Bad Faith Blog

Summary: Property Gusma Properties owned and insured was damaged in Hurricane Ike. When the insurer demanded an appraisal, Gusma hired an attorney to assist. Following the appraisal award, the insurer tendered a check to the attorney for the full amount, all of which the attorney retained. Gusma sued the attorney and the insurer to recover its losses. Gusma claimed it was entitled to prompt payment penalties from the insurer for issuing the check jointly payable to Gusma and its counsel. The Texas Court of Appeals affirmed the trial court’s ruling that Gusma was not entitled to penalties. The Court of Appeals held, on this issue of first impression, that an insurer does not “delay payment, within the meaning of the Prompt Payment provisions, when it tenders payment to the insured’s authorized counsel in the form of a negotiable instrument that is made jointly payable to both insured and its counsel.”

Summary: The District Court granted partial summary judgment in favor of insurer on bad faith claim regarding roof damage. The District Court found there was a bona fide dispute whether coverage applied, but that the insurer had not acted in bad faith by relying on its experts’ reports which concluded that the damage was not caused by Hurricane Ike.

Summary: The District Court dismissed Plaintiffs’ claims for negligence, negligent infliction of emotional distress and unfair business practice in violation of the California Unfair Competition Law statute. The District Court held that the Unfair Competition Law (“UCL”) claim was legally barred because it attempted to enforce a provision of the Unfair Insurance Practices Act (“UIPA”) that does not give rise to a private cause of action. The District Court also held that California law does not allow negligence claims to be asserted against insurers relating claims handling.

Summary: The United States District Court in Arizona held that an insurer, which admitted and rectified errors in calculation of the actual cash value of a homeowner’s property damage claim after the error was brought to its attention by the insured, did not commit bad faith.

Summary: Fifth Circuit finds there was no evidence to support insureds’ claim for extra-contractual statutory penalties based on mental anguish and lost wages. Also, Fifth Circuit finds insurer acted in good faith and timely in adjusting insureds’ contents damage claim. Homeowner insureds French and Sutter sued Allstate to recover additional insurance payments for damages to their home resulting from Hurricane Katrina. The insureds also sought statutory penalties and costs under Louisiana law. After a bench trial, the District Court awarded the insureds additional insurance payments as well as statutory penalties. This blog entry will only discuss the extra contractual damages awarded to the insureds.