Bad Faith Blog

The Western District of Pennsylvania held that an insurer did not act in bad faith but was well within its rights in denying an insured’s claim and voiding his policy.  The insured’s material misrepresentations caused the court to find that no reasonable jury could conclude that the insurer acted in bad faith in denying the claim. Mr. Felix submitted a homeowner’s insurance claim in excess of $1 million after a fire ravaged his home. The insurer assigned the case to a special investigations unit after identifying several “red flags” suggesting fraud. 

Summary: In Davis, the Texas Court of Appeals affirmed that no breach occurred when the insurer denied a claim that the jury ultimately found did not exceed the insured’s deductible. Without a breach, no “extra-contractual claims” could exist, including for bad faith.

Summary: Michelle Asermely rear-ended a vehicle driven by Mark Rendine but owned by Julieanne Bernier. Bernier had car insurance issued by Allstate Insurance Company with a policy limit of $50,000. Asermely’s lawsuit against both Rendine and Bernier went to arbitration where the arbitrator awarded Asermely $47,557.37, but also found her 25 percent at fault. Her attorney wrote a letter to the arbitrator saying that “plaintiff will accept the award of the arbitrator,” but the defendants rejected it and proceeded to trial. A jury entered a total judgment of $86,333.57, which included interest, and found Asermely 60 percent at fault. After trial, Allstate allegedly made a check out to Asermely for the policy limit of $50,000 as “final settlement of any and all claims arising from bodily injury and property damage caused by accident on 7/9/84.” Asermely refused to cash the check and instead sued to collect on the judgment. At that point, Rendine and Bernier assigned their rights to Asermely. Allstate later issued a second check for $50,000 to Asermely, but this time did not include the release language. Asermely cashed the second check, but later sued Allstate.

On September 9, 2014, the Missouri Supreme Court unanimously struck down the State’s punitive damage cap in Lewellen v. Franklin, 2014 WL 4425202 (Mo. banc Sept. 9, 2014).

Summary: Mr. and Mrs. Wright purchased a home in an exclusive golf club development and purchased homeowners’ coverage from State Farm. The home’s roof was damaged by a storm and had to be fully replaced as a result of the homeowner’s association’s restrictive covenants. After State Farm only paid for the repairs to the roof, the Wrights sued. Summary judgment was entered in favor of State Farm on plaintiffs’ breach of contract, misrepresentation and contractual bad faith claims. The Sixth Circuit affirmed the summary judgment in all respects.