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Bad Faith Blog

We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.

Bad Faith Blog
January 29, 2017

Release Inflexibility Leads to Multi-Million Dollar Stipulated Judgment and Bad Faith Liability

Summary: Mercury Casualty provided auto liability insurance coverage with limits of $15,000/$30,000 to insured driver McDaniel who, while intoxicated, ran into and seriously injured two pedestrians. Mercury investigated, offered its policy limits, and allowed the claimants’ attorney to investigate McDaniel’s assets, but balked at language plaintiffs’ attorney added to the release to account for “court-ordered restitution.” After a stipulated judgment of $3 million against McDaniel, the pedestrians sued for breach of contract and common law bad faith, which resulted in a $3 million judgment plus interest and costs in their favor. The California Court of Appeal affirmed the judgment.

Bad Faith Blog
January 22, 2017

Motorcyclist Decedent Not Covered on Commercial Policy, So No Bad Faith

Summary: The Netherlands Insurance Company provided insurance coverage to three corporate entities for which David Edens was the Chief Executive Officer. David and Rhonda Edens were the parents of Zachery who was a motorcyclist killed when an oncoming car turned into his path. The Oklahoma U.S. District Court found there was no UIM/UM coverage, found there could be no bad faith claim prosecuted in the absence of coverage, and entered summary judgment in favor of The Netherlands Insurance Company. The 10th Circuit affirmed on appeal.

Bad Faith Blog
January 12, 2017

No Ambiguity, No Problem, No Statutory Bad Faith

Summary: American Family insured William and Joyce Davis, Jennifer Hansen’s parents, and named the Davises on the declarations sheet. Hansen was injured in an auto accident, settled her claim, and presented an underinsured motorist (UIM) claim to American Family. American Family denied coverage and Hansen filed claims for breach of contract, common law bad faith, and statutory bad faith. After the breach of contract claim was resolved, the common law and statutory bad faith claims were tried. A verdict for American Family was returned on the common law bad faith, but a verdict was returned for Hansen on the statutory bad faith claim finding American Family “had delayed or denied payment without a reasonable basis,” and further finding the damages were $0 for the delayed or denied payment. The trial court awarded Hansen her attorney fees, costs, and entered a $150,000 penalty, two times the covered UIM benefit. The Court of Appeals affirmed, but the Supreme Court of Colorado reversed.

Bad Faith Blog
January 1, 2017

Missouri Unfair Claims Settlement Practices Act Created No Rights For Fire Loss Caused By Suicidal Insured

Summary: American Modern insured James and Ruth Roller when Mr. Roller set fire to the garage in a failed suicide attempt. American Modern investigated the loss, denied their claim, and then the Rollers filed a declaratory judgment action. The trial court denied coverage which the appellate court affirmed on all grounds.