Just because there is no insurance policy may not mean there is no cause of action for bad faith according to a recent Hawaii Supreme Court decision analyzing the Joint Underwriting Program (“JUP”) statute.  Willis v. Swain case. — P.3d — 2013 WL 2459880 (Hawaii).  In what appears to be a change in position, the Court explained that “[t]he special relationship between the insurer and the insured and the conduct of the insurer toward the insured is what gives rise to the tort of bad faith, not solely the existence of a contract.”  The Court concluded “the underlying covenant of good faith and fair dealing applies, even in the absence of an actual contract.” Based on this expanded view of…

A federal trial court in Iowa confirmed that first-party bad faith claims may be cognizable against both insurers and self-insured employers.  In Spencer v. Annett Holdings, Inc., 905 F.Supp.2d 953 (S.D. Iowa, Nov. 27, 2012), an over-the-road truck driver who was allegedly injured when he slipped and fell off  the back of his flatbed trailer sued his employer, a self-insured trucking company, alleging, among other things, that it acted in bad faith by refusing to pay outstanding medical bills, by denying and delaying necessary medical care and treatment, and by breaching a settlement agreement approved by the Iowa Workers’ Compensation Commissioner.   The trial court stated “[f]irst-party bad faith is an intentional tort that arises in the insurance context due to…

The New York Court of Appeals, the state’s highest court, recently held that an insurer that breached its duty to defend could not later rely on otherwise applicable exclusions to deny coverage for indemnification. Under this apparently new rule, an insurer’s wrongful failure to defend may result in the insurer’s liability for an amount up to its policy limits, even if a policy exclusion would otherwise preclude coverage for indemnification. This unanimous ruling potentially expands the indemnity obligation beyond the coverage afforded by the policy, although the court specifically affirmed the dismissal of the bad faith claims.  As the Court suggests, the filing of a pre-denial declaratory judgment action may now be an important strategic consideration.  It remains to be…

In Capstone Building Corp. v. American Motorists Ins. Co., 2013 Conn. LEXIS 187 (Conn. June 11, 2013), the Supreme Court of Connecticut declined to recognize a cause of action for an insurer’s alleged bad faith conduct in investigating a general liability insurance claim, relying on the policy terms which expressly granted the insurer discretion to conduct an investigation.  The Capstone court also addressed other certified questions including whether faulty construction work could be an “occurrence,” the meaning of “property damage” and application of the business risk exclusions.  As to the bad faith issue, the court held that a bad faith action “must allege denial of the receipt of an express benefit under the policy.”  Id. at *64.  The court reasoned…

A federal trial court in Tennessee confirmed what has been the law in Tennessee for almost thirty years: no tort of bad faith exists between an insurer and its insured.  In Westfield Ins. Co. v. RLP Partners, LLC, 2013 WL 2383608 (M.D.Tenn. May 30, 2013), the District Court ruled that neither a recent enactment by the state legislature nor a 2012 Tennessee appellate court decision cited by the insured have changed the law. The trial court quickly discredited the insured’s arguments that there is a plausible bad faith claim under Tennessee common law because such “a cause of action was recognized” by a recent legislative enactment or the poor reading of a 2012 Tennessee Court of Appeals opinion, finding that…