Bad Faith Blog

Summary: Allstate insured Valentine and Christina Zagorski’s home suffered a fire loss. Allstate’s Special Investigation Unit (SIU) assisted with the investigation of what was ultimately concluded to be an arson fire. Allstate’s retained counsel took an Examination Under Oath (EUO), and otherwise assisted with the claims handling before the claim was denied. After the denial, the Zagorskis filed suit for breach of contract, fraud, and sought extra-contractual damages for vexatious delay and refusal to pay. During the course of that litigation Allstate was ordered to disclose information through discovery, it refused, its attorney was held in civil contempt, and the matter was appealed to the Appellate Court, which then ruled on the various discovery issues, mostly in the Zagorskis’ favor, but also making some rulings in favor of Allstate. The Court also admonished Allstate’s counsel regarding properly responding to discovery.

Summary: Federal law provides for the imposition of sanctions against attorneys who unreasonably and vexatiously cause an opponent to incur excess costs and fees. A bad faith finding is required to impose those sanctions. In the Nielsen case, the plaintiff’s attorney filed a lengthy complaint alleging eleven causes of action and that ERISA did not apply to a case which was obviously an ERISA case. Two counts were for insurance bad faith and violations of Washington’s Insurance Fair Conduct Act (IFCA). After multiple dismissals, Unum filed a motion for summary judgment attacking the alleged insurance bad faith and IFCA violations. Plaintiff’s attorney filed a “non-opposition.” In light of that non-opposition the court granted the partial summary judgment and dismissed all remaining non-ERISA claims.