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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®



 



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).



9th Circuit Panel Upholds Court's Bad Faith Ruling In Auto Coverage Suit
PASADENA, Calif. - A federal district court did not err in denying an insurer's motion for judgment as a matter of law on an insurance bad faith claim because a reasonable jury could have determined that the insurer had a reasonable opportunity to settle the claims against its insured, a Ninth Circuit U.S. Court of Appeals panel ruled June 15 in affirming (Carlos Madrigal, et al. v. Allstate Indemnity Co., Nos. 16-55839 and 16-55863, 9th Cir.).



California Appeals Panel Says Issue Of Fact Exists On Insurer's Denial Of Coverage
SANTA ANA, Calif. - The Fourth District California Court of Appeal on June 19 reversed a summary judgment ruling entered in favor of an insurer after determining that a genuine issue of material fact exists as to whether the insurer's refusal to cover an insured's epidural injections for injuries sustained in an automobile accident was reasonable (Carmen Zubillaga v. Allstate Indemnity Co., No. G052603, Calif. App., 4th Dist., Div. 3, 2017 Cal. App. LEXIS 562).



Panel: Court Did Not Err In Dismissing Bad Faith Claim In Coverage Dispute
SAN FRANCISCO - A federal district court did not err in granting an insurer's motion for summary judgment on an insured's claim for insurance bad faith because the insured failed to plead any genuine issues of material facts to support the claim, a Ninth Circuit U.S. Court of Appeals panel ruled June 19 in affirming (Jesse Kalberer v. American Family Mutual Insurance Co., No. 14-17220, 9th Cir., 2017 U.S. App. LEXIS 10779).



California Federal Judge Says Bad Faith Claims Are Not Duplicative Of Each Other
SAN DIEGO - A California federal judge on June 9 denied a motion to dismiss a life insurance beneficiary's claims of bad faith alleged against two insurers after determining that the beneficiary alleged sufficient facts in support of the claims (Mehdi Vossoughi v. AIG Property Casualty Company et al., No. 17-0247, S.D. Calif., 2017 U.S. Dist. LEXIS 89206).



Judge Grants Insurer's Summary Judgment Motion On Bad Faith Claim
MUSKOGEE, Okla. - An insured failed to show that material issues of fact exist as to whether his insurer acted in bad faith in denying his claim for coverage under the terms of a commercial property insurance policy and, as a result, is not entitled to punitive damages on the bad faith claim, a federal judge in Oklahoma ruled June 20 in granting in part the insurer's motion for summary judgment (Billy Hamilton v. Northfield Insurance Co., No. 16-519, E.D. Okla., 2017 U.S. Dist. LEXIS 94672).



Federal Judge Won't Dismiss Insurer From Bad Faith Suit Over Storm Damage Claim
TULSA, Okla. - A federal judge in Oklahoma on June 13 denied an insurer's motion to dismiss in an insurance breach of contract and bad faith lawsuit, rejecting the insurer's claim that, at this time, it is not a party to the insurance contract at issue (Ranchers Pipe & Steel Corp. v. Ohio Security Insurance Co., et al., No. 17-0192, N.D. Okla., 2017 U.S. Dist. LEXIS 90278).



California Federal Judge Orders Insurer To Prove That Parties Are Completely Diverse
LOS ANGELES - A California federal judge on June 13 ordered an insurer to show cause as to why an insured's breach of contract and bad faith lawsuit should be litigated in federal court and not be dismissed for lack of subject matter jurisdiction (Reseda Medical Clinic, et al. v. Liberty Mutual Ins. Company, et al., No. 17-3686, C.D. Calif., 2017 U.S. Dist. LEXIS 90932).



9th Circuit Finds Jury Instructions Were Adequate For Dispute Over Coverage
SAN FRANCISCO - A Ninth Circuit U.S. Court of Appeals panel on June 16 overruled arguments from a general contractor that a jury was not properly instructed about certain exclusions included in a policy obtained from ProBuilders Specialty Insurance Co., finding that the contactor was reading the exclusions too narrowly (ProBuilders Specialty Insurance Company, RRG v. Valley Corp. B., et al., No. 14-17544, 9th Cir., 2017 U.S. App. LEXIS 10716).



Professional Services Exclusion Does Not Bar Coverage, Insured Tells 9th Circuit
SAN FRANCISCO - An insured has asked the Ninth Circuit U.S. Court of Appeals to reverse a lower federal court's finding that coverage for an underlying qui tam action brought against it under the False Claims Act (FCA) is barred because the claims arose out of its professional services (HotChalk Inc. v. Scottsdale Insurance Co., No. 16-17287, 9th Cir.).



Judge: Lawsuits Arose Out Of 'Single Scheme'; No Professional Liability Coverage Due
DENVER - A Colorado federal judge on June 12 entered a final judgment in favor of a professional liability insurer after finding that it has no duty to defend or indemnify against an underlying lawsuit alleging that its insured entered into a "kickback contract" to steer additional subcontractor work to city-employee-controlled companies (Ciber, Inc. v. Ace American Insurance Co., No. 16-1189, D. Colo., 2017 U.S. Dist. LEXIS 89895).



9th Circuit: Court Properly Dismissed Complaint Without Leave To Amend
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on June 13 affirmed a lower federal court's dismissal of an insured's lawsuit against its partners management liability reimbursement insurer, finding that the lower court did not abuse its discretion in denying the insured leave to amend its complaint (Cove Partners, LLC v. XL Specialty Insurance Company, No. 16-55315, 9th Cir., 2017 U.S. App. LEXIS 10504).



Texas Federal Judge Grants Insured's Motion To Remand, Dismisses Adjuster From Suit
SHERMAN, Texas - A Texas federal judge on June 20 adopted a magistrate judge's recommendation that an insured's motion to remand be denied because complete diversity of citizenship exists as the insured's complaint does not specifically allege any claims against the insurer's adjuster, who also is a resident of Texas (Max Wang v. Safeco Insurance Company of Indiana et al., No. 17-158, E.D. Texas, 2017 U.S. Dist. LEXIS 94255).



Appeals Court Dismisses Nationwide's Challenge Of Ruling Denying Discovery Stay
CHILLICOTHE, Ohio - An Ohio appeals panel on May 31 dismissed an appeal from Nationwide Mutual Fire Insurance Co.'s over the denial of its motion to stay discovery in a suit accusing a couple of intentionally setting fire to their home to collect insurance proceeds, finding that the ruling does not require the insurer to produce privileged documents (Nationwide Mutual Fire Insurance Company v. Mark Jones, et al., No. 15CA3709, Ohio App., 4th Dist., 2017 Ohio App. LEXIS 2300).