Bad Faith Blog

The Tenth Circuit Court of Appeals affirmed the trial court’s grant of summary judgment in favor of the insurer, USAA, finding the insureds failed to establish damages to support their claim for breach of the implied covenant of good faith and fair dealing. Specifically, the court found the insureds failed to establish unusual emotional distress, recoverable attorneys’ fees, or recoverable diminution in value damages that could independently support the claim.

Summary: A tanker truck spilled 6,380 gallons of gasoline, which flowed underneath the highway and beneath the property of multiple homeowners. This case involved the available amount of coverage under primary and excess policies that included both commercial general liability and auto liability coverages. The primary carrier quickly exhausted its $1,000,000 Auto limit through clean-up costs, and when suit was filed the primary carrier tendered the defense to the excess carrier. Excess carrier defended until its $4,000,000 “Per-Occurrence” limit was exhausted and then, believing its applicable limits had been exhausted, re-tendered defense back to the primary carrier. A declaratory judgment action ensued over the amount of available primary and excess coverage. The insureds entered into a “covenant not to execute” agreement that resulted in a stipulated judgment in excess of $13,000,000.

Summary: The plaintiff was injured while operating a vehicle insured by GEICO. The plaintiff obtained the policy limits from the tortfeasor’s insurer and then made a claim under the SUM endorsement of the GEICO policy. GEICO denied the claim, and the plaintiff alleged GEICO unreasonably refused payment.

Summary: Burgraff was injured when a Menard employee was loading Burgraff’s vehicle with materials purchased from Menard. Burgraff’s vehicle and trailer were insured by Millers First Insurance Company (Millers First). Menard was self-insured up to $500,000 and had an excess layer of $500,000 with CNA. During mediation Millers First agreed to settle Burgraff’s claim for $40,000. In exchange for the payment of $40,000, Millers First would be fully discharged as would “one-sixth of any liability that Menard, Inc. may have to [ ] Burgraff.” Millers First then stopped defending Menard. Menard did not settle so the tort case proceeded to trial. The circuit court, thereafter, ruled Millers First had no further defense obligation to Menard, the court of appeals reversed, and the Supreme Court of Wisconsin agreed Millers First had a duty to defend Menard through trial.