Bad Faith Blog

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. 

Summary: New Jersey Manufacturers Insurance Company (“NJM”) appealed the ruling that it breached its duty of good faith by failing to settle a claim against its insured which was within its policy limits. The New Jersey Superior Court, Appellate Division, applied the reasonableness standard in assessing whether the claim for bad faith was proper.

Summary: Campbell caused a serious automobile accident and was found liable for a judgment in excess of his insurance policy’s limits. Despite the serious risk of an excessive judgment and multiple offers to settle within policy limits, State Farm, Campbell’s insurer, refused to settle the claim. Campbell filed suit against State Farm for bad faith failure to settle, but the trial court granted State Farm’s motion for summary judgment. The Utah Court of Appeals reversed and remanded the case for trial.

Summary: Mr. and Mrs. Wright purchased a home in an exclusive golf club development and purchased homeowners’ coverage from State Farm. The home’s roof was damaged by a storm and had to be fully replaced as a result of the homeowner’s association’s restrictive covenants. After State Farm only paid for the repairs to the roof, the Wrights sued. Summary judgment was entered in favor of State Farm on plaintiffs’ breach of contract, misrepresentation and contractual bad faith claims. The Sixth Circuit affirmed the summary judgment in all respects.