Absent Policyholder Demand To Settle, Seventh Circuit Affirms Dismissal of Bad Faith Action Against Insurer After Unexpected Excess Judgment

The Seventh Circuit, applying Illinois law, recently tackled the highly-charged issue of a bad faith claim against an insurer for failing to settle for the policy limit. In Surgery Center at 900 North Michigan Avenue, LLC v. American Physicians Assurance Corp., Inc., the Seventh Circuit closely scrutinized the facts and affirmed the trial court’s decision that the insurer did not act in bad faith.  The coverage dispute arose between the Surgery Center at 900 North Michigan Avenue, LLC (Surgery Center)
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Dismiss or Abate? The Eleventh Circuit Dismisses Bad Faith Allegations in Breach of Insurance Contract Actions

The longstanding debate in Florida’s state courts as to whether bad faith allegations can remain in a pending breach of insurance contract case, or whether they must be dismissed pending the outcome of the coverage dispute, has now reached the federal courts. In Aligned Bayshore Holdings, LLC v. Westchester Surplus Lines Ins. Co., 2018 WL 6448632, Case No. 18-21692-Civ-Scola (S.D. Fla. Dec. 10, 2018), the insured sustained losses due to Hurricane Irma and submitted a claim to its insurer, which
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New York Appellate Division Split on Claim Preclusion of Bad Faith Action

By decision dated June 8, 2018, the New York State Supreme Court, Appellate Division, Fourth Department, affirmed the trial court’s denial of an insurer’s motion to dismiss bad faith claims based on res judicata, in defiance of prior precedent from a separate Department of the Appellate Division. Corle v. Allstate Ins. Co., N.Y.S.3d , 2018 WL 2751204 (4th Dept. 2018) arises out of an incident in which the plaintiff, Colin Corle (Corle) was shot by Jeoffrey lee Bauter Teeter (Teeter). 
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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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Bad Faith Decision Vacated as Insurer Not Responsible for Punitive Damages Where Insurance for Punitive Damages is Prohibited

In Jared Wolfe v. Allstate Property & Casualty Insurance Company, the insurer brought an appeal to the Third Circuit seeking to vacate a jury award against it for bad faith and breach of contract asserted by a plaintiff who was injured in a motor vehicle accident caused by the policyholder of the insurer. The Third Circuit agreed with the insurer and vacated the award, finding that the lower court made a mistake in allowing the plaintiff to introduce evidence of
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Insurers’ Duty of Good Faith Continues After the Filing of a Lawsuit

In  Am. Nat’l Prop. & Cas. Co. v. Stutte, 2015 U.S. Dist. LEXIS 55280 (E.D. Tenn. Apr. 28, 2015),  a federal court in Tennessee recently ruled that a finding of bad faith can be based on decisions made by the insurer after a declaratory action has been filed. The claim at issue in this litigation related to the loss of the insured’s home in a fire. The insured made a claim on their policy and the subsequent investigation into the circumstances of the
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Breach of Reinsurance Contract and Bad Faith Claims Survive Dismissal, District Court Rules

In Old Republic National Title Insurance Co. v. First American Title Insurance Co., 2015 U.S. Dist. LEXIS 44693, the U.S. District Court for the Middle District of Florida refused to dismiss portions of a cedent’s breach of contract claim, bad faith claim, and demand for declaratory judgment against a reinsurer. The reinsurance dispute arose when a cedent negotiated a $41 million settlement with the underlying insured, and the reinsurer paid its portion of the claim under a reservation of rights.
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Arizona Appellate Court Refuses To Vitiate the Attorney-Client Privilege When Insurer Does Not Advance Defense Based on Advice of Counsel

In Everest Indemnity Insurance Co. v. Rea, 2015 Ariz. App. LEXIS 9 (Ariz. Ct. App. Jan. 15, 2015), an Arizona appellate court held that Everest Indemnity Insurance Company (“Everest”) had not waived its attorney-client privilege by admitting that it had settled a case in good faith after consulting with counsel. As background, Rudolfo Brothers Plastering and Western Agriculture Insurance Company (collectively “Rudolfo”) alleged that Everest committed bad faith by entering into a settlement agreement that exhausted the liability coverage of
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Insurer’s Reliance on Prior Unpublished Decision Sufficient To Defeat Bad Faith Claim

In Badiali v. New Jersey Manufacturers Insurance Group, 2015 WL 668206 (N.J. Feb. 18, 2015), the New Jersey Supreme Court found that an uninsured motorist carrier did not commit bad faith by acting in accordance with an unpublished decision from a case it previously litigated. The policyholder was involved in a car accident with an uninsured motorist. He filed an uninsured motorist claim with his employer’s insurer and his personal insurer. The matter was arbitrated, and the policyholder was awarded
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District Court Sleuthing Around Policy Numbering Undermines Insurer’s Motion for Summary Judgment

In Connolly v. Progressive Northern Insurance Co., et al., No. 3:13-cv-2717, 2015 WL 464877 (M.D. Penn. Feb. 4, 2015), the United States District Court for the Middle District of Pennsylvania denied Progressive Northern Insurance Company’s (“Progressive”) motion for summary judgment regarding whether the plaintiff could stack underinsured motorist coverage limits and whether the insurer had engaged in statutory bad faith. Plaintiff was involved in a motor vehicle accident in February 2009.  The third party tortfeasor paid plaintiff his $250,000 policy
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