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Eleventh Circuit Reaffirms There Is No Bad Faith Unless the Settlement Offer Fully Protects the Insured

Recently, the Eleventh Circuit, applying Georgia law, reaffirmed that an insurer cannot be liable for negligently failing to settle a case unless the settlement demand provides protection to the insured against all potential claims, even those which have not been asserted. Linthicum v. Mendakota Insurance Company, No. 16-16593 (11th Cir. May 3, 2017) arises from truly tragic circumstances.  While driving intoxicated, Bobby James Hopkins, II, struck and killed the Linthicums’ 11 year old son.  Hopkins fled the scene, and attempted to have his car repaired.  The child lived a short time before dying.  When the claim was reported, Mendakota Insurance Company (Insurer) noted that there was a “probable recovery” and set the reserves for the $25,000 policy limit of Hopkins’

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Florida Alert: Can a Liability Carrier be Sued for Bad Faith when Its Insured Was Not Exposed to Liability In Excess of the Policy Limits?

The Third District Court of Appeals finding recently held that in certain circumstances, a third party can maintain a bad faith claim against an insurer even if the insured is not exposed to liability in excess of the policy limits.  The insurer, claiming that the decision is in direct contradiction to established Florida Supreme Court precedent and other precedential decisions, petitioned the Florida Supreme Court to review the decision.  See Infinity Indemnity Insurance Company v. Delia Reyes, et al., Case No. SC17-659 (Florida, April 26, 2017). The bad faith lawsuit arose out of an auto accident case.  Delia Reyes was involved in a car accident with Jorge Arroyo, Jr., who is now deceased.  Reyes filed a personal injury lawsuit against

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“Succeeds to the Interests of” Does Not Require Assumption of Obligations: D&O Policy’s Insured v. Insured Exclusion Applies to Claim Assigned to Fidelity Insurer; No Bad Faith

On February 24, 2017, the Texas Supreme Court reinstated a state trial court ruling that an “insured-versus insured” exclusion barred coverage under a D&O policy for the costs of defending a lawsuit. Because the D&O insurer demonstrated, as a matter of law, that the exclusion applied and no coverage existed, the high court also held the extra-contractual claims were properly disposed. See Great Am. Ins. Co. v. Primo, 2017 WL 749870, at *4 (Tex. Feb. 24, 2017). The individual insured, Robert Primo, previously served as a director and treasurer of Briar Green Condominium Association in Houston, Texas. In 2008 and, shortly before resigning, Primo wrote himself two checks from Briar Green’s account totaling roughly $100,000. Briar Green asserted the funds

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Alaska Creates Exception to General Rule that Injured Party Cannot Sue Insured’s Carrier

The Supreme Court of Alaska in Burnett v. Government Employees Insurance Company, 2017 WL 382648 (Alaska 2017) recently decided in a 3-2 decision that an insurer who voluntarily assumed the responsibility for cleaning up an oil spill on a third party’s property caused by its insured may become liable to that third party if it does not correctly handle the cleanup operations. GEICO argued that its obligations to its insured effectively negated any responsibility to third parties for improperly performing that clean up duty. The Court, over a strenuous dissent, rejected GEICO’s argument holding that an insurer who undertakes an independent obligation to a third party creates a new and independent duty to the third party claimant. GEICO was alleged

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First Circuit Provides Guidance as to When a Notice of Claim Triggers Policy Obligations

When does receipt of a pre-suit claim notice letter trigger an insurance carrier’s obligation to provide a defense and/or indemnity? In Sanders v. Phoenix Insurance Co., the First Circuit provided some guidance to this question, holding that a pre-suit notice letter would not trigger a carrier’s obligations unless a non-response would impact the policyholder’s ability to contest liability during a following proceeding. The Underlying Dispute Sanders arises from a “tragic tale of unrequited love.” Ms. Anderson hired an attorney to represent her in a divorce proceeding from Mr. Sanders, her husband. During the course of that representation, Ms. Anderson and her attorney began an affair. Ms. Anderson suffered from depression and anxiety. When the affair cooled, Ms. Anderson wrote a

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California Supreme Court Invites Suits against Defendants Doing Any Business in California

In a hotly contested 4-3 decision, the California Supreme Court in Bristol-Myers Squibb Company v. The Superior Court of San Francisco County, 2016 WL 4506107 greatly expanded the concept of specific jurisdiction to allow a non-resident plaintiff to file suit in California courts against any defendant who conducts or transacts any business in California, even though the plaintiff purchased that defendant’s product in another state.   The Court broadened the scope of specific jurisdiction to overcome the requirements of International Shoe Co. v. Washington, 326 U.S. 310 (1945), finding that a tangential use of the forum constitutes a “substantial” connection between plaintiff’s claim and the defendant’s forum activities. The product in question was Plavix, developed and manufactured by Bristol-Myers Squibb outside

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Avoiding Insurance Bad Faith
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action. More
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