Mealey's Insurance Bad Faith : Mealey's : Legal News & Analysis

Mealey's Insurance Bad Faith

July 10, 2023
Employer’s Liability Exclusion Does Not Bar CGL Coverage For Construction Accident

PHILADELPHIA — The Third Circuit U.S. Court of Appeals on July 7 held that a commercial general liability insurance policy’s employer liability exclusion does not bar coverage for a lawsuit arising from a construction accident, vacating a federal court’s ruling and remanding.
July 07, 2023
Bad Faith Claim In Disability Suit Proceeds; Emotional Distress Claim Dismissed

CAMDEN, N.J. — A New Jersey federal judge on July 6 determined that a disability claimant’s bad faith claim can proceed because the claimant sufficiently stated facts in support of the claim but a claim for intentional and negligent infliction of emotional distress cannot proceed because the claimant failed to show that the disability insurer’s conduct caused her to suffer emotional distress.
July 05, 2023
Justice Refuses To Dismiss Bad Faith Counterclaim In Worker Injury Coverage Suit

NEW YORK — A New York justice denied a commercial general liability insurer’s motion to dismiss an additional insured’s counterclaim alleging breach of the duty of good faith and fair dealing in a coverage dispute over a worker injury, finding that the bad faith counterclaim is not duplicative of a breach of contract counterclaim and there are material issues of fact as to whether the insurer’s reservation of rights was both timely and effective and whether it exercised exclusive control over the additional insured’s defense.
June 30, 2023
District Court Decision In Mold Coverage Suit Must Be Reversed, Insureds Say

ATLANTA — A district court’s ruling that no coverage is owed for mold damage discovered in an insured hotel should be reversed because the policy at issue provides coverage for losses caused by a construction defect even if the cost to fix the defect is not covered, the insureds say in an appellant reply brief filed in the 11th Circuit U.S. Court of Appeals.
June 29, 2023
California Federal Judge Says Stay Of Water Damage Coverage Suit Not Warranted

RIVERSIDE, Calif. — A California federal judge denied a motion to stay filed by insureds in a water damage coverage suit alleging claims for breach of contract and bad faith after determining that the insureds failed to show that their insurer’s notice of removal to federal court was fraudulent.
June 29, 2023
Rhode Island’s Arbitration Act Does Not Apply To Appraisal Proceeding, Judge Says

PROVIDENCE, R.I. — A Rhode Island federal judge denied a homeowners insurer’s motion to compel an arbitration award, allowing an insured’s claims for breach of contract and bad faith to proceed, because Rhode Island’s Arbitration Act does not govern the appraisal proceeding in which the parties participated to determine the amount of an insured’s losses caused by water damage.
June 29, 2023
Trial Court Did Not Err In Granting Judgment For Auto Insurer, Panel Says

SAN ANTONIO — A trial court did not err in granting judgment in favor of an auto insurer on breach of contract, bad faith and other extracontractual claims because the evidence supports the trial court’s finding that the claims could not proceed, the Texas Fourth District Court of Appeals said June 28 in affirming the trial court’s judgment.
June 28, 2023
Auto Insurer’s Comparative Bad Faith Defenses Fail As A Matter Of Law, Judge Says

TACOMA, Wash. — A Washington federal judge granted an insured’s motion for partial summary judgment on June 27 after determining that three affirmative defenses asserted by an auto insurer in response to the insured’s bad faith claim cannot proceed because the defenses, which claim that the insured and her attorney should be held liable for comparative bad faith conduct, are not valid under Washington law.
June 26, 2023
Panel Upholds Finding That Water Damage Suit Is Barred By Suit Limitations Provision

DENVER — The 10th Circuit U.S. Court of Appeals upheld a district court’s grant of summary judgment in favor of an insurer in a water damage suit after determining that the insured’s suit is barred by the policy’s four-year limitations provision and that insurer’s denial of coverage based on the policy’s exclusions for long-term water leakage and faulty workmanship does not constitute bad faith.
June 26, 2023
Freddie Mac Sues Insurers, Seeking D&O Coverage For Costs Incurred By SEC Subpoenas

WASHINGTON, D.C. — Federal Home Loan Mortgage Corp. (Freddie Mac), sued its primary and excess directors and officers liability insurers for breach of contract and bad faith in a District of Columbia federal court, seeking coverage for underlying expenses that it incurred on behalf of its directors, officers and employees who were subpoenaed by the Securities Exchange Commission during an investigation and subsequent lawsuit.
June 23, 2023
Bad Faith Claim Against Builders Risk Insurer Cannot Proceed, Federal Judge Says

BEAUMONT, Texas — A Texas federal judge adopted a magistrate judge’s recommendation to grant a builders risk insurer’s motion for summary judgment on breach of contract and bad faith claims after rejecting the insured’s argument that the bad faith claim should proceed because the insurer was vicariously liable for its agent’s negligent procurement of the policy and estopped from denying coverage for interior water damage sustained at the insured’s warehouse while the roof was being replaced.
June 23, 2023
Disability Income Insurer Did Not Breach Contract, Act In Bad Faith, Judge Says

TRENTON, N.J. — A disability income insurer did not breach its contract or act in bad faith in denying an insured ophthalmologist’s claim for total disability benefits because the insured’s inability to perform surgery does not render him totally disabled in his occupation as he is still able to see patients, a New Jersey federal judge said in granting the insurer’s motion for summary judgment and denying the insured’s motion for summary judgment.
June 23, 2023
Court Erred In Compelling Arbitration Of $7M Hurricane Ida Suit, 5th Circuit Told

NEW ORLEANS — An insured tells the Fifth Circuit U.S. Court of Appeals in its appellant brief that a Louisiana federal court erred by compelling arbitration of a dispute over its claims for $7 million in damages caused by Hurricane Ida and for bad faith against its foreign and domestic insurers, arguing that its domestic insurers cannot circumvent an anti-arbitration clause under Louisiana law.
June 23, 2023
Insured’s Suit Against Auto Insurer Dismissed For Want Of Prosecution

LAS VEGAS — An insured’s breach of contract and bad faith suit filed against an auto insurer must be dismissed for want of prosecution because no action has been taken by either party in the suit for more than 270 days, a Nevada federal judge said in dismissing the suit.
June 22, 2023
Suit Limitations Provision Bars Breach Of Contract, Bad Faith Claims, Panel Says

NEW YORK — The Second Circuit U.S. Court of Appeals on June 21 affirmed a district court’s ruling in favor of a homeowners insurer in a water damage coverage suit after determining that the policy’s suit limitations provision bars the insured’s breach of contract and bad faith claims.
June 21, 2023
Bank’s Breach Of Contract, Bad Faith Claims Must Be Dismissed, Judge Says

OKLAHOMA CITY — A bank’s breach of contract and bad faith claims filed against two insurers arising out of damages to an insured property by a polar vortex must be dismissed because the bank failed to show that either of the insurers was a party to the insurance contract at issue, an Oklahoma federal judge said June 20 in granting the insurers’ motion to dismiss.
June 21, 2023
Panel Grants Rehearing, Substitutes Opinion But Does Not Change Bad Faith Ruling

ATLANTA — The 11th Circuit U.S. Court of Appeals on June 20 granted a petition for rehearing, vacated its Jan. 4 opinion and substituted with an opinion that addressed the recent ruling in Dupree v. Younger but noted that this substitution did not alter its earlier holding that there is enough evidence for a jury to reasonably conclude that the defendant insurer acted in bad faith because it delayed acting on its duty to investigate and settle the underlying worker injury claim.
June 21, 2023
Insurers’ Request To Limit $87.5M Punitive Damages Award Under Indiana Law Denied

SOUTH BEND, Ind. — An Indiana federal judge denied a request by insurers’ to limit an $87.5 million punitive damages award entered for an insured by a jury in a breach of contract and bad faith dispute stemming from the insured’s request for coverage costs related to the cleanup of polychlorinated biphenyls (PCBs) because the award is within the state’s statutory cap as the statutory cap applies to each individual punitive damages award, which is $12.5 million against each of the seven insurers named as defendants in the suit.
June 20, 2023
Magistrate: Insured’s Discovery Approach In Irma Suit ‘Resembles A Shotgun Blast’

FORT MYERS, Fla. —A federal magistrate judge in Florida denied a condominium insured’s motion to compel discovery in a bad faith lawsuit seeking coverage for property damage caused by Hurricane Irma, finding that the insured’s broad discovery requests “necessarily capture a host of documents that would have little to no relevance” and its approach “resembles a shotgun blast,” which is not what Federal Rule of Civil Procedure 26 envisions.
June 20, 2023
California Judge Rules In Insurer’s Favor In Suit Arising From Roof Damage

LOS ANGELES — A California judge granted an insurer’s motion for summary judgment in a condominium homeowners association insured’s breach of contract and bad faith lawsuit arising from alleged storm damage to the roof of a Studio City building that housed 31 luxury condominiums, finding that the insurer has met its burden of establishing that the policy’s water damage and faulty workmanship exclusions applied to bar coverage.
June 19, 2023
Insurer Owes No Coverage For 2 Suits Against Contractor, 9th Circuit Affirms

SEATTLE — The Ninth Circuit U.S. Court of Appeals on June 16 affirmed a lower federal court’s summary judgment ruling in favor of a commercial general liability insurer in a contractor insured’s lawsuit alleging breach of contract and bad faith, finding that coverage was not triggered because the two underlying lawsuits brought against the insured seek liability arising from contractual obligations and debts and not from property damage.
June 19, 2023
Judgment Granted To Insurer In Row With Assignees Over Policy’s Fraud Exclusion

MIAMI — A Florida federal judge granted an insurer’s cross-motion for summary judgment in a suit filed against it by assignees of its insured, an attorney who settled an underlying lawsuit filed against him by the assignees, finding that the insurance policy at issue excluded coverage for the insured’s fraudulent conduct that resulted in his disbarment.
June 16, 2023
Kentucky High Court Reverses Ruling In Insurer’s Favor In Third-Party Bad Faith Suit

FRANKFORT, Ky. — The Kentucky Supreme Court on June 15 reversed an appeals court’s finding that a lower court improperly allowed mineral property owners to pursue their bad faith claims against the insurer because coverage had not been established when they filed their third-party bad faith lawsuit, finding that the appeals court erred by relying on Pryor v. Colony Ins. in finding the third-party bad faith claim premature.
June 16, 2023
Majority: KSU Did Not Satisfy Professional Liability Policy’s Reporting Requirements

FRANKFORT, Ky.— A majority of the Kentucky Supreme Court on June 15 affirmed an appeals court’s ruling that a lower court erred in finding that Kentucky State University (KSU) is entitled to professional liability insurance coverage for underlying wrongful discharge and intentional infliction of emotional distress claims brought by former employees because the insured provided notice of the claim three days late and the notice-prejudice rule does not apply.
June 16, 2023
Property Insurer Says Insured Refused To Cooperate With Policy Conditions As Required

PHOENIX — A commercial property insurer contends in a motion for summary judgment filed in Arizona federal court that its insured’s claims for breach of contract and bad faith cannot proceed because the insured breached the policy by failing to cooperate with the insurer’s investigation of the insured’s vandalism and theft claim.