A Bad Faith Cautionary Tale: Ninth Circuit Affirms $8.7 Million Award for Bad Faith Coverage Denial

In Millennium Laboratories, Inc. v. Darwin Select Insurance Co., No. 15-55227, 2017 U.S. App. LEXIS 1533 (9th Cir. Jan. 27, 2017), the Ninth Circuit held that Darwin Select Insurance Company breached its duty to defend its insured, Millennium Laboratories, Inc., against two third-party lawsuits (Ameritox and Calloway). The court further held that Darwin’s failure to defend Millennium was in bad faith. As background, Millennium filed a complaint seeking coverage regarding two underlying lawsuits alleging Millennium told its customers that its
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Supreme Court of Texas Puts a Dent in Policyholders’ Demand for Discovery of Other Claims in Hail Storm MDL

On October 28, 2016, the Supreme Court of Texas squelched a trial court order granting a policyholders’ motion to compel that reached its bench by mandamus petition. The dispute arose out of multidistrict litigation (MDL) involving claims for property damage caused by the 2012 hail storms that tormented Hidalgo County, Texas. The policyholders sought compensatory and extra-contractual damages against several insurers for underpayment of insurance claims. A pretrial court appointed by the MDL panel granted the policyholders’ motion to compel
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Bad Faith Without Dishonest Motive, Self-Interest, or Ill-Will? Pennsylvania Supreme Court to Decide

The Pennsylvania Supreme Court has agreed to review an appellate court decision in Rancosky v. Washington National Insurance Company, a case dealing with whether a showing of “dishonest motive” or “ill-will” is necessary to prove that an insurance company acted in bad faith. The Pennsylvania Supreme Court’s forthcoming decision will be its first word on the definition of “bad faith” as used in the Pennsylvania bad faith statute. In Rancosky, a husband and wife, both cancer patients, filed a lawsuit
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Defense Counsel’s Billing Records Are Discoverable When an Insured Seeks Payment of Attorney’s Fees for Bad Faith

While one may expect that an insurer opposing an award of attorney’s fees to a plaintiff in bad faith litigation would be entitled to review the billing records of the plaintiff’s attorney, the Florida Supreme Court has ruled that an insurer’s defense counsel’s billing records are discoverable by the plaintiff. In Paton v. GEICO General Insurance Company, the plaintiff insured asserted a bad faith claim against her UM insurer and sought recovery of attorney’s fees. To support the reasonableness of
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New Law and a New Trial: Eleventh Circuit Overturns Florida Court Judgment Against GEICO in Bad Faith Lawsuit

On Wednesday, August 19, 2015 the Eleventh Circuit issued a significant ruling that allows evidence to be introduced at trial regarding previous decisions in that litigation, as well as changes in coverage law. In doing so, it vacated a $5 million bad faith judgment against GEICO General Insurance Co. (GEICO) from the U.S. District Court for the Southern District of Florida. The lawsuit arises out of an automobile accident that occurred in 2006. The plaintiff represented the estate of a
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Bad Faith in Louisiana: Insured’s Claim for Bad Faith Not Limited to Statutory Cause of Action

In a multi-layered decision, Century Surety Company v. Belvins, (United States Court of Appeals for the Fifth Circuit, August 18, 2015), the Fifth Circuit found that a policyholder could assert non-statutory bad faith claims against an insurer under Louisiana law.  It also held that a district court could not sua sponte dismiss unchallenged counterclaims without notice to the parties, and affirmed that Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942)’s broad abstention doctrine (applicable in declaratory judgment
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Threshold for Extra-Contractual Liability Reaches New Low

The United States District Court for the District of South Carolina recently ordered an auto insurer to pay a $1.1 million dollar excess judgment because the settlement checks sent by the adjuster did not arrive in the plaintiff’s counsel’s hands within the 24-hour limit set by the plaintiff’s counsel. With a claim-to-settlement span of a mere 25 days, this case may set a new, far lower standard for “negligent” claims handling, and allowed the plaintiff’s counsel to place requirements on
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Insurer Not Liable For Excess Judgment Where Alleged Bad Faith Did Not Cause the Judgment

In Messinese v. USAA Casualty Insurance Company, 2015 U.S. App. LEXIS 13519 (11th Cir. Aug. 4, 2015), the insured struck the plaintiff, Mr. Messinese, while driving intoxicated. Mr. Messinese sustained serious injuries including paralysis and brain damage. The insured had an auto policy with USAA with limits of $100,000 per person and $300,000 per accident. The insured also had a homeowner’s policy with USAA, but it excluded coverage for injuries arising out of the use of an automobile. USAA immediately
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Hawaiian High Court Allows an Excess Insurer to Equitably Subrogate a Bad Faith Claim

On a certified question from the Hawaiian federal district court, the Hawaiian Supreme Court allowed an excess insurer to sue a primary insurer for bad faith. The case, St. Paul Fire and Marine Insurance Co. v. Liberty Mutual Insurance Co., arose out of claims that the primary insurer failed to settle underlying claims within its policy limits. The excess insurer contended the primary insurer had multiple opportunities to settle an accidental death claim within the $1 million primary limits, and
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Lax Claims Handling Basis for Award of Emotional Distress and Punitive Damages

In K.N.T. v. American Family Mutual Insurance Company, 2015 Iowa App. LEXIS 576 (Iowa Ct. App. July 9, 2015), the Iowa Appellate Court addressed emotional distress arising out of the claims process and whether lax claims handling warranted awarding punitive damages. Eleven-year-old K.N.T. was involved in a serious accident as a passenger in an all-terrain vehicle. She was in the hospital for twenty-three days and incurred approximately $250,000 in hospital expenses. K.N.T.’s mother filed an uninsured motorist claim. A claims
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