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

Mealey's Insurance Bad Faith

January 23, 2024
Insured Entitled To Depose Claims Handlers In Environmental Coverage Dispute

DETROIT — An insured seeking coverage for underlying environmental contamination suits is entitled to depose an insurer’s claims handlers because the information sought by the insured is relevant to the insured’s coverage claim and is relevant in determining whether the insurer acted in bad faith in handling the claim, a special master appointed by a Michigan federal court said in granting the insured’s motion to compel deposition testimony.
January 23, 2024
Insurer Removes Insured’s Complaint Seeking Coverage For Contamination Costs

TACOMA, Wash. — An insured alleges in an amended complaint, recently removed to Washington federal court, that its insurer breached its contract, acted in bad faith and violated Washington law by denying coverage for environmental liabilities and defense costs incurred as a result of contamination allegedly caused by the insured’s marine operations.
January 22, 2024
Infestation Exclusion Bars Coverage For Roof Damage, 4th Circuit Affirms

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Jan. 19 affirmed a Maryland federal court’s ruling that an insured’s claims for breach of contract and bad faith fail because the policy’s infestation exclusion precludes coverage for roof damage caused by an infestation of vultures.
January 22, 2024
Insurer Asks 5th Circuit To Reconsider Affirmation Of $502,172 Bad Faith Judgment

NEW ORLEANS — An insurer on Jan. 19 asked the Fifth Circuit U.S. Court of Appeals to reconsider its ruling that there was no reversible error in a jury’s conclusion that it acted in bad faith and underpaid its church insured for property damage that was caused by Hurricane Laura, challenging the panel’s ruling that affirmed the trial court’s $502,172.16 award in favor of the insured for damages, penalties and fees.
January 22, 2024
Panel Says District Court Properly Dismissed Insured’s Suit For Lack Of Jurisdiction

NEW ORLEANS — A district court properly dismissed a fire-suppressing foam distributor’s breach of contract and bad faith suit against its insurer, which denied coverage for a subpoena served on the insured in an underlying multidistrict litigation suit seeking damages for bodily injuries and contaminated drinking water caused by the use of the foam, because the lower court properly found that it lacked specific personal jurisdiction over the insurer, the Fifth Circuit U.S. Court of Appeals said.
January 22, 2024
Bridgebuilder, Insurer Stipulate To Dismissal Of Damage Coverage Claims

WASHINGTON, D.C. — A bridgebuilder and its builders risk insurer have agreed to the dismissal with prejudice of the builder’s breach of contract and bad faith suit against the insurer; the builder last year had been granted summary judgment on the breach of contract claim after a federal judge in the District of Columbia found that the policy’s definition of “damage” includes the builder’s claim for reimbursement for repair costs necessitated by defects in the concrete of the bridge and that the insurer failed to demonstrate that any exclusions apply.
January 22, 2024
Bad Faith Claim Against Guaranty Association Dismissed In Hurricane Coverage Row

NEW ORLEANS — A Louisiana federal judge granted partial dismissal to the Louisiana Insurance Guaranty Association (LIGA), which was substituted for an insolvent homeowners insurer, in a breach of contract suit over damages from Hurricane Ida, finding that the claims for bad faith, mental anguish, penalties, pre-insolvency costs and interest must be dismissed because they are not covered claims for which “LIGA is the statutory successor.”
January 22, 2024
Punitive Damages Claim Cannot Proceed, California Federal Judge Determines

SANTA ANA, Calif. — An insured cannot seek punitive damages in a coverage suit arising out of a claim for collapse at his business because the insured failed to show that the insurer acted with oppression, malice or fraud in handling his claim, a California federal judge said in granting the insurer’s motion to dismiss.
January 22, 2024
Contractor, Insurer Settle Construction Defects Suit, File Stipulation Of Dismissal

GREENBELT, Md. — A general contractor and its professional liability insurer filed a corrected stipulation of dismissal with prejudice on Jan. 18 in a Maryland federal court after reaching a settlement in the suit filed by the insured general contractor and alleging that the insurer breached its contract and acted in bad faith by failing to pay the insured for rectification expenses related to a faulty wall system installed as part of a construction project.
January 19, 2024
Business Owners’ Amended Complaint Demonstrates Standing, Judge Says

TACOMA, Wash. — A Washington federal judge denied a business insurer’s motion to dismiss claims for breach of contract, bad faith and violations of Washington law because the business owners have demonstrated standing to bring the suit based on an amended complaint adding the named insured business entity as a plaintiff.
January 18, 2024
Bifurcation Of Bad Faith Claims Is Necessary; Stay Of Discovery Not Warranted

MERIDEN, Conn. — Bifurcation of bad faith claims from claims seeking uninsured benefits is necessary to avoid any prejudice to the auto insurer; however, a stay of discovery on the bad faith claims is not warranted, a Connecticut state court judge said in partially granting an auto insurer’s motion to bifurcate and to stay discovery on the bad faith claims.
January 18, 2024
Committee Seeks To Bar Some Claimants In Vesttoo Cases From Liquidation Vote

WILMINGTON, Del. — The Official Committee of Unsecured Creditors on Jan. 17 asked a Delaware federal bankruptcy court to reclassify 49 disputed claims so the joint provisional liquidators (JPLs) that submitted them can’t vote on the committee’s Chapter 11 plan of liquidation for Vesttoo Ltd. and 48 affiliates.
January 17, 2024
Judge: Arbitration Clause, Sovereign Immunity Apply In Crop Insurance Row

GRAND RAPIDS, Mich. — Ruling in part that all claims against a crop insurer must be arbitrated “at least for ‘gateway’ matters” and that the government defendants didn’t waive their sovereign immunity, a Michigan federal judge dismissed a suit over claims that the plaintiffs say have not been adjusted in more than three years.
January 17, 2024
Breach Of Contract, Bad Faith Suit Against Insurer Remanded To State Court

OKLAHOMA CITY — A breach of contract and bad faith suit filed against a homeowners insurer must be remanded to Oklahoma state court because the insurer failed to timely remove the suit within 30 days of learning in a proposed amended complaint that the insureds were seeking more than $75,000 for damages to their home caused by a hailstorm, an Oklahoma federal judge said.
January 17, 2024
Insured’s Bad Faith Claim Cannot Proceed; Insurer Acted Reasonably, Judge Says

SCRANTON, Pa. — A Pennsylvania federal judge granted a homeowners insurer’s motion for partial summary judgment on an insured’s bad faith claim after determining that the insurer acted reasonably in assessing the insured’s roof and mold damages and the insured failed to offer evidence supporting a finding that the insurer acted unreasonably.
January 16, 2024
Insureds Cannot Pursue Consequential Damages On Contract Breach Claim

CEDAR RAPIDS, Iowa — Insureds seeking coverage for mold remediation and property damages caused by a windstorm are not entitled to consequential damages on their breach of contract claim, an Iowa federal judge said Jan. 12 in granting the insurer’s motion for summary judgment.
January 16, 2024
Coverage Owed For Collapse Of Bricks Caused By Hidden Decay, Federal Judge Says

CHATTANOOGA, Tenn. — A Tennessee federal judge determined in a revised opinion that an insurer owes coverage for the collapse of bricks from a wall that occurred during a contractor’s renovations because the collapse was caused by hidden decay, a covered cause of collapse under the policy. However, the judge said questions of fact exist as to whether coverage is owed for the demolition of the remainder of the wall.
January 11, 2024
Unfair Trade Practices Claim Against Disability Insurer Is Not Actionable Claim

ALLENTOWN, Pa. — A insured’s claim for violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) alleged against a disability insurer must be dismissed because the claim is not actionable under the UTPCPL as it alleges only a refusal to pay a disability insurance claim, a Pennsylvania federal judge said in granting the insurer’s motion to dismiss the claim without prejudice.
January 10, 2024
Reinsurer Tackles Third-Party Beneficiary Theory In Cleanup Costs Coverage Row

PADUCAH, Ky. — Arguing in part that what it calls a newly asserted third-party beneficiary theory fails as a matter of law, a reinsurer filed a reply brief on Jan. 9 urging a Kentucky federal court to grant its summary judgment motion in a dispute over pollution-related cleanup costs.
January 10, 2024
Louisiana Majority Refuses To Review Coverage Suit Over Hurricanes Laura, Delta

NEW ORLEANS — A majority of the Louisiana Supreme Court on Jan. 10 denied an insurer’s petition for a writ of certiorari seeking review of lower court’s rulings following a jury verdict in favor of insureds in a coverage dispute arising from Hurricanes Laura and Delta damage.
January 09, 2024
Alaska Judge Denies Judgment For Insurer In Dispute Over Water Damage Coverage

ANCHORAGE, Alaska — An Alaska federal judge on Jan. 8 denied an insurer’s motion for summary judgment in its suit seeking a declaratory judgment that a homeowners policy does not provide coverage for the insured’s water damage, finding that fact issues remain regarding whether the insured advised the insurer that the second mortgage on his property “was subject to litigation.”
January 09, 2024
Panel Affirms $502,172 Bad Faith Judgment Against Insurer In Hurricane Laura Suit

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals found no reversible error in a jury’s conclusion that an insurer acted in bad faith and underpaid its church insured for property damage that was caused by Hurricane Laura, affirming the trial court’s $502,172.16 award in favor of the insured for damages, penalties and fees.
January 08, 2024
Magistrate: Summary Judgment Not ‘Ideal Vehicle’ For Insurer’s Damages Argument

FORT MYERS, Fla. —A federal magistrate judge in Florida on Jan. 5 denied an insurer’s motion for partial summary judgment in a condominium insured’s bad faith lawsuit seeking coverage for property damage caused by Hurricane Irma, finding that “summary judgment is not the ideal vehicle” for addressing the insurer’s arguments against the insured’s claim for damages.
January 08, 2024
Insured Fails To Support Breach Of Contract, Bad Faith Claims, Federal Judge Says

NEW ORLEANS — A Louisiana federal judge dismissed an insured’s breach of contract and bad faith claims against his homeowners insurer after determining that the insured failed to provide sufficient facts showing that the insurer breached its contract and acted in bad faith in its adjustment of the insured’s claim for damages caused by Hurricane Ida.
January 08, 2024
Breach Of Contract Claim Dismissed; Assignee’s Bad Faith Claim Proceeds, Judge Says

PHILADELPHIA — A breach of contract claim against a homeowners insurer cannot proceed because the assignee of the insureds failed to file suit within one year of the insureds’ loss as required by the policy; however, a bad faith claim against the insurer can proceed because the assignee has standing as an injured plaintiff and as a judgment creditor to pursue the bad faith claim, a Pennsylvania federal judge said in partially granting the insurer’s motion to dismiss.