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Bad Faith Blog

We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.

Bad Faith Blog
September 17, 2019

Minnesota Court Declares First-Party Bad Faith Test While Affirming Bad Faith Judgment Against Insurer

Peterson filed an underinsured motorist claim against her UIM carrier, Western National, which had a $250,000 policy limit. After a series of migraine headaches caused by her whiplash injury, she started receiving periodic Botox injections to help her manage those headaches. Her insurance company made a series of “low ball” settlement offers after she settled the liability claim for $45,000 of the $50,000 limit of the tortfeasor’s policy.

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Bad Faith Blog
September 4, 2019

Breach of Contract Claims Survived (Barely), But All Bad Faith Claims Dismissed

The Sapienza’s purchased a home in an historic district in Sioux Falls, South Dakota, tore it down, and built a new home which the historic preservation board approved. However, the new house upset the neighbors who sued for injunctive relief (to include having the house torn down) arguing that the new structure violated certain height and setback restrictions. Liberty Mutual defended the Sapienza’s under a reservation of rights. The trial court in the underlying case granted injunctive relief after finding that “compensation would not provide adequate relief,” a ruling affirmed by the Supreme Court of South Dakota. The Sapienza’s were given 30 days to demolish their home which they did at the cost of more than $60,000.00. They then sued Liberty Mutual for breach of contract, both for failing to provide an adequate defense and for refusing to indemnify them for their out of pocket “damages”. They also filed three counts described as “bad faith” claims. The U.S. District judge granted Liberty Mutual’ s motion to dismiss the three bad faith claims, but denied the motion to dismiss the breach of contract claims. The judge gave plaintiffs 14 days to file a motion for leave to amend their complaint if they had a factual basis for alleging a breach of the duty to defend and certified a question to the South Dakota Supreme Court to decide whether “the costs the Sapienzas incurred to comply with the injunction constitute covered ‘damages’ under the Policies.”

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Bad Faith Blog
July 17, 2019

No Assignment, No Bad Faith: Rhode Island Supreme Court Finds Insurer Has No Duty to Third Party Claimant Unless There is an Assignment by the Insured

Automobile liability insurer brought action against its insured, an injured third-party claimant and claimant’s parents for declaratory judgment that it had no obligation to pay sums beyond the policy limits. Third-party claimant and his parents counterclaimed for declaratory relief. The Superior Court entered judgment in favor of the insurer.  After appeal, the Rhode Island Supreme Court held the insurer owed no duty to third-party claimant and his parents to act in a reasonable manner and in good faith in settling claim. 

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