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Bad Faith Blog

We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.

Bad Faith Blog
October 8, 2017

Washington Court of Appeals Finds No Preclusion for Bad Faith Claim After Resolution of UIM Benefits Action

Anastasia Fortson-Kemmerer (“Plaintiff”) sued Allstate Insurance Company (“Allstate”) to recover for bad faith and violation of the Insurance Fair Conduct Act (“IFCA”) for its actions when investigating her underinsured motorist (“UIM”) coverage claim. Allstate moved for summary judgment on the affirmative defense that Plaintiff’s previous action to enforce her UIM policy provisions operated as res judicata and barred her bad faith claim. The trial court granted summary judgment and Plaintiff appealed. The Washington Court of Appeals reversed, stating Allstate failed to demonstrate the operation of res judicata.

Bad Faith Blog
July 16, 2017

No Pay for Delay Today: Insurer’s Joint Check Satisfied Prompt Payment Statute

Summary: Property Gusma Properties owned and insured was damaged in Hurricane Ike. When the insurer demanded an appraisal, Gusma hired an attorney to assist. Following the appraisal award, the insurer tendered a check to the attorney for the full amount, all of which the attorney retained. Gusma sued the attorney and the insurer to recover its losses. Gusma claimed it was entitled to prompt payment penalties from the insurer for issuing the check jointly payable to Gusma and its counsel. The Texas Court of Appeals affirmed the trial court’s ruling that Gusma was not entitled to penalties. The Court of Appeals held, on this issue of first impression, that an insurer does not “delay payment, within the meaning of the Prompt Payment provisions, when it tenders payment to the insured’s authorized counsel in the form of a negotiable instrument that is made jointly payable to both insured and its counsel.”

Bad Faith Blog
May 14, 2017

Texas Law Firm’s Coverage and EC Awards Properly Reduced from $33M to $28M

Summary: OneBeacon Insurance Company (OneBeacon) provided professional liability insurance to T. Wade Welch & Associates (Welch Firm) and firm attorneys, including Ross Wooten (Wooten). After a legal malpractice award against the Welch Firm which OneBeacon refused to settle, the Welch Firm filed common law and statutory bad faith claims against OneBeacon on which it prevailed. The District Court reduced the award to prevent a double recovery. The Fifth Circuit affirmed.

Bad Faith Blog
April 4, 2017

Prejudicially Delayed Loss Reporting Barred All Claims, Contract and Extra-Contractual

Summary: Hamilton Properties owned the Dallas Plaza Hotel, which was insured by American Insurance Company (“AIC”) when a hail storm struck Dallas in July 2009. Hail damage was covered by the policy, but losses were to be reported promptly. The District Court found that the hail loss first reported at least 19 months after the storm was prejudicially late barring coverage plus the extra-contractual damages claims. The Fifth Circuit affirmed.