Mealey's Insurance Bad Faith : Mealey's : Legal News & Analysis

Mealey's Insurance Bad Faith

March 21, 2024
Earth Movement Exclusion Bars Coverage For Foundation Settling, Federal Judge Says

DENVER — Breach of contract and bad faith claims alleged against a homeowners insurer cannot survive because the policy’s earth movement exclusion clearly bars coverage for damages caused by settling in the foundation of the home, a Colorado federal judge said March 20 in granting the insurer’s motion for summary judgment.
March 21, 2024
Panel Affirms Ruling In Favor Of Insurer In Bad Faith Suit Over Woolsey Fire Damage

LOS ANGELES — A California appeals court held that a homeowners insurer did not breach the insurance contract or the implied covenant of good faith and fair dealing and did not commit financial elder abuse because it paid the proper insureds “all (if not more than)” it had a duty to pay under the policy coverages for dwelling repairs, personal property damage and temporary additional living expenses, affirming a lower court’s summary judgment ruling in favor of the insurer in a coverage dispute arising from property damage cause by the Woolsey Fire.
March 21, 2024
Judge: 1 Expert Excluded, Others Allowed In Insurance Coverage Spat

DENVER — Experts retained by homeowners can testify on the cause of alleged water damage that is part of an insurance coverage dispute, but the insurer’s expert is inadmissible because his testimony is irrelevant to the issues in the case, a Colorado federal judge ruled.
March 19, 2024
Judge Grants Dismissal To Guaranty Association In Hurricane Ida Coverage Dispute

NEW ORLEANS — A Louisiana federal judge dismissed homeowners’ claims against the Louisiana Insurance Guaranty Association (LIGA) in a breach of contract and bad faith suit against it over liability for purported damages caused by Hurricane Ida, finding that because the homeowners voluntarily dismissed the related claims against LIGA, which was substituted for a now-insolvent insurer, LIGA’s motion for partial dismissal is moot.
March 19, 2024
Amended Complaint Proposed In Delaware Suit Over Alleged Asset Dissipation

WILMINGTON, Del. — Plaintiffs in a suit over the “Agera transactions” — a complex asset-swap arrangement that they allege resulted in the “dissipation of at least $250 million” — have moved in Delaware Chancery Court for leave to amend the complaint “to clarify the record and make minimal amendments.”
March 19, 2024
3rd Circuit Affirms Ruling For Homeowners Insurer In Water Damage Coverage Suit

PHILADELPHIA — The Third Circuit U.S. Court of Appeals affirmed a district court’s ruling in favor of a homeowners insurer on breach of contract and bad faith claims in a water damage coverage dispute, agreeing with the insurer that the policy’s one-year suit limitation provision bars the breach of contract claim and that there is no evidence that the insurer’s denial of coverage was unreasonable.
March 18, 2024
Second-Layer Excess Insurer Owed A Duty Under Policy To Act In Good Faith

FLINT, Mich. — An insured’s claim for breach of contract based on a second-layer excess insurer’s failure to participate and contribute in the settlement of an underlying wrongful death suit can proceed because the insurer owed a duty under the insurance contract to exercise good faith in negotiating and settling the underlying case and the insured presented sufficient facts in support of its claim, a Michigan federal judge said in denying the insurer’s motion for judgment on the pleadings.
March 18, 2024
Insureds’ Bad Faith Claim In UIM Benefits Dispute Can Proceed, Judge Says

PHILADELPHIA — A bad faith claim alleged against an auto insurer can proceed because the insureds stated sufficient facts to support their allegation that the insurer failed to properly investigate their claim for underinsured motorist (UIM) benefits, a Pennsylvania federal judge said March 14 in partially denying the insurer’s motion to dismiss.
March 15, 2024
Judge Adopts Report, Remands Hurricane Coverage Suit Against Guaranty Association

MOBILE, Ala. — An Alabama federal judge adopted a magistrate judge’s report and recommendation that a bad faith and breach of contract hurricane coverage suit against the Alabama Guaranty Association (AIGA) be remanded to state court, agreeing with the magistrate judge’s finding that the suit is “due to be remanded” because the court “lacks subject matter jurisdiction.”
March 14, 2024
Coverage For Storm Damage Will Be Resolved As Part Of Breach Of Contract Claim

COVINGTON, Ky. — A homeowners insurer’s counterclaim seeking a declaration that no coverage is owed for storm damage to the insured’s home must be dismissed because the issue of coverage will be resolved as part of the insured’s breach of contract claim, a Kentucky federal judge said March 13 in dismissing the counterclaim.
March 14, 2024
Dismissal Of Bad Faith Suit Recommended For Failure To Comply With Florida Law

FORT LAUDERDALE, Fla. — A Florida federal magistrate judge recommended granting an insurer’s motion to dismiss its insureds’ bad faith suit because the insureds failed to file a compliant civil remedy notice (CRN) as required under Florida law before filing a bad faith suit against the insurer.
March 14, 2024
Bad Faith Claim Against Boat Insurer Can Proceed, Massachusetts Judge Says

BOSTON — An insured’s breach of contract claim cannot proceed as pleaded because the insured failed to show that the insurer breached any terms of the policy; however, the insured’s bad faith claim can proceed because it cannot be conclusively established that the insurer did not act in bad faith in investigating the insured’s claim for coverage for a boat accident, a Massachusetts federal judge said in partially granting the insurer’s motion for judgment on the pleadings.
March 13, 2024
Summary Judgment Denied To State Farm In Dispute Over Concealed SSDI Application

DENVER — A Colorado federal judge denied State Farm’s motion for summary judgment in a bad faith and breach of contract suit filed against it over coverage for an insured’s uninsured/underinsured motorist (UM/UIM) claims related to an auto accident, finding that the insured did “not technically” make false statements regarding her application for Social Security Disability Income (SSDI) that would void her insurance policy for fraud.
March 13, 2024
Insured’s Bad Faith Claim Against Auto Insurer Dismissed Without Prejudice

PHILADELPHIA — An insured’s bad faith claim alleged against an auto insurer cannot proceed because the insured’s complaint alleges only conclusory statements with no factual support, a Pennsylvania federal magistrate judge said March 12 in dismissing the claim without prejudice.
March 13, 2024
Oral Surgeon’s Breach Of Contract, Bad Faith Claims Against Disability Insurer Fail

FRESNO, Calif. — An insured’s breach of contract and bad faith claims against a disability insurer cannot proceed because there is no evidence that any doctor advised the insured to stop working as an oral surgeon to reduce the risk of contracting COVID-19 and suffering complications from the virus based on his comorbid conditions of asthma and hypertension.
March 13, 2024
Bad Faith Claims Fail In Coverage Suit Over Missing Artwork, Rolex Watch

TUSCON, Ariz. — An Arizona federal judge granted an insurer’s motion for summary judgment on an insured’s bad faith claims after determining that one of the bad faith claims related to the theft of artwork cannot proceed because the breach of contract claim related to the artwork fails and the other bad faith claim related to a missing Rolex watch fails because the issue of coverage was fairly debatable.
March 12, 2024
Judge Denies Summary Judgment On Bad Faith, Insurance Code Violation Claims

SHERMAN, Texas — A Texas federal judge on March 11 partially adopted magistrate judge’s recommendation to grant a homeowners insurer’s motion for summary judgment on a breach of contract claim related to the insureds’ claim for damages to their pool and landscaping; however, the judge rejected a portion of the magistrate judge’s report and denied the insurer’s motion on the claim for bad faith and a number of the claims alleging violations of the Texas Insurance Code.
March 12, 2024
9th Circuit Partly Reverses Ruling In $40M Commercial Crime Coverage Dispute

PASADENA, Calif. — The Ninth Circuit U.S. Court of Appeals on March 11 reversed a lower federal court’s dismissal of a financial services company insured’s claim for loss under its commercial crime insurance policy’s “Computer And Funds Transfer Fraud Insuring Agreement” and its claim for tortious breach of the implied covenant of good faith and fair dealing, finding that the authorized submission of fraudulent electronic data into the insured’s computer system can arguably be described as “fraudulent entry” to trigger coverage.
March 12, 2024
Discovery Orders Granted, Appeal Filed In Vesttoo Chapter 11 Bankruptcy Cases

WILMINGTON, Del. — A notice of appeal has been filed concerning the confirmation of a Chapter 11 plan of liquidation for Vesttoo Ltd. and its dozens of affiliates, and a Delaware federal bankruptcy judge on March 11 granted four unopposed motions for leave to conduct discovery against banking entities.
March 11, 2024
Extracontractual Claims Against Homeowners Insurer Cannot Proceed, Judge Says

BROWNSVILLE, Texas — An insured’s extracontractual claims alleged against a homeowners insurer in a storm damage coverage dispute cannot proceed because the evidence shows that a reasonable coverage dispute existed, a Texas federal judge said in granting the insurer’s motion for summary judgment.
March 07, 2024
5th Circuit Affirms Arbitration Order In $7M Hurricane Ida Dispute

NEW ORLEANS — A Fifth Circuit U.S. Court of Appeals panel on March 6 affirmed an order compelling arbitration of an insureds’ claims for $7 million in damages caused by Hurricane Ida and for bad faith against a group of foreign and domestic insurers that had provided it a surplus line policy.
March 07, 2024
Contractor Seeks 6th Circuit’s Review Of Coverage Rulings In Wall Collapse Suit

CHATTANOOGA, Tenn. — Less than two weeks after a building owner filed a notice of appeal to the Sixth Circuit U.S. Court of Appeals, the contractor responsible for the building’s renovation work followed suit and filed its own notice of appeal, seeking review of a Tennessee federal judge’s ruling and judgment entered in favor of the insurer in the dispute between the building owner, contractor and insurer over coverage for the replacement of the building’s wall that fell during renovation work.
March 04, 2024
Insurer’s Refusal To Settle For More Than Policy Limits Was Not Bad Faith, Panel Says

TAMPA, Fla. — The Second District Florida Court of Appeal granted a motion for rehearing filed by insureds and a third-party claimant in an auto coverage dispute and issued a revised opinion, reiterating its prior finding that while the trial court properly found that the auto insurer did not act in bad faith in refusing a settlement demand that was in excess of the insurance policy limits, the trial court erred in failing to properly consider applicable Florida precedent regarding other theories of bad faith alleged by the insureds and third-party claimant.
March 04, 2024
S.C. Panel Says Issue Of Fact Exists On Timeliness Of Breach Of Contract Claim

COLUMBIA, S.C. — A trial court correctly found that a bad faith claim against a homeowners insurer could not proceed because the insurer’s denial of coverage was not unreasonable; however, the trial court incorrectly found that the insured’s breach of contract claim could not proceed because a question of fact exists as to whether the breach of contract claim is timely based on the insurer’s communications with the insured about her water damage claim, the South Carolina Court of Appeals said in reversing a portion of the trial court’s ruling.
March 04, 2024
Complaint Alleges Sufficient Facts To Support Bad Faith Claim Against Auto Insurer

LOS ANGELES — A trial court erred in sustaining an auto insurer’s demurrer on an insured’s bad faith claim because the insured’s complaint alleges sufficient facts in support of a claim for bad faith against the insurer, a California appellate court said in reversing the trial court’s ruling.