Geico Loses Summary Judgment Bid In Florida Bad Faith Case

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TAMPA, Fla., May 12 — On May 12, GEICO Insurance lost a bid in Florida federal court to dismiss a bad faith suit premised upon its alleged failure to adequately defend a GEICO insured in a personal injury action.  The Court ruled that a genuine issue of material fact existed as to whether the insurer acted in bad faith in its handling of the claim.

The insureds,  Manuel A. and Aleli Gonzalez bought auto insurance from GEICO General Insurance Co. and added their grandson Ishmael Ramjohn as an additional insured. Ramjohn allegedly injured Lisa Anderson in an automobile accident in February 2009, whereupon Anderson’s attorney attempted to settle Anderson’s claim with GEICO .

Anderson’s lawyer and GEICO communicated several times during 2009, leading to his sending a demand for the $100,000.00 bodily injury policy limit insuring Ramjohn. GEICO offered $2,581.16 to resolve the claim.  Later, GEICO increased its offer to $22,500.00 after receiving additional information on Anderson’s injuries.

After  Anderson sued the insureds in the Hillsborough County, Fla., Circuit Court for damages,  GEICO offered the $100,000 policy limits, which Anderson rejected.  A jury in that case returned a verdict for Anderson in the amount of  $398,097.82.

The insureds then sued GEICO in the U.S. District Court for the Middle District of Florida, alleging bad faith in handling Ramjohn’s defense.

In denying GEICO’s motion for summary judgment, Judge James S. Moody Jr. held:

“the record reflects facts that could permit a jury to find that GEICO acted in bad faith…In other words, this case, like most bad-faith cases, presents a genuine dispute that requires a jury’s resolution…For example, [insureds’ expert Peter] Knowe’s testimony creates a genuine issue for trial. Knowe testified that GEICO’s handling of the Anderson claim deviated from industry standards in several key respects. Remarkably, GEICO does not address or reference Knowe’s expert opinion anywhere in its motion…there is also evidence suggesting that GEICO did not evaluate Anderson’s claim from the perspective of a reasonable insured facing unlimited exposure.”

Judge Moody added that a reasonable jury could find that GEICO’s offer strategy in the case was executed in aid of a policy to reduce average loss payments.

Gonzalez et al v. GEICO General Insurance Company, (M.D. Fla. 2016)(Moody, J.)

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Expert Cannot Testify About Exclusion; Can Opine On Industry Custom and Practice

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LOUISIANA, April 13 – A United States District Court in Louisiana has issued a ruling permitting an expert to testify in a coverage action about industry custom and practice, but barring the expert from testifying about the applicability of a policy exclusion to a coverage dispute.

The insured, Foundation Health Services,  sought reimbursement from Zurich American  for defense costs and lossess associated with an underlying  settlement with the U.S. Department of Justice and the Department of Health and Human Services. The disputed issues in the case were (1) whether a claim was first made during the policy period (2) whether a “professional services” exclusion in the policy applied to preclude coverage and (3) whether the insurer committed bad faith in denying coverage.

The insurer moved to preclude the plaintiff’s expert who was offered to testify about whether the insurer “met its obligations and responsibilities in connection with the claim at issue under custom and practice of the industry.” Id. at 4.

District Judge James Brady reviewed Federal Evidence Rules 702 and 704 and held that expert opinion on the applicability of certain exclusions “cross into the realm of making legal conclusions” were, therefore, inadmissible. Id. at 6. The Court also ruled however that “an expert may be allowed to testify regarding insurance industry standards for claims adjusting, but not the ultimate legal conclusions that an insurance company is acting in good faith.” Id.

 Foundation Health Services., Inc., et al. v. Zurich Am. Ins. Co., (M.D. La. 2016)(Brady, J.)

Property Value Admissible By Allstate To Prove Arson Fraud

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SPRINGFIELD, Feb. 29 –  A federal judge in Missouri has denied an insured couple’s attempt to exclude expert evidence Allstate Insurance  intends to submit  in a declaratory judgment action in which it seeks to have its denial of a homeowners insurance coverage claim upheld.

In Allstate Indemnity Company v. Joseph Dixon, et al., No. 14-cv-03489-MDH. W.D. Mo.; 2016 U.S. Dist. LEXIS 24678, U.S. District Judge Douglas Harpool denied a motion to strike Allstate’s expert disclosures filed by Allstate insureds Joseph Dixon and his wife, ruling that the value of the couple’s home could be probative of the couples’  financial motive to commit arson fraud. The Court found that Allstate’s proposed testimony from a county assessor as to the value of the insured couple’s home would not prejudice the homeowners, although it reserved final judgment about the precise nature of the allowed testimony until later in the case.

Allstate  denied coverage for the April 2014 fire, claiming that the Dixons falsified material facts with regard to the claimed loss. A cause and origin and claims investigation by Allstate revealed that the fire was intentionally set.  The Dixons contended in their motion to strike expert disclosures that the value of their home was not in dispute, and that expert testimony concerning the value of the property would be confusing to the jury as well as irrelevant, cumulative and prejudicial.

In denying the motion, Judge Harpool cited to an Eighth Circuit U.S. Court of Appeals’ ruling which discussed proper evidence of motive in arson fraud cases,  Gen. Cas. Ins. Companies v. Holst Radiator Co. (88 F.3d 670, 672 [8th Cir. 1996]).

Allstate v. Dixon (W.D. Mo. 2016)

Bad Faith Expert Permitted To Testify Against Progressive, Judge Rules

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KANSAS CITY, Kan., March 9 – A Kansas federal judge has ruled that an expert may testify on Plaintiff’s behalf in a bad faith case against Progressive Insurance, and that the expert can criticize Progressive’s handling of a third party auto liability claim.

In Grant M. Nelson v. Progressive Northwestern Insurance Co., No. 15-7454, D. Kan.; 2016 U.S. Dist. LEXIS 28952, District Judge John W. Lungstrom denied Progressive’s motion to preclude the Plaintiff’s expert from testifying.  Nelson sued Progressive for bad faith in the handling of his third party claim after suing and obtaining an excess verdict against a Progressive insured for personal injuries sustained in a car accident.

Progressive’s insured, Hardacre, had a $50,000 policy limit.  Following non jury trial of the personal injury case, a   state court awarded Nelson more than $530,000.  During the underlying case, Progressive offered the policy limit on Hardacre’s behalf, but Nelson declined to accept it, demanding $1 million.  Hardacre also assigned his rights against Progressive to Nelson in exchange for Nelson’s agreement not to collect against Nelson.

Nelson sued Progressive for bad faith in state court, and Progressive removed to federal court.   In the case, Progressive sought to bar opinion evidence from Plaintiff’s expert Jim Leatzow.  Judge Lungstrum rejected Progressive’s claim that Leatzow was unqualified because he had no specific auto claims handling experience.  He also rejected Progressive’s contention that Leatzow, in opining that Progressive’s investigation was insufficient, did not consider all relevant material in the claims investigation.  The judge wrote:

“Mr. Leatzow’s failure to find fault with every investigative step actually taken by Progressive is not remarkable and does not provide a basis for exclusion. Progressive will be free to cross-examine Mr. Leatzow at trial concerning the weight he gave to particular facts in forming his opinions, and the Court will assign only such weight to those opinions as warranted by the evidence. The Court denies Progressive’s motion to strike.”

While conceding the Plaintiff’s bad faith case was weak, the judge also denied Progressive’s motion for summary judgment in the bad faith case on the merits:

“there is at least some evidence that could support a finding that some percentage of fault would have been apportioned to Ms. Hardacre… the seriousness of plaintiff’s injury meant that even a small allocation of fault to Ms. Hardacre could have exhausted the policy limit of $50,000, leaving the possibility of an excess judgment. Thus, viewing the evidence in the light most favorable to plaintiff, the Court concludes that a question of fact remains concerning whether Progressive acted negligently or in bad faith in handling the claim and in failing to attempt to secure a settlement for the policy limit to protect the interest of its insured.”

The judge also ruled that Progressive’s tender of the limit did not moot the bad faith claims made by Nelson.

Grant M. Nelson v. Progressive Northwestern Insurance Co., No. 15-7454, D. Kan.; 2016 U.S. Dist. LEXIS 28952