Bad Faith Blog

Injured logger, as an assignee of claims by a timber lessee and land owner, brought an action against his employer’s liability insurer to recover a consent judgment for the $1M policy limits. After the trial court entered summary judgment in favor of the logger, the employer’s insurer appealed. The Supreme Court of Appeals of West Virginia found the consent judgment was not binding on the insurer because it was not a party to the underlying suit and the settlement and assignment were void for fraud and collusion.

Summary: The Seventh Circuit Court of Appeals, applying Indiana law, considered an insurer’s duty to defend under a commercial general liability policy. The insured sued its insurer in the Southern District of Indiana for breach of contract and bad faith and sought a declaratory judgment that the insurer had a duty to defend. Since the complaint did not allege facts which would establish coverage, the District Court’s dismissal was affirmed.