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We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.
Brandi Burge’s mobile home and all of its contents were destroyed by fire in July 2013 while insured by Farmers Mutual of Tennessee. Farmers Mutual paid an advance in August 2013, but denied the claim without disclosing why. Suit was filed one year later. After 10 months of discovery Farmers Mutual declared (in discovery responses) the policy void ab initio because Plaintiffs failed to disclose “multiple mortgages on the property.” At a bench trial three years after the fire, the trial court entered judgment for Plaintiffs for damage to the mobile home, loss of personal property, additional living expenses, and a statutory bad faith penalty of 15 percent. On appeal the judgment was affirmed, but modified to increase the award on the mobile home and to add post-judgment interest.
On April 26, 2017, the Missouri General Assembly passed a bill modifying certain statutory provisions relating to settlement of tort claims. The bill, known as HB 339 and HB 714, grants certain rights to insurers when a claimant and tortfeasor enter into a contract to limit recovery pursuant to R.S.Mo. § 537.065 and imposes new requirements on time-limited demands in R.S.Mo. § 537.058. Governor Greitens signed the bill on July 5, 2017 and it will be effective August 28, 2017. This legislation is designed to limit currently legal, but abusive, practices against insurers in an effort to reform insurance “bad faith” litigation in Missouri.
Salvati’s husband died as a result of a work injury. Ms. Salvati sued several parties she believed responsible for her husband’s death. The parties in the underlying action and their primary carrier agreed at mediation to a $6,000,000 settlement. The primary carrier tendered its $1,000,000 in coverage, but the excess carrier (American Insurance Company (AIC) refused to pay. The case against AIC asserted breach of contract, declaratory judgment, Massachusetts Consumer Protection violation, unfair and deceptive acts in insurance, and professional negligence for failure to settle the claims.
No Independent Cause of Action for Stand Alone Regulatory Violations of Washington’s Insurance Fair Conduct Act
Perez-Crisantos sustained injuries resulting in more than $50,000 in medical bills. After settling with the underinsured motorist (UIM) and collecting $10,000 in medical expenses and $400 in lost wages under the PIP coverage from State Farm, his insurer, he sought additional funds from State Farm, claims which eventually went to arbitration. The arbitrator largely ruled in favor of Perez-Crisantos who then filed claims for bad faith, negligence, violation of Washington’s Consumer Protection Act (CPA), and violation of IFCA. After a reduction for the sums already paid, there was a net UIM award of $24,000. Perez-Crisantos’s “IFCA claim [was] based on the violation of IFCA regulations relating to unfair settlement practices[,]” contending “that State Farm forced him to litigate in order to get payments that were due to him.” The trial court granted State Farm’s motion for summary judgment after concluding there was no “scintilla of evidence” that State Farm’s actions were “unreasonable and there must have been some ulterior motive” for them, such as “some sort of incentive program to ‘lowball claims.’” On direct appeal to the Supreme Court of Washington, the court affirmed.