Category: Bad Faith and Extra-Contractual Liability

QBE Ins. Corp. v. Chalfonte Condo. Apt. Ass’n, Inc.
(Fla. May 31, 2012)

The Florida Supreme Court ruled last week that there is no common law first-party bad faith cause of action against an insurer and, therefore, that a policyholder may only pursue a bad-faith action in accordance with Florida statutes.

The action arose from property damage caused by Hurricane Wilma in 2005. The policyholder, Chalfonte, sustained significant damage and filed a claim with its property insured, QBE. Dissatisfied with QBE’s handling of the claim, …

United States Fidelity & Guar. Co. v. American Re-Insurance Co.
N.Y. App. Div. 1st Dep’t, Jan. 24, 2012

The case arose out of litigation concerning the underlying asbestos claims spanning several decades. The Appellate Court reviewed and affirmed the lower courts Order granting the reinsured summary judgment and denying the reinsurer’s motion for summary judgment.   The reinsurance treaty involved was an excess of loss treaty with a $100,000 retention and a maximum $4.9 million payable by the reinsurers for any one loss subject to a …

Gulf Prod. Co. v. Hoover Oilfield Supply, Inc. (U.S. Dist. E.D.LA, January 11, 2012)

A Louisiana federal court denied an insurer’s motion to dismiss bad faith claims brought in an insurance coverage dispute involving the manufacturer of a pipeline.  The manufacturer itself is no longer a party to the action, having settled with the underlying gas company plaintiffs.  The plaintiffs are seeking compensation from the insurer for bad faith due to the insurer’s alleged arbitrary and capricious decision not to offer a settlement and a …

In this article, national bad-faith expert Tom Segalla and his colleague Kimberlee Danieu analyze recent case law from across the country that address the "fairly debatable", "genuine dispute" or reasonable basis" doctrine in bad faith cases.

For a copy of the article please click here…

Liberty Mutual Ins. Co. v. Land

App. Div. NJ, January 14, 2010

In this declaratory judgment action, the plaintiff insurer filed a declaratory judgment action against the defendant policyholders alleging that the policyholders committed fraud to inflate the property loss incurred to their home when a tree fell and hit the roof.  The insurer sought treble damages for the cost of investigation, various fees and costs, and counsel fees under the New Jersey Insurance Fraud Prevention Act (“IFPA”) and also sought a ruling …

Pennsylvania Nat. Mutual Cas. Ins. Co. v. Edmonds

(United States District Court, Southern District Alabama, March 3, 2010)

This action involved the misappropriation of hundreds of thousands of dollars by an employee of an Alabama metal fabricating company.  The insurer paid the claim and received an assignment from the company to pursue the losses.  Employee-defendant never appeared and the insurer filed a motion for default judgment against the employee for approximately $570,000, including $150,000 in punitive damages.

Despite the court’s acknowledgment …

Byrd & Assocs., PLLC v. Evanston Ins. Co.

(5^th Cir. (Miss.) Feb. 26, 2010)

A federal court ruled that professional liability insurer Evanston Insurance Company was not obligated to defend or indemnify its policyholder, the law firm of Byrd & Associates, in a legal malpractice action stemming from dismissal of a medical malpractice action prosecuted by the law firm. The medical malpractice case was dismissed after the firm failed to comply with the court’s scheduling order.

The firm submitted its application for …

Panasia Estates v. Hudson Insurance Co. (New York Appellate Division, First Department, December 15, 2009)

In an insurance coverage dispute, plaintiff commenced this action against  Hudson Insurance Co. alleging that it breached the insurance contract by failing to properly investigate the loss and denying the loss as not covered under the policy.  In a historic decision, the Court of Appeals, in 2008, allowed plaintiff to proceed forward with asserting a claim for consequential damages despite a contractual exclusion contained in the insurance policy prohibiting such relief.…

Fortner v. Grange Mutual Ins. Co.

(Georgia Supreme Court, October 19, 2009)

The Georgia Supreme Court granted certiorari to consider whether the Court of Appeals properly interpreted the “safe harbor” provision recognized in Cotton States Mut. Ins. Co. v. Brightman, 276 Ga. 683 (2003).  In 2003 Fortner was injured in a car accident caused by Grange Mutual policyholder, Arnsdorff, who had bodily injury limit of $50,000 and a $1 million liability with Auto Owners Ins. Co. through his plumbing business.  Fortner …

SNL Financial LC v. Philadelphia Insurance Co. (W.D. Vir. September 30, 2009)

Plaintiff commenced this declaratory judgment lawsuit seeking coverage of an underlying discrimination lawsuit pursuant to its employment practices liability insurance policy.  Defendant denied the claim, arguing that plaintiff made material misrepresentations when plaintiff renewed the policy.  Specifically, defendant argues that the "litigation hold" letter plaintiff received in which it was required to preserve all evidence relating to a possible discrimination lawsuit triggered its notice obligation under the policy and such information was material to …