Bad Faith Blog

Summary: Great American insured Bayley, a general contractor on a $12.3 million renovation project in Orange County, California. After its air conditioning subcontractor was found to have violated California’s prevailing wage law, the Community College District served Bayley with a “Notice of Withholding Contract Payments” as well as the procedural right to dispute the withholding. On cross-motions for partial summary judgment the district court found that Great American had a duty to defend which Great American had breached, but also found in favor of Great American on the statutory and non-statutory bad faith claims.

Summary: A Washington homeowners association filed suit against Derus Wakefield II, LLC for property damage at a condominium project. Derus tendered the suit to the association’s insurer, QBE, which denied the tender for defense at which point Everest agreed to defend under a reservation of rights. It then sued QBE arguing it had a duty to defend under Washington law. The matter was removed to federal court where the district court judge found the action was timely and further found that Everest could depose QBE’s coverage attorney in light of the bad faith claims.

Burlington Insurance Company’s denial of the tender to defend additional insured Tim Ryan Construction was deemed a breach of contract, found to be in bad faith, and in violation of Washington’s Insurance Fair Conduct Act (“IFCA”) entitling Tim Ryan Construction to recover attorney’s fees plus an increase in the total award of damages to be determined after the underlying lawsuit had been finally resolved.

Summary: After the insurer denied a settlement demand for the $2 million policy limits, the insured, a plumbing contractor, and the land owner plaintiff (“claimant”) reached a settlement agreement for approximately $3.75 million. The trial court judge determined that the settlement was reasonable. The insurer appealed arguing it had a right to a jury trial on the issues of reasonableness and that the reasonableness finding was supported by substantial evidence. The appeals court affirmed.

Summary: It is a question of fact as to whether an insurer who has a duty to investigate is guilty of bad faith when it asks insured to tell it if facts change such that it is exposed. Gordon Trucking operated a vehicle that was involved in a serious accident. Another vehicle crossed the center line hitting the Gordon vehicle and then the injured plaintiff’s vehicle. Gordon Trucking had the following coverages: