Extracontractual and Bad Faith Claims Litigation Committee Article Archive

Archived Presentations & Papers:

Posted 12/5/2023
Special Master Orders Travelers Attorney To Sit For PFAS Depo

Posted 10/26/2023
9th Circuit Affirms $6M Bad Faith Award

Posted 10/10/2023
5th Circuit Voids a Policy Limits Settlement After the Jilted Claimant Forces the Insured into Bankruptcy

Posted 10/5/2023

Third Circuit Finds Perfection not Required and that Bad Judgment is not Bad Faith and Holds for Insurer

Posted 9/6/2023

Yacht Co. Sues for Bad-Faith Suit After $2.5M Win Affirmed on Appeal

After an Eleventh Circuit win, the owner of a yacht that was totaled during 2017's Hurricane Irma is suing its insurer for bad faith for failing to promptly cover more than $2 million in coverage for the loss. Read more.

Posted 7/10/2023:

Record Indiana Bad Faith Verdict Upheld

The U.S. District Court for the Northern District of Indiana upheld a jury verdict that awarded punitive damages against the defendant insurers, finding that an award of damages for breach of contract also constituted an award of compensatory damages for bad faith, making punitive damages recoverable under the law. Read more.

Posted 6/26/2023

Fifth Circuit Holds That Amount of Excess Judgement and NOT the Policy Limits Determines the $75,000 Threshold for Diversity Jurisdiction

In a Declaratory Judgment action brought by an insurer to seek a declaration that an excess judgment obtained by default is not covered under the policy due to the insureds failure to cooperate (which led to the default judgment), the Claimant argued that the policy’s $50,000 limit should determine the amount in controversy. Since that amount does not meet the $75,000 minimum threshold for federal court diversity jurisdiction, the Claimant argued that the district court lacked jurisdiction to declare that the claim was not covered. The Fifth Circuit Court of Appeals affirmed the district court’s ruling. Read more.

Posted 6/12/2023

Texas Federal Court Refuses to Bifurcate Punitive Damages Phase in Bad Faith Lawsuit

Posted 5/30/2023

Indiana Federal Court Jury Awards $87.5 Million in Punitive Damages Against 7 Insurers in Property Damage Bad Faith Case

Posted 5/23/2023

Michigan Contemplates New Bad Faith Legislation
Read more.

Posted 4/21/2023

The American Law Institute Embraces First Party Bad Faith

Past President Mike Aylward analyzes the evolution and content of the current draft of Section 20 A of the impending Restatement Third of Torts. Section 20 A is titled “Bad-Faith Performance of First-Party Insurance Contract.” Read more.

Posted 4/21/2023

As the insurance industry liaison, Fellow and Regent Laura Foggan comments on Council Draft No. 4; Sect. 20A. of ALI Rest. of the Law Third Torts.
Read more.

Posted 4/17/2023

Current Draft of ALI § 20 A. Bad-Faith Performance of First-Party Insurance Contract

In March 2023, the ALI released revisions to Chapter 20. Attached is the latest draft on the chapter on First-Party Insurance Bad Faith in the upcoming Restatement (Third) of Torts. Read more.

Posted 4/17/2023

Pennsylvania Federal Court Finds No Bad Faith In Fire Claim Holding No Material Fact Issues

The Court stated that “in order for a fact to affect the outcome of [the insured’s] bad faith claim, it would have to lead a reasonable jury to conclude that [the insurer] did not have a reasonable basis for denying benefits under the Policy and that it knew or recklessly disregarded its lack of reasonable basis in denying the claim.” Read more.

Posted 4/10/2023

A Look At Florida's Aggressively Pro-Insurer Tort Reform

Posted 4/10/2023

STOWERS: Court Rejects Primary Insurer's Unclean Hands Defense to Umbrella Carrier's Stowers Claim

Texas District Court holds that the primary carrier could not assert the defense of unclean hands against the excess insurer in response to the excess carrier's equitable subrogation claim arising out of a judgment in excess of the primary policy limits because the jury found that the primary carrier had breached its stowers duty in May 2009 and again in September 2009, and therefore on those dates it became liable for all damages arising out of the negligent refusal to settle, so no action by the excess insurer was responsible for the loss since the excess carrier did not receive notice of the claim until 2010. Read more.

Posted 4/5/2023

11th Circuit Reverses a Bad Faith Judgment in Favor of the Insurer

The 11th Circuit applying Florida law reversed a trial court’s ruling in favor of an insurer because the insurer waited over one month to tender its $10,000 policy limits when it had sufficient information to determine that it was required to tender its policy limits and because it failed to provide information to the claimant’s attorney that may have facilitated settlement of the case. Accordingly, the court found a fact question on conduct could be seen by the factfinder as causing or contributing to a $5 million excess judgment against the insured. Read more.

Posted 3/28/2023

Key issues for policyholders under Florida’s new tort reform bill. The Policyholder Perspective
Read more.

Posted 3/20/23


The district court’s order lacks any analysis of either the importance to the case of the new data in the expert’s Second Report or the potential prejudice to Lloyd’s of allowing the late disclosures, beyond the court’s bald statement that the “delay to seemingly surprise [Lloyd’s] . . . [was] not harmless.” And the district court did not address the possibility of a continuance to cure any prejudice. Because the district court failed adequately to explain its reasoning, “the order must be vacated and remanded to allow the district court to explain its decision after considering the proper factors.” Read more.

Posted 3/20/2023

Florida Cuts P&C Claims Deadlines by Half

Dramatic changes to claims administration for Florida property and casualty insurance carriers took effect on March 1, 2023, cutting claim response times in half for both personal and commercial lines.

Gov. Ron DeSantis signed Senate bill 2-A (SB 2-A) into law on December 16, 2022, which arose from the Florida legislature's second special legislative session of 2022, addressing the deterioration of the state's P&C insurance marketplace. The bill enacts many significant revisions to claim-governing sections 627.70131 and 627.70132 of the Florida Statutes. Read more.

Posted 3/15/2023

11th Circ. Orders USAA's $5M Bad-Faith Fight To Trial

A USAA unit must face claims that its alleged bad-faith conduct caused its policyholder to suffer a $5 million excess judgment in a trial over a serious car accident, the Eleventh Circuit said Tuesday, reversing and remanding the insurer's early win against the injured driver. Read more.

Posted 3/6/2023

New Jersey Federal Court Allows Bad Faith Failure to Settle Suit to Proceed Based on Claims Committee Conduct

The court’s decision, that bad faith could possibly be established [insurer’s MSJ was denied], was tied to two key issues – (1) the insurer not accepting its adjuster’s recommendation to settle and (2) the court taking issue with how the insurer’s claims committee went about its business of analyzing whether the claim should be settled. Read more.

BrightView Enterprises Solutions v. Farm Family Cas. Ins. Co., No. 20-cv-7915 (D.N.J. Feb. 7, 2023)

Posted 2/10/2023

Kansas Supreme Court Finds No Bad Faith and Affirms Reversal of a District Court’s Finding that the Insurer Breached its Duty of Good Faith in Failing to Settle, thus Causing an Excess Judgment.

Posted 2/10/2023

Insured’s Failure to Obtain Consent to Settlement Deemed Prejudicial

The Western District of Pennsylvania granted an insurer’s motion to dismiss breach of contract and bad faith claims with prejudice after finding that an insured had no basis to sue its insurer for reimbursement of a settlement payment when the insured did not seek the insurer’s consent before entering into the settlement, pursuant to the terms of a business insurance policy. See RealogicHR, LLC v. Continental Cas. Co., 2022 WL 17904245 (W.D. Pa. Dec. 23, 2022).

Posted 1/30/2023

Texas Court of Appeals Affirms Summary Judgment For Insurer After Homeowners Refuse to Cooperate in Appraisal Process and EUO

The Court found that the trial court had properly granted summary judgment for the insurer on the insureds' claims for breach of contract and extra-contractual damages because the insureds refusal to designate a "qualified appraiser" and to timely sit for examinations under oath had breached the policy's cooperation clause and prejudiced the insurer. Read more.

Posted 1/30/2023

Western District of PA Finds No Bad Faith for Policy Interpretation Based on Unsettled Law

The Western District of Pennsylvania recently granted an insurer’s motion for summary judgment and denied an insured’s motion for summary judgment after finding that the insurer did not act in bad faith when it requested that its insured submit to an IME at a time when the validity of the IME clause in the Policy was unsettled and the subject of debate in Pennsylvania.  See Loughery v. Mid-Century Ins. Co., 2022 WL 17821613 (W.D. Pa. Dec. 20, 2022). Read more.

Posted 1/12/2023

Missouri Supreme Court Reverses $5.2 Million Extracontractual Judgment Against Auto Insurer

The Missouri Supreme Court vacated a $5.2 million judgment over a woman's claim that she contracted HPV during sexual encounters in a Geico policyholder's car, finding that the insurer wasn't given the opportunity to intervene in the lawsuit before judgment was entered. Read More.

Posted 12/19/2022

Kentucky Supreme Court Affirms Reversal Of $4.5M Bad Faith Verdict Against Insurer

A split Kentucky Supreme Court affirmed the dismissal of a $4.5 million bad faith jury verdict against Cincinnati Insurance Co. finding that CIC had a reasonable basis in law and fact for disputing the policy's coverage of Belt's claims. Read more.

Oral argument: Haley Belt v. Cincinnati Insurance Company | Kentucky Supreme Court Coverage (ket.org).

Posted 12/16/2022

New California Statute Puts Limits On Time-Limited Demands Within Liability Policy Limits
The statute is Code of Civil Procedure Sections 999 to 999.5.  It goes into effect on January 1, 2023. Read more.

Posted 12/15/2022

When the Insurer’s and the Insured’s Interests Diverge on Whether to Settle an Underlying Claim

This article explores the disagreements over whether to settle that may arise between the insurer and insured. The two sides may disagree on the value of the claim. The insurer may be asked to settle a case despite having questioned or disputed coverage as outlined in a reservation of rights letter. Consequently, the insurer may ask the insured to contribute to a settlement while coverage issues remain in dispute. If both the insurer and insured agree to make a joint offer to the underlying claimant, they may value the claim differently. Can the insurer place a limit on its contribution based on how it values the claim, requesting that the insured contribute its own funds if it wants to increase the amount of an offer? Would the insurer act in bad faith by seeking a contribution from its insured? Read more.

Posted 12/12/2022

Texas Jury Finds Primary Insurer Violated the Stowers Doctrine

The jury verdict, finding that the primary insurer failed to accept within limits settlement demand, absolves the excess insurer from covering a loss above the primary insurer’s limits. Read more.

Posted 11/28/2022

Consent Judgments with Covenants not to Sue/Enforce

Posted 11/22/2022

The Evolution of Litigation Immunity in the Context of Insurance Coverage and Bad Faith Litigation 
From the Journal for Civil Defense & Corporate Counsel and Industry Professionals by Michael Young.
Read more.

Posted 11/7/2022

Western District of Texas Grants Insurer's Motion for Partial Summary Judgment on Bad Faith, DTPA, and Chapter 541 Claims

A court of the Western District of Texas granted an insurer's motion for partial summary judgment on certain extra-contractual claims, holding that undisputed facts reveal a bona fide dispute. Read more.

Posted 10/17/2022

Nebraska Supreme Court Holds Insured Can't Bring Bad Faith Claims

The Nebraska Supreme Court affirmed the dismissal of bad-faith claims from a roofing and gutter company, finding that a policyholder can't assign such claims to a non-policyholder. Read more.

Posted 10/14/22

Illinois Court of Appeals Holds No Liability to Insurer for Failure to Settle

Plaintiff did not state a claim that the defendant insurer had a duty to settle the underlying action where he did not allege facts establishing that an excess judgment was reasonably probable. (2) Plaintiff did not allege facts establishing a conflict of interest between the insurer and its insureds. (3) Plaintiff was not entitled to damages under section 155 of the Insurance Code for insurer's allegedly “vexatious and unreasonable” actions. Read more.

Posted 10/14/22

Seventh Circuit Holds that Self Insured does not Owe Duty to Insurer to Settle within SIR

Excess liability insurer that provided coverage with liability limits from $3 million to $25 million brought action against insured owner and operator of home improvement stores, alleging breach of contract and breach of duty to settle for not settling within its self-insurance limit of $2 million and excess coverage of $1 million. 

Seventh Circuit held that the $2 million of personal injury liability coverage the insured carried as “self-insured retention” did not make it an “insurer” subject to additional responsibilities to its excess insurer when it rejected the settlement of underlying action, and insured did not violate any express or implied duties it owed to its primary or excess insurers under primary liability policy by rejecting the settlement. Read more.

Posted 9/30/22

11th Circ. Reverses Geico's Early Win In $18M Golf Cart Case: Revives Bad Faith Claim

The Eleventh Circuit ruled Thursday that a golf cart is covered by a Geico auto insurance policy issued to the cart driver's parents, reversing a Florida district court's decision that the insurer doesn't have to cover an $18 million collision between the golf vehicle and a car. This ruling will require the district court to adjudicate the plaintiff’s bad faith claims, which were not addressed in the initial summary judgment. Read more.

Posted 9/23/22

N.D. Texas Holds that Bona Fide Coverage Dispute Precludes Bad Faith Claims

Posted 9/23/22

Texas Court of Appeals Affirms Judgment in Favor of Insurer on Statutory Bad Faith Claims

At most, the record shows an initial dispute between Jefferson and Geico regarding her level of liability for the collision. A dispute on liability, without more, does not constitute evidence the insurer violated the insurance code or otherwise engaged in unfair settlement practices

Posted 9/22/2022

Is New Jersey’s Unfair Claim Settlement Practices Act Obsolete?

Posted 9/14/2022

Texas Federal Judge Strikes Plaintiff’s Bad Faith Experts: Finds that Opinions Amount to Legal Conclusions

Once the expert was struck, the court granted the insurer’s motion for summary judgment. Read More.

Posted 9/8/2022

Court Strikes Claims Handling Expert And Resolves Cross Motions for Summary Judgment in Insurer's Favor

A court of the Western District of Texas granted an insurer's motion to strike claims handling expert and dismissed insured's claims on cross motions for summary judgment in post-appraisal hail damage dispute, holding insured is not entitled to attorney's fees. Read More.

Posted 8/25/2022

California Court of Appeals Finds No Bad Faith and No Duty to Pay a $3 million Extracontractual Judgment Holding: "If anyone acted in bad faith, it was plaintiffs and [their law] firm."

The Second Appellate District affirmed the insurer's summary judgment, holding that Mercury Insurance Co. did not act in bad faith because plaintiffs did not offer to settle their wrongful death claims stemming from their son.

"Because Mercury's undisputed evidence shows plaintiffs did not offer to settle their wrongful death claims, they cannot state a cause of action for bad faith refusal to settle those claims."

Mercury tendered $15,000 to the estate and subsequently paid $1,070 to cover the loss of the claimant’s moped. The estate subsequently rejected the settlement because it demanded payment of all available policy limits, including the property damage limits, and accused the insurer of bad faith. Mercury argued that it timely tendered the bodily injury limits but was not obliged to tender the property damage limits because the claim for Palma's moped did not meet or exceed the limits. Read more.

Posted 8/17/2022

Duty of Good Faith, Self-Insured Retention Coverage Update 

Duty of Good Faith – Sixth Circuit (Michigan Law)

Trident Fasteners, Inc. v. Selective Ins. Co. of South Carolina No. 21-1439, 2022 WL 3088238 (6th Cir. Aug. 3, 2022)

Self-Insured Retention – Seventh Circuit (Illinois Law)
N. Am. Elite Ins. Co. v. Menard, Inc. No. 21-1813, --- F.4th---, 2022 WL 3095976 (7th Cir. Aug. 4, 2022)

Read More

Posted 8/1/2022

Insurer Can't Get New Trial After $2.6M Loss In Bad Faith Case

Rockhill Insurance Co. isn't entitled to a new trial after it was found to have acted in bad faith and was ordered to pay a fishery $2.6 million, a Colorado federal judge said, rejecting the insurer's contention that it was prejudiced by the exclusion of certain evidence.

In an order, U.S. District Judge Raymond P. Moore said that the court didn't err by excluding from trial evidence of certain "litigation conduct" from Rockhill's yearslong legal battle with CFI-Global Fisheries Management. Nor was the jury given improper instructions about the insurer's payment and settlement obligations toward CFI under a professional liability policy, the judge said.

Posted 7/28/2022

Insurer Says Ga. Law Doesn't Apply In Bad Faith Suit
A Travelers unit urged a Georgia federal court to toss a residential construction company's claims for bad faith damages related to the insurer's refusal to provide coverage for an employee theft, saying Georgia law doesn't apply because the company is based in Washington, D.C.

Travelers noted that Tiber has its headquarters in D.C. The company also admitted in its amended complaint that it renovates single-family homes throughout the United States and is seeking coverage from Travelers for some properties that weren't in Georgia, Travelers said.

Tiber also can't sue Travelers for bad-faith damages under D.C. law, the insurer said, arguing that D.C. doesn't allow policyholders to bring bad-faith claims against insurers based solely on the decision to deny coverage.

Posted 7/26/2022

Insurer Dodges Extra Liability In Shooting Coverage Suit

The insurer for an event center that was sued over an on-premises shooting did not handle the center's claim in bad faith when it did not tender the center's policy limits earlier in the underlying dispute, because the center's liability was unclear, a Florida federal judge said Thursday. Read More

Posted 7/26/2022

11th Circ. Upholds Progressive's Win In Bad Faith Suit

The Eleventh Circuit on Monday affirmed a Progressive unit's win in a coverage dispute over its handling of a personal injury claim brought against a policyholder, concluding no reasonable jury could have found the insurer acted in bad faith when attempting to settle the claim.

"Under Florida law, disagreement over the valuation of a claim resulting in an insurance company's refusal to pay the demanded amount does not equate to per se bad faith," the judges added. They concurred with the lower court's finding that the facts of the case reflect that the insurer simply disagreed about the value of Deary's claim, and that the original offer was based on the medical documentation provided by Deary.

Moreover, the insurer's delay in tendering the full policy limits until June 2018 is not evidence of bad faith, the panel said, noting that Deary expressly disclaimed any willingness to settle months before.

Posted 7/11/2022

11th Circuit Holds that a Consensual Settlement in Excess of the Policy Limits Does Not Kill Bad Faith Insurance Claims

Here the claimant is alleging that the insurer acted in bad faith in its handling of a car wreck case, which led the policyholder to accept a settlement that exceeded his policy limits. The trial court, however, dismissed the case finding that a final judgment enforcing a consensual settlement is not an "excess judgment," and that an excess judgment is required before a bad faith claim can move forward.

The Eleventh Circuit reversed holding that "a final judgment that exceeds all available insurance coverage" constitutes an "'excess judgment' that can satisfy the causation element of an insurer-bad-faith claim under Florida law," no matter if it comes from a consensual settlement or a jury verdict.
Click here for the article.

Posted 7/1/2022

New Jersey Appellate Division Rules that Injured Plaintiff May Sue His Insurance Carrier for Bad Faith Damages Due to Delay in Approving Medical Test and Surgery
Click here for the article.

Posted 6/29/2022

A Split 11th Circuit Revives a Bad Faith Claim on a $12 Million Judgment

The Eleventh Circuit held that a Florida federal court erred in a motorcycle crash victim's bad-faith suit seeking to collect a $12.6 million judgment from the at-fault driver's insurer when it failed to instruct the jury that an insurer not only has a duty to settle claims for its insured, but also to properly advise their insureds.

The dissenting opinion noted that the overwhelming evidence "indicates that the claimant’s counsel tried to "lure Direct General into making mistakes that [the claimant] could later use to generate a bad-faith claim.”

Click here for the article.

Posted 6/10/2022

Fifth Circuit Affirms Denial of Bad Faith Claim for Lack of Expert Testimony:
Proffered expert’s testimony was held to be based on unreliable methods and principles. 

Applying Louisiana law, the Fifth Circuit held that the expert needed to show how his experience or expertise led to his conclusions, especially about causation, noting that “causation should come first and cost second, not the other way around.” The court continued that the passage of time, lack of accounting for post strike repairs, reliance on the insured’s representations alone, and drastic difference in repair estimates all cast doubt on the reliability of the expert’s underlying principles and methods. Accordingly, the Fifth Circuit affirmed the denial of the insured’s bad faith claim.


Posted 6/1/2022

Texas Courts Are Now Considering Extrinsic Evidence With Respect to The Duty To Defend.
Immediate Impact Appears to be More of the Same: Artful Pleading Still Seems to Work
By Robert Allen The Allen Law Group

Posted 4/25/21

Texas Justices Say Insurer Owed No Legal Duty In Fatal Crash

The Texas Supreme Court reversed an intermediate appellate court's ruling that an insurer owed a duty to its insured to issue a safety warning about taking photos at the scene of a car accident, saying the policyholder's negligence claims fail without an applicable legal duty.

The state justices reinstated a trial court's summary judgment ruling in favor of Elephant Insurance Co., which found the insurer had no duty to ensure the safety of policyholder Lorraine Kenyon or her husband while guiding her through the post-accident claims process.

Posted 4/19/2022

Fourth Circuit Reverses District Court and Awards Treble Damages Against Insurer

The Fourth Circuit reversed a lower court's decision limiting an apartment complex owner's damages for a walkway collapse, saying that the owner's contract damages should be trebled because of the insurer's violation of North Carolina's Unfair and Deceptive Trade Practices Act.

The appellate court affirmed the district judge's summary judgment decision in favor of the insured in a published opinion, ruling that the insurer improperly denied coverage of the apartment owner's claim, however it ruled that the district court erred in not trebling the damages. Here, the district court determined that the insurer violated a North Carolina bad faith statute by first granting coverage and then denying it in a confusing letter, however, the district court refused to treble DENC’s contract damages under the UDTPA because the insurer’s deceptive practice didn’t proximately cause those damages. A panel of the Fourth Circuit disagreed and awarded the insured treble damages as a matter of law. Read more.  

Posted 4/13/22

The Misinterpretation of Pennsylvania Bad Faith Claims Handling Rule

Some courts applying Pennsylvania law in insurance coverage disputes have reflexively posited that no claim for bad faith claims handling will lie where an insurer establishes that the subject claim is not covered by the insurer's policy. According to Reed Smith lawyers, particularly as it relates to first-party coverage claims, that is a misleading and inaccurate statement of Pennsylvania law.

Posted 4/6/2022

11th Circ. Says Settlement Can Be Basis For Bad-Faith Claim

A consent judgment memorializing a private settlement agreement qualifies as an "excess judgment" that a policyholder can cite under Florida law to bring a bad-faith claim against their insurer, the Eleventh Circuit ruled Tuesday, overturning its unpublished ruling that held the opposite. Read more

Posted 3/25/22

Colorado: No bad faith claim against claims adjuster

On March 14, 2022, the Colorado Supreme Court held that a bad faith cause of action does not accrue against an insurance company’s adjuster employee. The practical reality is that this decision will stop the practice of joining a resident adjuster to destroy diversity jurisdiction and make it easier for insurers to remove cases to federal court in Colorado.

Colorado: No bad faith claim against claims adjuster - State Bar of Texas Consumer and Commercial Law Section Newsstand (lexology.com)

Posted 3/18/2022

Del. Supreme Court: Opt-Out Action “Related” to Securities Class Action, Precluding Coverage

In an interesting decision that explores the standard to be used in determining whether an earlier claim and a later claim are interrelated, the Delaware Supreme Court has affirmed a lower court ruling that a later filed opt-out action is related to a securities lawsuit earlier filed and therefore that the opt-out action is not covered under the D&O insurance program in place at the time the opt-out action was filed.

Del. Supreme Court: Opt-Out Action “Related” to Securities Class Action, Precluding Coverage | The D&O Diary (dandodiary.com)

Posted 2/14/2022

Court Announces New Rule on Considering Extrinsic Evidence; but holds that it does not Apply in the Two Cases

Read More

Posted 2/3/2022

Fifth Circuit Bars a Bad Faith Lawsuit Filed After the Settlement of the Coverage Action Based on Res Jucicata

Applying Louisiana Law, the Fifth Circuit held that the initial coverage case, seeking higher UM/UIM limits due to an ineffective UM/UIM waiver, and the subsequently filed bad faith case were “’intertwined and center around the same set of operative facts,’ namely, [the insured’s] damages from the accident, the coverage he was entitled to under [the insurance] policy, and [the insurer’s] response to [the] claim for coverage.” Noting that the insured “did not specifically reserve” the right to bring this second suit as part of his settlement agreement, the court opined that the bad faith action “arises out of the same nucleus of facts” as the initial suit, and thus, the issue of the insurer’s alleged bad faith in misrepresenting its UM coverage “could have been raised” in that initial suit. Accordingly, the subsequent bad faith case was barred by res judicata. Read More.

Posted 1/25/2022

2021 Key D&O Insurance Coverage Decisions

Guest Post: The Year in Review: 2021 Key D&O Insurance Coverage Decisions | The D&O Diary (dandodiary.com)

Posted 1/25/2022

Colorado Supreme Court Hears Oral Argument On Whether Adjusters Can Be Sued Individually For Improper Denial Of Claims

On January 11, 2022, the Colorado Supreme Court heard oral arguments in Skillett v. Allstate.

For more information on the case, see 
Claims adjusters' fate lies in state Supreme Court following arguments over personal liability | Courts | coloradopolitics.com

To listen or watch the oral argument, see https://cojudicial.ompnetwork.org/embed/sessions/235399/21sa187

Posted 1/19/2022

New Jersey Enacts a Bad Faith Statute for UM/UIM Claims

New Jersey has enacted an insurance bad faith statute that will penalize insurers for certain types of conduct in handling claims for uninsured and underinsured motorist coverage as the result of auto accidents. The new law allows prevailing insureds to recover extra-contractual damages, up to three times the policy limit, as well as attorney’s fees. Read more.

Posted 1/7/2022

Florida Court of Appeals (2-1) Reverses Bad Faith Summary Judgement for Insurer in a Hurricane Claim

On a set of undisputed facts, including the insurer immediately paying an appraisal award less than the amount the insured was claiming in coverage, the majority held that: "[t]ypically, the question of whether an insurer acted in good faith toward its insured in resolving a claim is an issue of fact for the jury … . Given the different inferences that each party argues must be drawn from the facts at hand, this case is no exception." Read More.

Posted 1/5/2022

Fourth Circuit Holds No Bad Faith For An Excess Carrier Denial Of Coverage Because The Insured Was Dissolved And Faced No Liability

Applying South Carolina law in a construction defect coverage case, the Fourth Circuit characterized the insured’s alleged damages alleged as a loss without injury because the insured would never be liable for the damages since its dissolution, and as such, the summary judgment to the insurer was proper. Read More

Posted 1/5/2022

Oklahoma Federal Court Rules That Plaintiff's Time Sensitive Demand Was Faulty Because It Did Not Allow the Insurer Adequate Time To  Conduct Its Investigation

The district court concluded that the insurer’s action did not equate to bad faith because the claimant’s offer deadline precluded a full investigation of the multiple claims against its insured. Therefore, the court held that the insurer’s actions were not tortious under Oklahoma law in that the insurer conducted a diligent investigation, earnest negotiation and competent defense of its insured in an attempt to avoid excess liability. Read More

Posted 1/3/2022

Texas Court of Appeals Allows a UIM Bad Faith Lawsuit to Proceed Even Though Insurer Timely Paid UIM Benefits After a UIM Trial

Here, the Austin Court of Appeals, relying on the original Arnold case, held that Allstate was not immune from a bad faith case even though it paid out its limits immediately after losing the UIM case. Also, the court ruled that the insured's mental anguish can constitute an independent injury. The opinion, however, specifically recognizes an insurer's bona fide dispute defense.

Allstate has filed a motion for rehearing. This is a case to watch because the result creates a conflict amongst different Texas Court of Appeals, which makes it more likely that the Texas Supreme Court will involve itself with the case.

Posted 12/28/21
West Virginia Supreme Court Holds that Personal Liability is Necessary for an Insured to Prove Extracontractual Damages Read more.

Posted 12/22/21
Texas Federal Magistrate Judge Grants $500 an Hour for Attorneys Fees to Prevailing Plaintiff's Attorney in a Garden Variety Property Damage Bad Faith Case Read more.

Posted 12/1/21
Texas Supreme Court Hears Oral Argument on Insurers Duty to Policyholders in the Investigation of a Loss Read more
The oral argument can be accessed on the Texas Supreme Court’s YouTube page.

Posted 11/30/21
Third Circuit Affirms District Court’s Finding That Insurer's Denial of Benefits Was Arbitrary and Capricious Read more 

Posted 11/16/21
Insurer Sued for Bad Faith Application of a Social Engineering Sublimit on a Cybercrime Fraud Case in Minnesota Federal Court Read more

Posted 11/10/21
Insurer loses motion to dismiss coverage and bad faith claims arising from furniture store's damages sustained by civil unrest. Read more.

Posted 10/27/21
Nevada Federal Court Throws Out Bad Faith Claims in Underinsurance Motorist Coverage Case Read more 

Posted 10/18/21
New Mexico Med Center's COVID-19 Bad Faith Claim Against Insurer Can Proceed Read more

Posted 10/4/21
11th Circuit Applying Florida Law Holds No Bad-Faith after the Insured Hit with a $5 million Judgment in a Car-Wreck Case Read more.

Posted 9/16/21 
The Texas Supreme Court Hears Oral Argument on Two 8-Corner/Extrinsic Evidence Cases The Texas Supreme Court’s YouTube page for September 14, 2021 can be accessed here: Supreme Court of Texas - Oral Arguments 09.14.21 - YouTube

Posted 9/16/21
What 5th Circuit Ruling Means for Insurer’s Post-Appraisal Award Liability

Posted 7/28/21
New Missouri Law Safeguards Insurers from Excessive Arbitration Awards and Findings
Reprinted with permission from the July 22, 2021, online edition of PropertyCasualty360.com © 2021 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or [email protected].

Posted 7/22/2021
New York Federal Court Holds No Bad-Faith for Denial of Coverage to a Manager in a D&O Case
Nationwide Unit Beats Bad-Faith Claim In D&O Coverage Fight - Law360

Posted 6/23/2021
No Bad Faith By Insurer In Crash Dispute, 4th Circuit Rules - Law 360

Posted 6/14/2021 
Attorney Client Privilege in First Party Litigation By William T. Barker 
Excerpted from William T. Barker & Ronald D. Kent, New Appleman Insurance Law Bad Faith Litigation, Second Edition, ch. 16, with permission. Copyright 2021. Matthew Bender & Company, Inc., a LexisNexis company. All rights reserved.

Posted 6/3/2021
11th Circ. Hands Progressive A Win In Fla. Bad-Faith Dispute - Law 360

Posted 5/14/2021 
NY Bad Faith Bill Would Tip The Scales Against Insurers - Law360 
By ACCC Fellow Dan Kohane, Lee Siegel and Diane Bucci: 

Posted 4/27/2021
7th Circ. Reverses Insurer's $2.8M Loss For Declining TM Defense - Law 360

Posted 4/22/2021
Recent Bad Faith Cases Regarding Reasonableness of Medical Treatment In two recent cases

Posted 4/20/2021
Georgia Supreme Court Upholds $2.7 Million Award Against Insurer for Failure to Settle - Law 360

Posted 4/13/2021
Insurer Hit with $1.9 Million (including $1 Million Punitive Damages) for Failure to Settle - Law 360

Posted 4/13/2021 
Insurer Seeks Interlocutory Appeal to the 7th Circ. To Review Punitive Damages Recovery in Bad Faith Case over the Defense of the Insured - Law 360

Posted 3/15/2021
Use and Abuse of Claims Experts in Bad Faith Litigation
ACCC Fellow and Board Officer Mike Huddleston’s article in ABA TIPS “The Brief” Winter 2021

Posted 3/10/2021
11th Circ. Won't Revive Rental Co.'s $5M Failure-To-Settle Suit - Law 360

Posted 3/10/2021
Farmers Insurance Beats $9.9M Bad Faith Verdict On Appeal - Law 360

Posted 3/9/2021
Fifth Circuit Revises Stowers Opinion; but the Result Stays the Same

Posted 2/26/2021
Oral Argument of Note: Texas Supreme Court to Rule on whether a Claims Handler can be Deposed in an Uninsured/Underinsured Motorist Coverage Cases prior to the Legal Determination of the Tortfeasor’s Liability
Briefs | Court of appeals opinion Simulcast on Texas Supreme Court’s YouTube page: Supreme Court of Texas - YouTube.

Posted 2/23/2021 
Insurer Sued for Fraud for Repeatedly Using the Same Allegedly Unqualified Experts Seeks Dismissal - Law 360

Posted 2/19/2021
Upon Certified Question, Arizona Supreme Court Holds that Insurer’s Alleged Unreasonably Withheld Consent for a Settlement Must be Analyzed from Insurer's Perspective - Law 360 

Posted 2/19/2021
No Coverage; but Insurer Must Defend Bad Faith Claims over Defense At Trial - Law 360 

Posted 2/17/2021
Kroger Insurer's Trial Gamble Blamed For 'Runaway' Verdict - Law 360 

Posted 2/16/2021 
11th Circ. Doubts Fla. Law Firm's Right To $1M Damages - Law 360

Posted 2/6/2021
A Question of Timing: Policy-Limit Demands and Insurer Bad Faith in Florida
From The Segal McCambridge Insurance Coverage and Bad Faith Practice Group, co-chaired by Douglas McIntosh

Posted 1/7/2021
Texas Supreme Court to Decide Whether a Declaratory Judgment Action is the Proper Way to Assert an Underinsured Motorist Claim
Bob Allen, The Allen Law Group, [email protected]
Also see Law360 Article: Allstate Asks Texas Justices To Ax Fee Award In Crash Suit
Texas Supreme Court YouTube recording of the argument is https://www.youtube.com/watch?v=XjN52ef0f_g.

From Law360: Theater Chain Sues Insurer $400 Million for Systematically and “Suggestively Steering” Claims to Lower Limit Coverages 12/23/2020

Missouri Insurance Bad Faith Claim Overrides New York Choice of Law Provision 12/21/2020

American Guarantee and Liability Ins. Co. v. ACE American Ins. Co., Cause No. 19-20779 on file in the Fifth Circuit Court of Appeals 12/21/2020  -  Casenote by Bob Allen 12/22/2020

Insurer Liable for Bad Faith—For Filing a Declaratory Judgment Action
By Randy Maniloff, White & Williams, LLP

Insurer Estopped from Denying Coverage for Legal Malpractice Action But Not Subsequent Disgorgement Action
Wiley Executive Summary Blog(Nov 11 2020)Errors & Omissions 
The U.S. District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, has held that an insurer is estopped from denying coverage for a legal malpractice action after defending the action for over a year without a reservation of rights, despite knowledge of the facts upon which it ultimately relied to deny coverage.

11th Circuit's significant decision - Court certified bad faith issues to the Georgia Supreme Court 
Law 360 Article

No Coverage for TPA in Claim Arising from Extracontractual Exposure to Insurer
Wiley Executive Summary Blog Article

After Refusing $30K Settlement Offer, Bad Faith Suit May Cost GEICO $2.7M

Texas Supreme Court and the Fifth Circuit to Rule on the Texas Stowers Doctrine 
As the iconic Texas Stowers Doctrine (holding liability insurers liable for negligently failing to settle cases within their policy limits) approaches its 100th anniversary, the rumor is that Vince Morgan is planning a party at the Stowers Furniture warehouse with fireworks and a parade. Meanwhile, new situations arise that continue to test the boundaries of the established criteria for invoking the doctrine. Over the past two months, two cases—one federal and one state—have winnowed their way up the appellate ladder and were argued to their respective courts.

In this regard, here is the audio link to the 5th Circuit oral argument in American Guarantee v ACE American, an excess-primary Stowers case, which among other issues focuses on whether an in-trial settlement demand met the elements of the Stowers doctrine: http://www.ca5.uscourts.gov/OralArgRecordings/19/19-20779_8-10-2020.mp3.

Next is the link to the Texas Supreme Court’s zoom oral argument in In Re Farmers Texas, which analyzes whether the Stowers Doctrine is invoked in the context of an over-the-limits settlement, partially funded by the insured, which was allegedly required because the insurer’s allegedly negligently failed to accept an earlier demand within the policy limits. http://www.texasbarcle.com/CLE/SCPlayer5.asp?sCaseNo=19-0701&bLive=&k=&T=.

These cases were well argued and the panels were active. They are each about 45 minutes a piece, so they are perfect listening for a 20-minute commute (listen to half on the way there and the other half on the way back). The Texan Fellows are watching these cases closely. After a relative yawn on the 8-corner/extrinsic evidence duty to defend cases in last year’s Texas Supreme Court term, it will be very interesting to see how these decisions go. Stay tuned.

ACCC 2020 Annual Meeting Panel Paper: Duty to Defend Bad Faith Issues

August 2020 IADC newsletter article "Preparing for Possible Bad Faith Claims in COVID-19 Related First Party Property Lawsuits" by Karen K. Karabinos and Eric R. Mull

May 2020 IADC newsletter Alexander G. Henlin

COVID-19 DJ Alleges Bad Faith For Failure To Investigate Claim. Randy Maniloff

Right To Jury Trial re Reasonableness of Settlement. William T. Barker

Overview of Texas Bad Faith Law. Bob Allen

A Liability Insurer's Breach of the Duty to Defend and the often erroneous consequence of Extracontractual Liability. Douglas R. Richmond

Newly admitted fellow Terence Ridley recently secured a trial court ruling for the insurer, on remand from the Colorado Supreme Court, finding and concluding that a policyholder-appointed appraiser was improperly biased. The trial court vacated in toto a ~$3 million property-damage appraisal award, arising from a hail claim,  in favor of a Homeowner’s Association. After a two-day trial to the court, the judge ruled that the appraiser’s actions favored the policyholder and that the appraiser influenced the appraisal for the policyholder’s benefit.  Owners Ins. v. Dakota Station II Condo Ass’n, Inc. (Jefferson Cty. Dist. Ct. Colo. 2020).

Attached are the Colorado Supreme Court opinion and the Findings of Fact and Conclusions of Law on remand.

Excess vs. Primary Stowers Doctrine Bench Trial Reveals Inciteful Findings of Facts and Conclusions of Law

The Texas Stowers doctrine, which has been shaped in large part by ACCC Texas Fellows, gives rise to some of the more exciting insurance bad faith litigation in Texas. The prospect of opening up the policy limits for an insurer’s failure to accept a within limits settlement demand of a covered claim that an ordinarily prudent insurer would accept, considering the likelihood and degree of the insured’s potential exposure to an excess judgment, in many situations is the ultimate hammer in settlement negotiations.

The Stowers doctrine is particularly effective when dealing with one injury and one insured for a covered claim. Another recurring aspect of Stowers litigation is that it often arises in the context of an excess insurer suing a primary insurer. Both of these factors were involved in American Guarantee & Liability Ins. Co. v. Ace American Ins. Co., 2019 WL 4316531 (S.D. Tex. 2019).

The underlying tort litigation was a wrongful case brought by the mother, wife and two minor children of a man killed in a bike accident involving a truck owned by a large landscaping company.  The Plaintiffs were represented by a highly regarded and very successful Joe Jamail mentee; although defense counsel was very bullish about the insured’s lack of liability. The primary limits were $2 million. The excess insurer monitored the underlying tort litigation.

After a $39 million verdict against the insured, which was subsequently settled for $9.975 million with the excess carrier funding the amount over the $2 million primary limits, an excess vs primary insurer Stowers lawsuit was litigated in a Houston federal court.

What is very different than normal about American Guarantee v. Ace American, is that Houston Federal Judge Keith P. Ellison, after presiding over a week-long bench trial, issued 68 Paragraphs of Findings of Fact and 17 Paragraphs of Conclusions of Law in the attached Memorandum Order issued last month. He discussed the evidence involving whether the primary insurer was negligent in not accepting one of three settlement demands within the $2 million policy limits.

Significant to insurers facing demands under the Stowers doctrine is that Judge Ellison ruled that, even in the face of a hammer letter by the excess insurer, the primary insurer did not violate the Stowers doctrine for failing to accept the first policy limits demand made after a second failed mediation eleven days before the start of trial. Judge Ellison ruled that in light of the perceived liability defenses, an ordinarily prudent insurer could believe that the settlement value of the case was less than the $2 million policy limits, relying on what he found to be a reasonable report assessing a reasonable settlement range between $1.25 and $2 million.

However, there were adverse evidentiary rulings against the insured landscape company during trial, which changed Judge Ellison’s mind about two within policy limits demands made during trial, the last one expiring when the jury returned its verdict. As it relates to those demands, Judge Ellison ruled that the primary insurer violated the Stowers doctrine by not accepting either one of those demands, which will leave it responsible for the settlement payment made by the excess insurer.  

In many cases, the Stowers issue is decided by as few as one jury question. In American Guarantee & Liability Ins. Co. v. Ace American Ins. Co., however, Stowers liability was established by a very thorough analysis of the facts and then a highly detailed application of the law. Accordingly, unless it gets reversed or altered on appeal, this uncommon Memorandum Opinion will be helpful for those evaluating Stowers claims in the future.

Bad Faith Personal Liability of Claims Adjusters Arising Out of Claims-Handling Conduct, Bryan M. Weiss

State Farm Mutual Auto Assc. v. Cook
On September 18, 2019, the San Antonio Court of Appeals handed down an opinion that may open up the avenue for filing bad faith claims on uninsured/underinsured motorist claims in Texas. Here, the policyholder sought the entire UM limits of $100,000, while State Farm offered about $15,000. The UM case proceeded to trial and the insured obtained a verdict of over $100,000. State Farm quickly paid the $100,000 limits and then sought summary judgment on the plaintiffs bad faith claims. The trial court denied State Farm’s MSJ, however the court of appeals agreed to consider the trial court’s ruling in an interlocutory appeal. The San Antonio Court of Appeals affirmed the trial court’s denial of State Farm’s MSJ, holding that an UM carrier’s immediate payment of a adverse UM judgment does not insulate the carrier from bad faith lawsuits for the carrier’s handling of the bad faith claim.