Bad Faith Blog

Summary: Ethel Nelson’s car struck Mary Busby on June 10, 1964 after Busby stepped onto the street. Nelson had an automobile insurance policy from Tri-State Insurance Company with a policy limit of $10,000. Busby made two settlement offers within the policy limits, but Tri-State refused both. At trial, the jury apportioned fault between Busby and Nelson and ultimately awarded Busby a total of $16,250, $13,000 to Busby herself and $3,250 to her husband (the first judgment). Nelson’s insurer, Tri-State, paid only the $10,000 policy limit.

Summary: Metropolitan Property & Casualty Insurance Company (Metropolitan) denied Calvin’s residential fire loss claim contending the policy was void because of material misrepresentations on the application and in the claims process. Metropolitan also claimed that it was an arson fire for which Calvin was responsible. Calvin counterclaimed alleging breach of contract, slander, tort of outrage, and bad faith. The Court granted Metropolitan’s summary judgment finding Calvin had misrepresented his prior loss and also granted summary judgment on Calvin’s bad faith claim. The 8th Circuit concluded there were fact issues preventing summary judgment regarding the alleged material misrepresentations justifying voiding the policy. Calvin had also appealed the district court’s summary judgment in favor of Metropolitan on the breach of contract and bad faith claims. The breach of contract ruling was reversed regarding the insured’s “alleged misrepresentation in failing to report the prior fire loss.” However, the summary judgment on the bad faith claim was affirmed.