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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
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. 

Bad Faith Blog
September 24, 2017

Montana Supreme Court: $300,000 Consent Judgment Proper

Summary: The seller of a home was insured under a Homeowner’s Policy and a Renter’s Policy issued by United Services Automobile Association (USAA). Past basement problems, including flooding, were not disclosed by the seller. The basement flooded after the buyer took possession, and buyer sued the seller. After USAA denied coverage, the parties reached a settlement wherein a consent judgment was entered for $300,000 in favor of Huckins in the underlying case and Huckins then filed suit against USAA for breach of the duty to defend Van Sickle, breach of contract, common law and statutory bad faith, and punitive damages. The District Court held that USAA had not breached its duty to defend, as the claim was not an “occurrence,” and the buyer appealed. The Montana Supreme Court reversed and held USAA had a duty to defend under the renter’s policy.

Bad Faith Blog
June 4, 2017

Fraud and Collusion Defeat Logger’s Attempt to Enforce West Virginia Consent Judgment

Injured logger, as an assignee of claims by a timber lessee and land owner, brought an action against his employer’s liability insurer to recover a consent judgment for the $1M policy limits. After the trial court entered summary judgment in favor of the logger, the employer’s insurer appealed. The Supreme Court of Appeals of West Virginia found the consent judgment was not binding on the insurer because it was not a party to the underlying suit and the settlement and assignment were void for fraud and collusion.

Bad Faith Blog
February 21, 2017

No Bad Faith If Insurer Refuses To Allow Excess Judgment To Be Entered Against Its Insured

Franklin Kropilak was badly injured when Collins made a left hand turn in front of his motorcycle. The insured was cited by a police officer just after the accident. 21st Century had the police report within in one week and within in two weeks knew that the hospital lien was $33,888. The policy for Collins provided for a liability limit of $10,000 for the crash. Thirty-seven days after the accident the insurer mailed to the attorney for the plaintiff a check for the policy limits. The plaintiff never accepted the policy limits. He did not cash the check. More than a year later in March the plaintiff proposed a settlement whereby consent judgment would be entered against Collins for $150,000 but Kropilak would agree to pursue only the insurance company for the amount in excess of her coverage. 21st Century did not agree to this proposed settlement, which the parties referred to as a Cunningham agreement.

Bad Faith Blog
August 14, 2016

Louisiana Plaintiff Not Permitted to Bring a Bad Faith Failure to-Settle Suit Because of Lack of Proper Assignment

Summary: Dana Johno brought a suit against Leon Duplessis & Sons, Inc. (“Duplessis”) alleging it demolished his home without consent following Hurricane Katrina. Johno also named as parties to the suit Duplessis’s two subcontractors (Hard Rock Construction and Pro Tree Services), its insurer (Scottsdale Insurance Company) and the local parish government which hired Duplessis.