Bad Faith Blog

Summary: Maharaj filed a third-party bad faith claim against GEICO on behalf of her son after GEICO insisted that Maharaj sign a release that included objectionable indemnification and property damage clauses to conclude the settlement. After removing the bad faith case to federal court, a discovery dispute arose. The Magistrate Judge partially granted Maharaj’s Motion to Compel Production of Documents withheld on privilege grounds.

The excess insurer subrogated to the insured’s bad faith claim was entitled to pursue its counterclaim against the primary insurer although the named insured was fully protected from excess exposure by a high/low agreement.

Summary: A Wisconsin high school discharged an employee who then sued. The school district’s insurer defended the case through an adverse summary judgment, but refused to indemnify the school district for an adverse judgment even though it had never sent a reservation of rights letter. The majority ruled that the doctrines of waiver or estoppel were insufficient “to defeat… a coverage clause in an insurance contract that would otherwise justify the insurer’s denial of coverage.” The Maxwell case is primarily a coverage opinion which declares how and when the estoppel and waiver doctrines apply in state courts in Wisconsin. Because of its brief discussion of Wisconsin bad faith law it merits attention in our blog.

Summary: Allstate insured Wanda Brethorst was injured while a passenger in the car her husband was driving. The Allstate policy provided both medpay and uninsured motorist coverages. Allstate paid her medical expenses up to the $5,000.00 medpay limit and offered to pay a small portion of the remaining $4,789.00 in medical expenses to settle the UM claim. She rejected the offer to settle the UM claim for roughly 37 percent of her unpaid medical expenses and filed a bad faith claim. The case was before the Supreme Court of Wisconsin on an interlocutory appeal to decide if Wisconsin law allowed her to proceed with a stand alone bad faith claim. In two separate opinions, the court unanimously agreed that she could.