Bad Faith Blog

On June 29, 2021, Governor Parson signed into law Missouri HB 345, which amends R.S.Mo. § 537.065 (permitting contracts to limit recovery to specified assets or insurance policies) and R.S.Mo. § 435.415 (Missouri’s Uniform Arbitration Act). This legislation is an effort to reform insurance “bad faith” litigation in Missouri, supplement legislation passed in 2017, and address recent tactics to avoid the statutory protections granted to insurers in 2017.

The Missouri Supreme Court affirmed the judgment against a liability insurer for extra-contractual damages in a declaratory judgment action originally filed by the insurer to determine coverage and defense obligations. The insurer was not allowed to challenge the reasonableness of its insured’s court-approved settlement and the judgment entered against the insurer for extra-contractual damages was upheld despite there being no bad faith claim asserted in the declaratory judgment action filed by the insurer.

BSI Constructors, a general contractor, had to replace the roof installed by one subcontractor and improperly protected by other subcontractors. After having to replace the roof at a cost of approximately $174,000, Hartford denied its claim. That denial was supported by the district court on summary judgment and the Eighth Circuit affirmed on appeal on both the breach of contract claim and the vexatious refusal to pay claim.

Summary: This case is a dispute between an excess and primary insurer, both of whom insured a trucking company whose tractor trailer was involved in a fatal traffic accident. The parties injured in the accident sued the trucking company and obtained a jury verdict, which exposed the excess carrier to a $17 million liability. The excess carrier sued the primary carrier alleging bad faith for failing to settle the underlying claim within the policy limits. The district court granted primary insurer’s Motion for Summary Judgment and the Eighth Circuit affirmed.