Bad Faith Blog

Summary: The insured’s assignee argued Occidental Fire & Casualty Company of North Carolina breached the covenant of good faith and fair dealing by refusing to defend and indemnify the insured against a claim regarding faulty construction of shower walls in a hotel. The District Court for Arizona found because the insurer did not defend the insured in the underlying suit, it could assert new reasons for the denial of coverage. The court ruled the policies did not provide coverage, and there was no bad faith where the policies did not provide coverage.

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.