Bad Faith Blog

Summary: The insured, a county in Florida, and personal representative of deceased accident victim’s estate brought a declaratory judgment action against the County’s excess insurer seeking a declaration the County was allowed to settle the personal representative’s underlying wrongful death claim without the excess insurer’s consent and without the Florida legislature passing a special claims bill. The Eleventh Circuit, affirmed in part, vacated in part, and remanded the district court’s decision. The Eleventh Circuit found the frustration of purpose doctrine did not apply to allow the insured County to satisfy its self-insured retention limit, which exceeded the statutory sovereign immunity cap. Also, the sovereign immunity statute did not allow the insured County to settle the claim without the insurer’s consent given the language in the excess insurance policy. Finally, fact issues precluded summary judgment whether the excess insurer acted in bad faith in refusing to consent to the insured County’s proposed settlement with the personal representative in the wrongful death lawsuit.

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.

Summary: Lasorte brought suit against Certain Underwriters at Lloyd’s seeking payment on a stipulated judgment agreed to by Lasorte’s employer (the insured) after Lloyd’s refused to defend the employer. After Lloyd’s moved for summary judgment, the United States District Court warned that partial summary judgment in favor of Lasorte was likely regarding Lloyd’s liability, but not damages. Even if Lloyd’s had breached its duty to defend, Lasorte had to prove that the stipulated judgment was reasonable and entered into with good faith.