The Georgia Court of Appeals recently made waves in Hughes v. First Acceptance Insurance Company of Georgia, Inc., 343 Ga. App. 693 (2017). First, it aggrandized the role of a jury in determining the existence of an offer to settle a claim where the text of purported offer letters was not in dispute. Second, it subtly reminded litigants that punitive damages are available in a bad faith failure-to-settle claim where the claim sounded in tort and had not been ... Keep Reading »
Bad Faith
Pennsylvania Supreme Court Clarifies Showing Required for Bad Faith Insurance Claims
The Pennsylvania Supreme Court has, for the first time in the 37-year history of Pennsylvania’s bad faith insurance statute, 42 Pa.C.S. § 8371, considered the necessary elements of such a claim, and it has determined that proof of an insurer’s motive of self-interest or ill will are not required. See Rancosky v. Washington Nat'l Ins. Co., 28 WAP 2016 (Pa. Sept. 28, 2017). The case arose from a supplemental cancer insurance policy that plaintiff LeAnn Rancosky ... Keep Reading »
Poisoning the Well: Washington Supreme Court Applies Efficient Proximate Cause to Eviscerate Pollution Exclusion in Liability Policy
Professionals and practitioners in first party property insurance are likely familiar with the efficient proximate cause rule, which requires an insurance policy to provide coverage where "a covered peril sets in motion a causal chain," even if subsequent causes-in-fact of the loss are excluded by the policy. As indicated by our previous coverage [1, 2, 3] of this doctrine, this can be a confusing analysis that leads to unpredictable results. Until recently, the ... Keep Reading »
Shot Through the Heart, But the Excess Carrier Isn’t to Blame: Georgia Federal Court Finds Policy’s Broad Firearms Exclusion Bars Coverage
On June 1, 2017, the U.S. District Court for the Northern District of Georgia granted summary judgment in favor of AIG Specialty Insurance Co. in a case involving the application of the firearms exclusion in Powe v. Chartis Specialty Insurance Co., No. 1:16-CV-01336. The court dismissed the case, in which claimant Christopher Powe sought the remaining $3 million of a $4 million settlement against the insureds, property management company HMI Property Solutions, Inc. ... Keep Reading »
Texas Supreme Court Clarifies When Insured May Recover Policy Benefits
In an effort to clarify over 20 years of conflicting precedent, the Texas Supreme Court announced five rules that, according to the court, explain the relationship between claims for breach of insurance policy and extra-contractual claims for bad faith and violations of the Texas Insurance Code. USAA Texas Lloyds Co. v. Menchaca, No. 14-0721, slip op. at 6 (Tex. April 7, 2017). Although an insurance policy is an agreement between the parties that is generally governed by ... Keep Reading »
Blowing the Whistle on Willful Misconduct: California Court holds that False Claims Act Suits Are Uninsurable Due to Public Policy
Willful misconduct is uninsurable. It is a fundamental principle of insurance, and it makes sense to both the lay and the lawyerly. But few states go as far as to codify this principle in the insurance code. California is an exception. In Office Depot, Inc. v. AIG Specialty Insurance Company, Case No. 15-02416-SVW-LPRx (C.D. Cal. Jan. 4, 2017), the U.S. District Court for the Central District of California held that Section 533 of California’s Insurance Code relieved ... Keep Reading »
Third Circuit Affirms Rescission of $25 Million Contaminated Products Policy
In H.J. Heinz Co. v. Starr Surplus Lines Ins. Co., No. 16-1447 (3d Cir. Jan. 11, 2017), the Third Circuit affirmed a District Court’s order allowing insurer Starr Surplus Lines Insurance Company (“Starr”) to rescind a $25 million Contaminated Products Insurance (CPI) policy that it sold to food manufacturer H.J. Heinz Company (“Heinz”), on the basis that Heinz failed to disclose material information in its insurance application. After Starr declined coverage, Heinz ... Keep Reading »
Florida Appellate Court Rejects Jury’s Bad Faith Verdict
It feels like a black swan event: last month, in GEICO Gen. Ins. Co. v. Harvey, No. 4D15-2724 (Fla. Ct. App. Jan. 4, 2017), a Florida appellate panel unanimously overturned a jury verdict, on the ground that the plaintiff’s bad faith claim was insufficient as a matter of law. A dissection of this rara avis can yield some insight into the limits of judicial tolerance for claims against insurers. The Fatal Accident On August 8, 2006, James Harvey and John Potts ... Keep Reading »
Eleventh Circuit Clarifies “Permanency” Requirement under Florida Bad Faith Statute
In Cadle v. GEICO Ins. Co., Case No. 15-11283 (11th Cir. Sept. 30, 2016), the Eleventh Circuit held that GEICO had not acted in bad faith when it failed to settle a claim after the insured did not provide any evidence of permanency during the cure period as is required by Florida law. With A Friend Like This… On July 2007, Catherine Cadle was rear-ended by Derek Friend, an underinsured motorist driving down I-95. Cadle had previously purchased insurance providing ... Keep Reading »
California Appellate Court Takes Equitable Subrogation to the Excess
In California, where a primary insurer is found to have unreasonably failed to settle within its policy limits, and a judgment is later entered against their insured in excess of those limits, the primary carrier can be liable to the insured for breach of an implied duty of good faith and fair dealing. And, where the insured’s excess carrier becomes liable for damages that exceed the limits of the primary policy as a result, that carrier may pursue an equitable ... Keep Reading »