they often seek broad discovery in an attempt to prove their cases. Aside from discovery of reinsurance agreements, which generally is allowed, these efforts can include communications between a ceding insurer and its reinsurer(s) in the hopes of finding a smoking gun. Unsurprisingly, the cases are split on this issue but perhaps the more significant point to be learned from an examination of the selected case law reviewed below is that the outcome of the an effort to obtain such communications can depend on the focus of the request as well as a nuanced response.



10th Circuit Majority Says Insureds Failed To Offer Evidence Supporting Claims
DENVER - The majority of the 10th Circuit U.S. Court of Appeals on June 27 affirmed a district court's summary judgment ruling in favor of an insurer after finding that the insureds failed to present sufficient evidence in support of their claims for emotional distress, economic loss and attorney fees (Alan Blakely, et al. v. USAA Casualty Insurance Co., No. 15-4059, 10th Cir., 2017 U.S. App. LEXIS 11400).



Insureds Failed To State Bad Faith Claim Against Insurer, Judge Rules
HARRISON, Ark. - Insureds have failed to state a claim for relief in making their insurance bad faith claim against their homeowners insurance provider, a federal judge in Arkansas ruled June 22 in granting the insurer's motion to dismiss (Jon Lee, et al. v. State Farm Fire & Casualty Co., No. 17-3024, W.D. Ark., 2017 U.S. Dist. LEXIS 97754).



Insured Failed To Prove Attorney-Client Privilege Was Waived By Insurer
LAS VEGAS - A Nevada federal magistrate judge on June 22 denied an insured's motion to compel an insurer to produce reports and letters from one of its attorneys after determining that the insured failed to prove that the insurer's alleged bad faith conduct warrants a finding that the insurer impliedly waived the attorney-client privilege (Kirsten Spargo v. State Farm Fire and Casualty Company, No. 16-3036, D. Nev., 2017 U.S. Dist. LEXIS 96823).



Judge Allows Claims For Violation Of Nevada Law Against State Farm To Proceed
LAS VEGAS - A Nevada federal judge on June 20 dismissed the majority of claims asserted by an insured who asserts causes of action related to an insurer's alleged practice of applying a reduced cash value for vehicles that are a total loss, but allowed her claims under Nevada law to proceed (Luz Elena Cuadros v. State Farm Fire and Casualty Co., No. 16-2025, D. Nev., 2017 U.S. Dist. LEXIS 95384).



State Appeals Court Asked To Decide Whether Bad Faith Suit Dismissal Was Proper
CARSON CITY, Nev. - Parties in an insurance breach of contract and bad faith lawsuit asked the Nevada Court of Appeals recently to determine whether a trial court erred in granting summary judgment in favor of an insurer in an automobile insurance dispute and whether the trial court improperly denied the insured's motion for leave to file a third amended complaint (Valgene Sutherland v. State Farm Mutual Automobile Insurance Co., No. 71389, Nev. App.).



Insurer: Fla. Appellate Court Misapplied Key Legal Principles In Bad Faith Suit
TALLAHASSEE, Fla. - A Florida appellate court erred in reversing a jury's verdict in favor of an insured in a bad faith lawsuit, because it misapplied "well-settled principles of directed verdict law" in ruling that the insurer did not act in bad faith in failing to reach a settlement with a third party that ended up resulting in an excess verdict against the insured, the insured argues in a June 29 merits brief filed in the Florida Supreme Court (James M. Harvey v. GEICO General Insurance Co., No. SC17-85, Fla. Sup.).



9th Circuit Affirms Ruling In Insurer's Favor In Coverage Dispute Over Theft
SAN FRANCISCO - Finding that an insured's argument on appeal is waived because it never presented it to the lower court, the Ninth Circuit U.S. Court of Appeals on June 26 affirmed a lower federal court's summary judgment ruling in favor of a business owners insurer (Pacific Enterprises LLC v. AMCO Insurance Co., et al., No. 15-16042, 9th Cir., 2017 U.S. App. LEXIS 11319).



Panel: Professional Services Exclusion Bars Coverage For Suits Over Ponzi Scheme
ATLANTA - The 11th Circuit U.S. Court of Appeals on July 5 affirmed a lower federal court's finding that a professional services exclusion in both primary and excess executive organization liability insurance policies precludes coverage for underlying lawsuits arising from a Ponzi scheme (Herbert Stettin, et al. v. National Union Fire Insurance Company of Pittsburgh, Pa, et al., No. 15-14716., 11th Cir., 2017 U.S. App. LEXIS 11972).



California Federal Judge Denies Motion To Dismiss Counterclaims In Sewage Suit
LOS ANGELES - A California federal judge on June 23 denied a motion to dismiss bad faith counterclaims against an insurer in a coverage dispute arising out of a sewage spill after determining that the counterclaims sufficiently allege facts in support of the claims (Travelers Property Casualty Company of America v. Mountain Movers Engineering Contactors Inc., No. 16-2127, S.D. Calif., 2017 U.S. Dist. LEXIS 97731).



Judge Dismisses Bad Faith Claim In Suit Challenging Life Insurance Calculations
PHILADELPHIA - A Pennsylvania federal judge on June 26 granted a life insurer's motion to dismiss a bad faith claim and the majority of the breach of contract claims in an insured's lawsuit challenging the methods by which the insurer calculated the cost of insurance rates (Kalodner v. Genworth Life and Annuity Insurance Co., No. 16-4817, E.D. Pa., 2017 U.S. Dist. LEXIS 97990).



Judge: Insurer Did Not Act In Bad Faith In Delegating Employer Trust To Reinsurer
CHICAGO - A contract placed no limits on an insurer's discretion to assign its responsibility to an employer's trust and contained no requirements for disclosure of any assignments, an Illinois federal judge ruled July 5, finding that the insurer did not act in bad faith when it delegated to a reinsurer (Midco International Inc. and Employees Profit Sharing Trust v. Metropolitan Life Insurance Co., No. 14-9470, N.D. Ill., 2017 U.S. Dist. LEXIS 103296).