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

Mealey's Insurance Bad Faith

February 02, 2024
Bad Faith, Insurance Code Violation Claims To Proceed Against Homeowners Insurer

MARSHALL, Texas — An insured’s claims for bad faith and violation of the Texas Insurance Code will proceed to trial because questions of fact exist regarding the cause of a fire at the insured’s home and whether the homeowners insurer investigated the claim with the pretext of denying coverage on the basis that the fire was intentionally set by the insured, a Texas federal magistrate judge said in denying the insurer’s motion for summary judgment.
February 02, 2024
Questions Of Fact Exist On Breach Of Contract Claim In Fire Coverage Suit

TOLEDO, Ohio — An insured’s breach of contract claim against a homeowners insurer in a fire coverage dispute will proceed because questions of fact exist regarding the materiality of an insured’s alleged misrepresentations and regarding the insurer’s affirmative defense of arson; however, the insured’s bad faith claim cannot proceed because the insurer’s denial of coverage was not unreasonable, an Ohio federal judge said in partially granting the insurer’s motion for summary judgment.
February 01, 2024
Breach Of Contract, Bad Faith Claims In Hurricane Damages Suit Fail, Judge Says

NEW ORLEANS — A Louisiana federal judge granted a homeowners insurer’s motion to dismiss an insured’s breach of contract and bad faith claims without prejudice to amend the complaint after determining that the insured fails to allege sufficient facts in support of the claims stemming from the insurer’s adjustment of a hurricane damages claim.
February 01, 2024
Airline And Insurer Agree To Dismiss UCL, Bad Faith Suit Over Passenger’s Coma

SAN FRANCISCO — A California federal judge on Jan. 31 entered an order of dismissal after an airline and two insurers entered a joint stipulation requesting dismissal of the airline’s suit accusing one insurer of violating California’s unfair competition law (UCL) and bad faith based on an allegedly improper denial of coverage for a separate lawsuit brought against the airline by the family of a quadriplegic man who fell into a coma while traveling, which recently settled for $30 million.
February 01, 2024
Federal Judge Tosses Hurricane Coverage Case After Suspending Homeowner’s Counsel

LAFAYETTE, La. — A Louisiana federal judge adopted a magistrate judge’s report and recommendation to dismiss for failure to prosecute after a homeowner failed to attend a status conference in her hurricane coverage suit against her now-insolvent insurer following the judge’s termination of her legal counsel.
February 01, 2024
Breach Of Contract, Bad Faith Counterclaims Must Be Dismissed, Judge Says

CHICAGO — An insured’s counterclaims for breach of contract and bad faith cannot proceed against a commercial property insurer because the breach of contract claim is duplicative of the insurer’s declaratory judgment claim and because the bad faith claim fails to state any facts in support of the insured’s allegation that the insurer acted unreasonably in handling the insured’s claim for property damages.
February 01, 2024
Late Objection Bid Draws Opposition In Vesttoo Chapter 11 Cases

WILMINGTON, Del. — Asserting that “Vesttoo’s defrauded creditors have overwhelmingly voted to accept” a Chapter 11 plan of liquidation for Vesttoo Ltd. and dozens of its affiliates, two creditors are among the entities urging a Delaware federal bankruptcy court to reject a motion to allow an untimely objection to claims against one of the affiliates.
January 31, 2024
Wall’s Structural Instability Caused By Deterioration, Not Collapse, Judge Says

CHATTANOOGA, Tenn. — No coverage is owed for the replacement of an entire wall of a building undergoing renovations because the cause of the structural instability of the wall was deterioration and not the collapse of a limited number of bricks from the wall during the construction work, a Tennessee federal judge said Jan. 30 in entering judgment in favor of the insurer.
January 31, 2024
Extracontractual Claims Against Insurer Dismissed For Failure To State Claim

HOUSTON — A Texas federal judge dismissed an insured’s extracontractual claims alleged against an insurer in a property damage coverage dispute after determining that the insured failed to provide sufficient facts to support allegations that the insurer acted in bad faith and violated Texas law in its adjustment and handling of her property damage claim.
January 30, 2024
Vice Chancellor Mostly Denies Dismissal In Suit Over Asset Dissipation

WILMINGTON, Del. — Ruling on four long-pending motions in a suit over a complex asset-swap transaction that the plaintiffs argue resulted in the “dissipation of at least $250 million,” a Delaware vice chancellor granted dismissal only as to a claim of fraudulent trading under Cayman Islands law.
January 26, 2024
Fact Issues Exist On Insured’s Roof Damages, Texas Federal Judge Determines

HOUSTON — An insured’s claims for breach of contract and bad faith can proceed against a homeowners insurer because questions of fact exist regarding the extent of the damage to the insured’s home.
January 26, 2024
4th Circuit Affirms Ruling For Professional Liability Insurer, Finds No Bad Faith

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals affirmed a lower federal court’s summary judgment ruling in favor of a professional liability insurer in a breach of contract and bad faith lawsuit, finding that the insured failed to create a genuine dispute of fact about the reasonableness of the insurer’s refusal to defend her against an underlying lawsuit.
January 25, 2024
Vesttoo Bankruptcy Debtors: Proceeding In Israel Would Be More Efficient

WILMINGTON, Del. — A variety of objections have been lodged in Delaware federal bankruptcy court regarding the Official Committee of Unsecured Creditors’ Chapter 11 plan of liquidation for Vesttoo Ltd. and 48 affiliates, including one in which the debtors argue that the cases should be dismissed “so that more efficient insolvency proceedings can be filed in Israel.”
January 25, 2024
Fact Issues Exist On Insureds’ Conduct, Insurer’s Handling Of Water Damage Claim

DENVER — A Colorado federal judge on Jan. 24 determined that portions of a breach of contract claim and a bad faith claim against a homeowners insurer can proceed because questions of fact exist as to whether the insureds provided the insurer with all requested information regarding their claim for water damages and whether the insurer acted unreasonably in handling the insureds’ claim.
January 25, 2024
Panel: LLC Was Sole Tenant, No Personal And Advertising Injury Coverage Owed

SAN FRANCISCO — A California appeals court affirmed a lower court’s ruling in favor of an insurer in a breach of contract and bad faith lawsuit seeking coverage for an underlying cross-complaint in response to the insureds’ unlawful detainer lawsuit, finding that the policy’s personal and advertising injury coverage was not triggered because a limited liability company and not an actual person was the sole tenant sued.
January 23, 2024
Judge OKs Adding Guaranty Association In Bad Faith Suit Against Insolvent Insurer

NEW ORLEANS — A Louisiana federal judge granted a homeowner’s motion to file an amended complaint to add as a defendant the Louisiana Insurance Guaranty Association (LIGA) in a breach of contract and bad faith suit against a now-insolvent homeowners insurer over its purported failure to adequately cover damage caused by Hurricane Ida, finding that amending the complaint is necessary due to the insurer’s insolvency and that the case must be remanded because complete diversity is destroyed.
January 23, 2024
Insured Entitled To Depose Claims Handlers In Environmental Coverage Dispute

DETROIT — An insured seeking coverage for underlying environmental contamination suits is entitled to depose an insurer’s claims handlers because the information sought by the insured is relevant to the insured’s coverage claim and is relevant in determining whether the insurer acted in bad faith in handling the claim, a special master appointed by a Michigan federal court said in granting the insured’s motion to compel deposition testimony.
January 23, 2024
Insurer Removes Insured’s Complaint Seeking Coverage For Contamination Costs

TACOMA, Wash. — An insured alleges in an amended complaint, recently removed to Washington federal court, that its insurer breached its contract, acted in bad faith and violated Washington law by denying coverage for environmental liabilities and defense costs incurred as a result of contamination allegedly caused by the insured’s marine operations.
January 22, 2024
Infestation Exclusion Bars Coverage For Roof Damage, 4th Circuit Affirms

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Jan. 19 affirmed a Maryland federal court’s ruling that an insured’s claims for breach of contract and bad faith fail because the policy’s infestation exclusion precludes coverage for roof damage caused by an infestation of vultures.
January 22, 2024
Insurer Asks 5th Circuit To Reconsider Affirmation Of $502,172 Bad Faith Judgment

NEW ORLEANS — An insurer on Jan. 19 asked the Fifth Circuit U.S. Court of Appeals to reconsider its ruling that there was no reversible error in a jury’s conclusion that it acted in bad faith and underpaid its church insured for property damage that was caused by Hurricane Laura, challenging the panel’s ruling that affirmed the trial court’s $502,172.16 award in favor of the insured for damages, penalties and fees.
January 22, 2024
Panel Says District Court Properly Dismissed Insured’s Suit For Lack Of Jurisdiction

NEW ORLEANS — A district court properly dismissed a fire-suppressing foam distributor’s breach of contract and bad faith suit against its insurer, which denied coverage for a subpoena served on the insured in an underlying multidistrict litigation suit seeking damages for bodily injuries and contaminated drinking water caused by the use of the foam, because the lower court properly found that it lacked specific personal jurisdiction over the insurer, the Fifth Circuit U.S. Court of Appeals said.
January 22, 2024
Bridgebuilder, Insurer Stipulate To Dismissal Of Damage Coverage Claims

WASHINGTON, D.C. — A bridgebuilder and its builders risk insurer have agreed to the dismissal with prejudice of the builder’s breach of contract and bad faith suit against the insurer; the builder last year had been granted summary judgment on the breach of contract claim after a federal judge in the District of Columbia found that the policy’s definition of “damage” includes the builder’s claim for reimbursement for repair costs necessitated by defects in the concrete of the bridge and that the insurer failed to demonstrate that any exclusions apply.
January 22, 2024
Bad Faith Claim Against Guaranty Association Dismissed In Hurricane Coverage Row

NEW ORLEANS — A Louisiana federal judge granted partial dismissal to the Louisiana Insurance Guaranty Association (LIGA), which was substituted for an insolvent homeowners insurer, in a breach of contract suit over damages from Hurricane Ida, finding that the claims for bad faith, mental anguish, penalties, pre-insolvency costs and interest must be dismissed because they are not covered claims for which “LIGA is the statutory successor.”
January 22, 2024
Punitive Damages Claim Cannot Proceed, California Federal Judge Determines

SANTA ANA, Calif. — An insured cannot seek punitive damages in a coverage suit arising out of a claim for collapse at his business because the insured failed to show that the insurer acted with oppression, malice or fraud in handling his claim, a California federal judge said in granting the insurer’s motion to dismiss.
January 22, 2024
Contractor, Insurer Settle Construction Defects Suit, File Stipulation Of Dismissal

GREENBELT, Md. — A general contractor and its professional liability insurer filed a corrected stipulation of dismissal with prejudice on Jan. 18 in a Maryland federal court after reaching a settlement in the suit filed by the insured general contractor and alleging that the insurer breached its contract and acted in bad faith by failing to pay the insured for rectification expenses related to a faulty wall system installed as part of a construction project.