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

Mealey's Insurance Bad Faith

December 12, 2023
Bad Faith, Negligence Claims Bifurcated For Trial But Not For Discovery, Judge Rules

ANCHORAGE, Alaska — An Alaska federal judge determined that claims for bad faith and negligent claims adjustment should be bifurcated for trial purposes but determined that a stay of discovery on the claims for bad faith and negligent claims adjustment is not warranted.
December 12, 2023
Magistrate Grants Motion To Compel In Bad Faith Suit Over $4M STOLI Policy

LINCOLN, Neb. — A Nebraska federal magistrate judge granted an insurer’s motion to compel the production of documents in a breach of contract and bad faith suit filed against the insurer by Wells Fargo Bank, the securities intermediary for an account holder of a purported stranger originated life insurance (STOLI) policy, finding that even if the insurer’s “conduct was inequitable,” the insurer is “entitled to discover evidence of” purported “inequitable conduct” by Wells Fargo.
December 07, 2023
COMMENTARY: Fire & Rain: 2023 Key Decisions & Developments Impacting The Wide World Of Insurance

By Scott M. Seaman, Pedro E. Hernandez and Lisa M. Roccanova
December 08, 2023
Home Inspector Can Testify In Dispute Over Insurance Payout, Repairs

TULSA, Okla. — A federal magistrate judge in Oklahoma on Dec. 7 denied an insured couple’s motion to exclude expert testimony by a property inspector who was hired by the insurer to review work done on a home damaged by a storm after the couple filed a breach of contract suit against the insurer.
December 08, 2023
Elder Abuse Suit Against LTC Insurer Tossed For Not Following Reimbursement Terms

SAN FRANCISCO — A California federal judge dismissed without leave to amend a bad faith, breach of contract, anticipatory breach of contract and elder abuse suit filed against a couple’s long-term care (LTC) insurer for its failure to cover the wife’s claim for benefits, finding that “[t]he fundamental problem with their claims is that the insurance policy in question is a reimbursement policy” and the couple failed to incur or submit covered expenses for reimbursement.
December 08, 2023
Faulty Work Isn’t An Accident, Doesn’t Trigger Policy, Insurer Says

LAS VEGAS — An insurer told the Ninth Circuit U.S. Court of Appeals that neither a contractor found by an arbitrator to have breached a contract nor the homeowner association to which it assigned its rights was entitled to coverage for faulty work and that contrary to their arguments, there was nothing ambiguous about the term “accident.”
December 08, 2023
Limitation In Disability Income Policy Is Ambiguous, Claimant Tells 9th Circuit

SAN FRANCISCO — A district court erred in finding that a disability income insurer correctly reduced the claimant’s disability income benefits according to the terms of the disability income policy because the policy’s monthly benefit limitation is ambiguous and, therefore, must be construed in favor of the claimant, a disability claimant says in an appellant brief filed in the Ninth Circuit U.S. Court of Appeal.
December 06, 2023
Federal Judges Tosses D&O Coverage Suit After Parties Move For Dismissal

WILMINGTON, Del. — A federal judge in Delaware dismissed a directors and offices coverage dispute arising from an underlying investigation by the Securities and Exchange Commission after the insured and the insurer stipulated to dismissal of the entire action.
December 04, 2023
Insureds’ Motion To Remand Breach Of Contract, Bad Faith Suit Denied

BATON ROUGE, La. — A Louisiana federal judge adopted a report recommending the denial of a motion to remand a hurricane damage coverage suit filed by insureds against a homeowners insurer, agreeing with the magistrate judge’s finding that complete diversity of citizenship exists because the insureds’ claims against a non-diverse, Louisiana insurance agent fail.
December 04, 2023
Insureds’ Amendments To Breach Of Contract, Bad Faith Claims Permitted

HAMMOND, Ind. — An Indiana federal magistrate judge granted a motion for leave to file a second amended complaint against excess insurers in a dispute over coverage for an underlying negligence suit after determining that amending the complaint to add additional facts in support of breach of contract and bad faith claims would not be futile.
December 04, 2023
Questions Of Fact Regarding Cause Of Water Damage Exist, Calif. Federal Judge Says

LOS ANGELES — An insured’s claims for breach of contract and bad faith can proceed against a homeowners insurer because questions of fact exist as to whether water damage in the insured’s home was caused by wear and tear, an excluded cause of loss, and whether the insurer’s investigation of the claim was reasonable, a California federal judge said in denying the insurer’s motion for summary judgment.
December 01, 2023
Delaware Judge Denies Assignees’ Motion To Compel In Wrongful Death Coverage Suit

NEW CASTLE, Del. — A Delaware judge refused to compel a homeowners insurer to produce the claim file of a convicted murderer’s parents in a breach of contract and bad faith lawsuit seeking coverage for an underlying wrongful death lawsuit that resulted in a $15,816,580 arbitration award, finding that the murderer’s assignees failed to demonstrate that the parents’ claim file is relevant to the coverage lawsuit.
November 30, 2023
Appraisal Award In Remediation Suit Was Not Valid, Texas Panel Says In Reversing

AMARILLO, Texas — While “dancing with oneself may have been acceptable to Billy Idol,” two appraisers “needed to tango together to have a viable appraisal award,” the Seventh District Texas Court of Appeals said in finding that a trial court erred in entering summary judgment for a homeowners insurer on a breach of contract claim in a remediation coverage suit because the appraisal award was not valid as both appraisers did not agree on the award.
November 30, 2023
Questions Of Fact Exist As To Whether Auto Insurer’s Claim Denial Was Reasonable

SEATTLE — A Washington federal judge denied an auto insurer’s motion for summary judgment on the insured’s extracontractual claims after determining that questions of fact exist regarding whether the insurer’s denial of an underinsured motorist benefits claim was reasonable based on the evidence.
November 30, 2023
No Coverage Owed For Breach Of Franchise Agreement, Trademark Infringement Claims

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals affirmed a lower federal court’s ruling in favor of insurers in an insured’s breach of contract and bad faith lawsuit seeking coverage for an underlying action alleging that it breached a franchise agreement and infringed on trademarks, finding that some of the underlying claims “clearly fell outside the policy's coverage” and that the policy’s intellectual property (IP) exclusion also barred coverage.
November 30, 2023
Panel Says Request For Examination Under Oath Was Not Made In Bad Faith

SAN FRANCISCO — The First District California Court of Appeal affirmed a trial court’s ruling in favor of an insurer on an insured’s breach of contract and bad faith claims in a water damage coverage suit after determining that the insurer’s request for an examination under oath (EUO) from the insured is not evidence of bad faith conduct.
November 29, 2023
Breach Of Contract, Bad Faith Claims To Proceed Against Auto Insurer

SCRANTON, Pa. — A Pennsylvania federal judge determined that an insured’s claims for breach of contract and bad faith can proceed against an auto insurer because questions of fact exist as to whether the insurer breached its contract and acted reasonably in handling the insured’s claims for medical payments following his involvement in an auto accident.
November 28, 2023
Additional Work Not Barred By Policy’s Mold Sublimit Provision, Judge Says

PHILADELPHIA — A claim for additional coverage for mold remediation work required by a local building code is not subject to a policy’s mold sublimit provision because the policy’s ordinance or law provision provides coverage for the additional work that was required by the enforcement of a local building code, a Pennsylvania federal judge said in partially granting the insureds’ motion for summary judgment.
November 27, 2023
U.S. High Court Refuses To Review Insurance Bad Faith Suit Over Worker Injury

WASHINGTON, D.C. — The U.S. Supreme Court denied an insurer’s petition seeking review of the 11th Circuit U.S. Court of Appeals’ finding that there is enough evidence for a jury to reasonably conclude that it acted in bad faith because it delayed acting on its duty to investigate and settle an underlying worker injury claim, refusing to address the insurer’s argument that the appeals court’s holding “sharply conflicts” with the high court’s recent ruling in Dupree v. Younger and warrants grant of its petition for writ of certiorari, vacatur of the lower court’s judgment and remand for further consideration.
November 27, 2023
Unsecured Creditors Propose Liquidation Plan For Vesttoo And Its Affiliates

WILMINGTON, Del. — The Official Committee of Unsecured Creditors has proposed a Chapter 11 plan of liquidation for the jointly administered cases of Vesttoo Ltd. and 48 affiliates in Delaware federal bankruptcy court, with a Dec. 13 objection deadline.
November 27, 2023
Judge Grants Substitution Motion In Hurricane Coverage Row With Insolvent Insurer

NEW ORLEANS — A Louisiana federal judge granted a motion to substitute the Louisiana Insurance Guaranty Association (LIGA) as a defendant in a property owner’s breach of contract and bad faith suit against its now-insolvent insurer that purportedly failed to cover alleged losses from Hurricane Ida, finding that substituting LIGA as a defendant is permitted in an action seeking to resolve covered claims.
November 20, 2023
Judge Issues Remand, Says Guaranty Association Is Insolvent Insurer’s Obligor

NEW ORLEANS — A Louisiana federal judge granted homeowners’ motion to file an amended complaint and name the Louisiana Guaranty Association (LIGA) as a defendant in their breach of contract suit against their now-insolvent homeowners insurer for its purported failure to adequately cover their losses from Hurricane Ida, finding that LIGA is the statutory obligor for the insolvent insurer and that the case must be remanded to state court due to the absence of subject matter jurisdiction.
November 17, 2023
Auto Insurer Owed A Duty To Insured To Disclose Risk Of Minimum UIM Coverage

ALBUQUERQUE, N.M. — A New Mexico federal judge partially denied an auto insurer’s motion to dismiss on claims for bad faith, negligent misrepresentation and violations of New Mexico’s Unfair Trade Practices Act (UPA) and Unfair Insurance Practices Act (UIPA) after determining that the auto insurer had a duty to disclose to the insured that the selection of the minimum uninsured/underinsured motorist (UM/UIM) limits of coverage could result in the insured receiving no UIM benefits if the insured were involved in a collision with a minimally insured tortfeasor.
November 17, 2023
No Coverage Owed For Foundation Damage; Bad Faith, Breach Of Contract Claims Fail

LOS ANGELES — An insured’s claims for breach of contract, bad faith and unfair business practices alleged in a complaint seeking coverage for foundation damage arising out of a burst water pipe cannot proceed because the insurer properly denied coverage under the policy’s foundation damage exclusion, the Second District California Court of Appeal said in affirming a trial court’s decision.
November 16, 2023
Judge Dismisses Most Claims In Property Loss Suit, Says No Bad Faith Claim Exists

TRENTON, N.J. — A New Jersey federal judge dismissed a number of claims alleged against a homeowners insurer in a property loss coverage suit but denied the homeowners insurer’s motion as it pertained to severing and staying any bad faith claims that may be present on the face of an insured’s pro se complaint because the complaint does not include any sufficient facts in support of a bad faith claim.