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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 31, 2016

New York’s Highest Court Applies Ohio’s Bad Faith Law

Summary: The New York Court of Appeals affirmed the trial court’s denial of Seneca Specialty Insurance Company’s (“Seneca Specialty”) motion to dismiss. Seneca Specialty relied upon New York’s restrictive bad faith requirements for this commercial property loss even though the insured’s building was located in Ohio. The prevailing conflicts of law rule provides that whenever the insured risk is located entirely within one state, that state’s law will control the litigation.

Bad Faith Blog
July 12, 2016

In New York, Breach of Duty of Implied Covenant of Good Faith and Fair Dealing and Breach of Contract Are Distinct Causes of Action

Summary: The plaintiff was injured while operating a vehicle insured by GEICO. The plaintiff obtained the policy limits from the tortfeasor’s insurer and then made a claim under the SUM endorsement of the GEICO policy. GEICO denied the claim, and the plaintiff alleged GEICO unreasonably refused payment.

Bad Faith Blog
June 2, 2016

No Bad Faith by Settling Unconstitutional Strip Search Cases Requiring the Insured to Fund the Settlement

Summary: The County unconstitutionally strip searched multiple arrestees between 1999 and 2002. Recognizing the defenseless nature of the case, Selective Insurance Company of America (Selective) and retained counsel, settled the case, funded the settlement, and then sued the County to recover the multiple deductibles paid. The courts below determined the County owed a deductible paid on its behalf, assessed all defense costs and fees to one plaintiff, and rejected the County’s bad faith claim. The highest court in New York affirmed.

Bad Faith Blog
February 10, 2016

New York Has No Independent Bad Faith Tort

Summary: Aaron Cohen (Cohen) was injured while working for UPI while operating a mixing machine. Cohen filed suit against UPI, Hastings Development (“Hastings”), and other defendants. Hastings filed a declaratory judgment and bad faith case in federal court after Evanston Insurance Company (“Evanston”) denied coverage under the Employers Liability Exclusion and reserved its rights under the “Designated Operations Coverage.” The Court found coverage under the policy, but ruled Hastings had no bad faith claim.

Bad Faith Blog
February 3, 2016

Bad Faith Claims Are Not Covered by Re-Insurance

United States Fidelity & Guaranty Company (USF&G) sued its re-insurers, including American Re-Insurance Company, seeking to recover “a share of the nearly billion dollars it paid in settling asbestos claims.” An earlier summary judgment motion had been appealed to, ruled upon, and remanded by the highest court in New York after finding a fact issue remained whether “USF&G, in allocating the settlement amount, reasonably attributed nothing to the so called ‘bad faith’ claims made against it. …” On remand the re-insurers sought to put on evidence of the reasonableness of the allocation of all settlement dollars. The trial court denied that motion, a ruling affirmed on appeal. The re-insurers could challenge at trial USF&G’s zero dollar allocation to bad faith claims and whether USF&G had given unreasonable values to certain classes of asbestos injury (“lung cancer asbestosis, pleural thickening and ‘other cancers’”). In other words, the trial was to be limited to determining whether those classes of asbestos claims had been “inflated by USF&G,” and whether part of those values should have been attributed to bad faith claims. The trial was not to determine any other reasonableness issues.