Category: Bad Faith

Hawaii: Defending Insured In Underlying Claim Not Necessarily Bad Faith Safe Harbor

HAWAII, Feb. 4 – The Supreme Court of Hawaii has ruled that a title insurer’s defense of its insured in underlying action to quiet title does not shield that insurer from bad faith exposure, and that questions of fact regarding the reasonableness of such action, as opposed to settling the underlying claim which appeared to be meritorious,  precluded summary judgment in favor of the title insurer.

In Anastasi v. Fidelity National Title Ins. Co., the Court affirmed an intermediate appeals court ruling that a summary judgment in favor of Fidelity National should be reversed, and the case remanded to trial for exploration of whether the title insurer should have paid to settle the underlying action to quiet title against its insured, Anastasi,  earlier, as opposed to continuing to litigate.  There was evidence that a warranty deed upon which Anastasi issued a mortgage to the borrower  was falsified, and the true owners of the property would prevail in the underlying suit against Anastasi and the mortgagee.

The Court found there were questions of fact regarding the reasonableness of Fidelity National’s continuing the defense of its insured in the underlying case after learning the deed upon which Anastatia issued the mortgage was forged.  Justice Paula Nakayama wrote for the court:

“If insurance companies were held to be acting reasonably as a matter of law any time they filed or defended lawsuits under a contractual right to pursue litigation, frivolous lawsuits could be used to unfairly delay payments to insureds for years…

The opinion also contains an excellent discussion of an ongoing discovery dispute regarding whether documents prepared by Fidelity’s in house legal department during the claims investigation were protected by attorney client privilege or the attorney work product doctrine.  The Court remanded that issue to the trial court as well, directing it to make a determination whether the documents in question were prepared “because of” litigation or the threat of litigation, or whether they would have been prepared regardless.

Anastasi v. Fidelity National Title Ins. Co. (HI 2016)(Nakayama, J.)

Insured’s Failure To Disclose Prior Pathogen Losses Results In Dismissal of Coverage, Bad Faith Claims

SANTA CLARA, Jan. 14 – An intermediate state appeals court in California has affirmed dismissal of coverage, negligence,  and bad faith claims by a geranium grower against excess insurer  Great American Insurance Co., finding the trial court acted properly in granting rescission ab initio of the policy because the insured omitted material facts from a loss history on the policy application.

The court ruled that the grower omitted from the policy application’s loss runs and loss histories prior pathogenic outbreak issues experienced by the grower, and that such failure to disclose was material to Great American’s agreement to issue a policy insuring against such losses.   The appeals panel further held that under California law, including the statutory scheme for rescission of insurance policies,  the trial court acted properly within its “broad equitable discretion to fashion appropriate remedies so as to establish equity between the parties.”

The Court also found that the grower “substantially contributed” to the delay in the investigation of the contaminant outbreak claims, dismissing all contract, bad faith, and negligent claims and affirming judgment in favor of the insurer.

Goldsmith Seeds v. Great Am. Ins. Co., (Jan. 14, 2016, Cal. Sixth App. Dist)

-UPDATE- Reconsideration Denied; Summary Judgment for Harleysville Upheld In Bad Faith Case

READING, Feb. 2 – The Berks County Court of Common Pleas has denied Plaintiff’s Motion for Reconsideration on the same day the motion was filed regarding the case discussed in this prior post.

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Reading, Pa., Jan. 19. Dickie, McCamey & Chilcote attorneys C.J. Haddick and Christine Line have won a dismissal in a bad faith case in favor of client Harleysville Insurance Companies.  The Berks County, Pa.  Court of Common Pleas on January 19 granted the motion for summary judgment filed by Haddick and Line in a bad faith suit arising out of a commercial property coverage dispute over an alleged van theft and fire involving business personal property.  Haddick and Line are members of the firm’s Insurance Law and Litigation Group.

Harleysville did not dispute it owed coverage for the value of the van, substitute van rental expense, and for the value of certain business personal property under an inland marine policy.  It did contest, however, the Plaintiff’s claimed entitlement to a variety of other sums for towing, vehicle storage, loss of business income, and claims for tool losses in excess of the policy limit.  The Court agreed that the additional claims were unsupported by the policy language.

The Court also agreed with Harleysville’s position that regardless of the outcome of the several coverage claims, the claims decisions made were made with reasonable legal and factual bases.  As a result, the Plaintiff’s bad faith claims were dismissed as well.

For additional details on  the ruling, or suggestions  how to have your coverage and bad faith claims decided faster and more favorably with greater cost control, contact us at chaddick@dmclaw.com or 717-731-4800

Rogers Flooring Co. v. Harleysville Ins. Co., Berks County No. 14-674 (Sprecher, J.)

Bad Faith Case Based On Hailstorm Claim Dismissed in Lousiana

NEW ORLEANS, Jan. 28 – A Federal Judge in New Orleans has dismissed a statutory bad faith suit against an insurer arising out of a hailstorm property damage claim, finding that the insured failed to establish any genuine issue that the insurer acted arbitrarily or capriciously in the handling of the claim.  In Dubois v. Southern Fidelity Ins. Co., Judge Ivan Lemelle granted Southern Fidelity’s motion for partial summary judgment, dismissing the insured’s claim for statutory penalties.

In granting the motion, Judge Lemelle, found the insurer’s failure to pay the hailstorm property damage claim arose out of a genuine dispute about the cause, nature, and extent of the property damage.  The Court went on to note that the insured’s initial claims were both filed after some delay, and were initially unclear, making reference to both damage caused by the hailstorm, but also Hurricane Isaac.  This,  and the plaintiff’s failure to properly identify any facts tending to prove bad faith on the part of the insurer, warranted dismissal of such claims under F.R.C.P. 56, the Court held.

Dubois v. Southern Fidelity Ins. Co., E.D. La. 2016 (Lemelle, J.)

Editor’s Note:  This opinion contains a concise review of Louisiana law regarding insurer bad faith, including review of the applicable statutes, and the bad faith standard of arbitrariness and capriciousness.  The ruling also demonstrates that while the precise language of the bad faith standard may differ from state to state, in large measure they all articulate the same standard, i.e., the lack of a reasonable basis on the part of the insured in handling the claim.

 

Travelers’ “Fairly Debatable” Position On Roof Loss Bars Bad Faith Claim

SALT LAKE CITY, Jan. 25 – A Utah federal judge has dismissed bad faith claims against Travelers on grounds that the insurer’s position on coverage of a roofing damage claim  following a windstorm was “fairly debatable.”  In Pheasantbrook Homeowners Ass’n. v. Travelers, U.D. District Judge David Nuffer ruled that even if an insurer is ultimately incorrect on a coverage position, it should escape bad faith liability if the position it took is “fairly debatable.”

Judge Nuffer reviewed applicable case law, including Utah decisions which have held that an insurer’s engagement of an expert to help assess the nature and extent of covered damage for a given loss could provide a defense to bad faith liability.  He ruled that the denial of certain portions of the windstorm claim in reliance on an expert engaged by the insurer, even if the expert was compensated, created legitimate factual questions regarding which portions of the roofing repairs were attributable to the windstorm, as opposed to betterment, maintenance, or a need to replace the roofing regardless of the wind damage.

Such legitimate factual questions regarding the insured’s proposal for roof replacement created a “fairly debatable” dispute about the amount owed, causing the judge to grant Travelers’ summary judgment motion as to the bad faith claim.

Pheasantbrook Homeowners Ass’n. v. Travelers, N.D. Utah, 2016 (Nuffer, J.)

Federal Judge Denies Stay, Upholds Insurer’s Work Product Privilege In Bad Faith Case

Reading, Pa., Jan. 19.  U.S. District Judge  Joseph Leeson  has denied a motion filed by Allstate Insurance Company to sever and  stay a  bad faith claim, including  discovery,  in a combined breach of contract and bad faith case, but has ordered that Allstate may properly assert work product privilege protection as to matters genuinely prepared in anticipation of litigation.

In Wagner v. Allstate, Judge Leeson conceded that while there may be a basis for separate trial of the breach of contract and bad faith claims under F.R.C.P. 42 , there was no need to prevent simultaneous discovery in both the breach of contract and bad faith claims.

Judge Leeson also granted in part and denied in part Plaintiff’s motion to compel discovery of Allstate’s claims file, ruling that the Court needed more information to make a complete ruling on the motion.  The Court ruled that Allstate did have the right to assert privilege over materials in its claims files which were prepared in anticipation of litigation, while observing the parties disputed the date at which time Allstate’s anticipation of litigation over the underlying UIM claim was bona fide.

Wagner v. Allstate Ins. Co., E.D. Pa. 2016 (Leeson, J.)

Phila. Judge Recommends Bad Faith Dismissal

Philadelphia, Jan. 20.  A Philadelphia Common Pleas Judge has recommended that the Pa. Superior Court affirm her dismissal of breach of contract and bad faith claims filed against Progressive Insurance Company.   In an opinion written pursuant to Pa.R.A.P. 1925(a) in Racioppi v. Progressive Ins. Co.,2015 Phila. Ct. Com. Pl. LEXIS 415 , the Court dismissed the Plaintiff’s claims for UM benefits under her Progressive auto policy following an automobile accident.  The Plaintiff  had previously collected policy limits of the tortfeasor, Insured by Geico.

The Court held that both the breach of contract and bad faith counts suffered from the same fatal defect:  The Plaintiff failed to proved that she paid for a policy which was in force at the time of the collision.  While the Court conceded there were circumstances in which a bad faith claim could proceed in the absence of a breach of contract claim, it found that such circumstances were not presented by the Plaintiff’s UM claim at issue:

Since the breach of contract claim is without evidence, this component of the bad faith claim must immediately be rejected; Appellee-Defendants cannot have failed to pay in reckless disregard of the contract when Appellant-Plaintiff fails to offer any evidence that there was a contract between the parties on the date of the accident.

The Court dismissed the claims by way of a motion for summary judgment filed by Progressive.

Racioppi v. Progressive Ins. Co., 2015 Phila. Ct. Com. Pl. LEXIS 415 (Shreeves-Johns, J.)

DMC Lawyers Obtain Summary Judgment For Harleysville In Bad Faith Suit

Reading, Pa., Jan. 19. Dickie, McCamey & Chilcote attorneys C.J. Haddick and Christine Line have won a dismissal in a bad faith case in favor of client Harleysville Insurance Companies.  The Berks County, Pa.  Court of Common Pleas on January 19 granted the motion for summary judgment filed by Haddick and Line in a bad faith suit arising out of a commercial property coverage dispute over an alleged van theft and fire involving business personal property.  Haddick and Line are members of the firm’s Insurance Law and Litigation Group.

Harleysville did not dispute it owed coverage for the value of the van, substitute van rental expense, and for the value of certain business personal property under an inland marine policy.  It did contest, however, the Plaintiff’s claimed entitlement to a variety of other sums for towing, vehicle storage, loss of business income, and claims for tool losses in excess of the policy limit.  The Court agreed that the additional claims were unsupported by the policy language.

The Court also agreed with Harleysville’s position that regardless of the outcome of the several coverage claims, the claims decisions made were made with reasonable legal and factual bases.  As a result, the Plaintiff’s bad faith claims were dismissed as well.

For additional details on  the ruling, or suggestions  how to have your coverage and bad faith claims decided faster and more favorably with greater cost control, contact us at chaddick@dmclaw.com or 717-731-4800

Rogers Flooring Co. v. Harleysville Ins. Co., Berks County No. 14-674 (Sprecher, J.)

Insured’s Failure To Cooperate During Time Limit Demand Leads To Bad Faith Dismissal

Florida, Jan. 19.  A Federal District Judge in Florida has granted summary judgment in favor of Titan Insurance Co. in a bad faith case, finding that the insured’s lack of responsiveness during a time limits settlement demand precluded the case from proceeding further.

In Hinson v. Titan Ins. Co., 2015 U.S. Dist. LEXIS 121666 (N.D. Fla. 2015), Chief Judge M. Casey Rodgers dismissed a third party bad faith suit arising out of an excess verdict against Titan’s insured, Hinson.  During an underlying personal injury case against Hinson, the plaintiff’s lawyer issued a 20 day settlement demand for policy limits, requiring among other things an affidavit from Hinson as to any other applicable insurance.

Titan’s claims personnel made multiple attempts to alert Hinson, including the hand delivery of a draft affidavit to his address, in an effort to comply with the terms of the time limits demand.  Chief Judge Rodgers wrote:

Hinson failed to timely return the required affidavit to meet the [terms of the time limit] demand…The totality of the circumstances demonstrate that Titan diligently pursued a settlement; advised Hinson of the risks of an excess judgment, of settlement opportunities, and the probable outcome of the litigation; and tendered checks on more than one occasion.

Hinson at 15-16.

The Court found that the failure to meet the conditions of the 20 day time limit demand were therefore attributable to the insured, not Titan, and entered judgment for Titan.

The Court also found that Titan’s refusal to agree to try the bad faith claim before the personal injury action and pay the limits to the personal injury plaintiff  if the insurer prevailed in the bad faith case (known in Florida as a “Cunningham agreement”) was not bad faith as a matter of law.

Takeaway:  There is nothing new under the sun here, although the case is a perfect illustration of two key components of dealing with time limit personal injury settlement demands: 1.) claims staff must make Herculean efforts to act  on the insured’s behalf within the demand window, and before it is too late; and 2.) those efforts must be re-traceable in a well-d0cumented claims file.  For additional information on defensive handling of time limit settlement demands, reach me at chaddick@dmclaw.com or 717-731-4800.

Hinson v. Titan Ins. Co., 2015 U.S. Dist. LEXIS 121666 (N.D. Fla. 2015),

Philly Trial Court Recommends Dismissal of Time-Barred Bad Faith Claim

In an opinion  recommending that summary judgment in favor of the insurer be affirmed pursuant to Pa.R.A.P. 1925, , the Philadelphia Court of Common Pleas has ruled that the plaintiff failed to file his bad faith claim within two years of his claims denial, time-barring the claim under the two year statute of limitations.

In Fieldhouse v. Metropolitan Property Ins. Co., 2015 Phila. Ct. Com. Pl. LEXIS 396, the Court found that the Plaintiff’s bad faith claim, premised upon the insurer’s cooperation with law enforcement in their investigation of the auto accident which gave rise to the claim, was filed more than two years after the claim was denied.

Fieldhouse v. Metropolitan Property Ins. Co., 2015 Phila. Ct. Com. Pl. LEXIS 396

Editor’s Note: The statute of limitations defense  aside, it is highly unlikely any Court would find that an insurer’s cooperation with law enforcement in the investigation of an auto accident would constitute bad faith under the Pa. Bad Faith Statute, 42 Pa. C.S. A. §8371.