Yearly Archives: 2014

Texas Supreme Court Accepts a Concurrent Cause and Ordinance or Law Matter Involving Hurricane Ike

On October 3rd, the Texas Supreme Court granted a policyholder’s petition for review in a Hurricane Ike matter that potentially gives Texas’ highest court an opportunity to address several important insurance issues.  They include concurrent cause in wind and flood losses and the insured’s burden of proof under policy provisions affording coverage when local ordinances mandate demolition and reconstruction and the authorities’ decision that those ordinances were triggered fails to differentiate between loss attributable to covered perils and loss attributable to excluded ones.  The case that is going up on appeal is Lexington Ins. Co. v. JAW The Pointe, LLC, 2013 WL 3968445, 2013 Tex. App. LEXIS 9602 (Tex.Ct.App. 2013). Policyholder JAW The Pointe owned an apartment complex in Galveston

Posted in Uncategorized

Alabama Supreme Court Clarifies (And Criticizes) Its Bad Faith Jurisprudence

In an opinion released for publication on August 14th, 2014, one year after issuance, the Alabama Supreme Court unanimously held that the state has but one tort of bad faith, albeit with two separate methods of proof, and that both of those – bad faith refusal to pay and bad faith refusal to investigate – require the policyholder to show that the insurer had no “reasonably legitimate or arguable reason” for not paying.  State Farm Fire & Cas. Co. v. Brechbill, 144 So.3d 248, 2013 Ala. LEXIS 126  (Ala., Sept. 27, 2013) also featured an unusual concurrence by Chief Justice Roy S. Moore in which the Chief Justice stated that he believed that the thirty-year-old judicially-adopted tort of bad faith

Posted in Uncategorized

Florida Appellate Court: “Coverage Liability” Can Be Basis for Bad Faith in Suit Involving First Party Appraisal

On Wednesday, Florida’s Fourth District Court of Appeal issued an opinion concerning the prerequisites for bringing bad faith claims in Florida.  In an en banc ruling, the Court held in Cammarata v. State Farm Florida Ins. Co., 2014 WL 4327948 (Fla.Dist.Ct.App., Sept. 3, 2014) that once coverage liability and the extent of damages under an insurance policy have been determined, a bad faith action has accrued even if there has yet to be any finding of breach of contract liability. The case arose from a claim dispute between Joseph and Judy Cammarata and their property insurer regarding coverage for repairs for Hurricane Wilma damages their home.  After the claim was initially denied, the parties agreed to proceed with an appraisal of

Posted in Uncategorized

Texas Supreme Court Weighs In Again on the Scope of the Material Breach Doctrine

Last week, the Texas Supreme Court handed down an opinion that involved the material breach doctrine.  The doctrine — adopted twenty years ago in Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691 (Tex. 1994) and subsequently applied in PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630 (Tex. 2008), Prodigy Commc’ns  Corp. v. Agric. Excess & Surplus Ins. Co., 288 S.W.3d 374 (Tex. 2009), and Lennar Corp. v. Markel  Am.  Ins. Co., 413 S.W.3d 750 (Tex. 2013) – stands for the proposition that if the insurer receives its reasonably anticipated benefit despite an insured’s breach, then the breach is immaterial and the insurer is neither  prejudiced nor excused from performance. In the four cases cited above, policyholders were held entitled

Posted in Uncategorized

Water Loss Case Gives Rise to Dispute Over Bad Faith Standard For ‘Genuine Dispute’ and Admissibility of Expert Evidence

In a recent decision in the case of Pyramid Technologies, Inc. v. Hartford Casualty Ins. Co., 752 F.3d 807 (9th Cir., May 19, 2014), the Ninth Circuit, relying on California law upheld a grant of summary judgment dismissing the insured’s business interruption claim as speculative and, by a split decision, reversed in part and remanded in part the trial court’s exclusion of the testimony from the insured’s expert witnesses under Daubert standards.  In addition, and most importantly, it also reversed a grant of summary judgment  concerning the insurer’s “genuine dispute” defense to the insured’s bad faith claims, holding that bad faith was an issue for the factfinder under the facts of the case. In an upcoming Alert, Joann Selleck of

Posted in Uncategorized

Update on 2013 Amendments to the Oregon Environmental Cleanup Assistance Act

In June 2013, the Governor of Oregon signed into law Senate Bill 814, which created sweeping reforms on environmental claims handling regulations and available remedies for insureds facing liability for cleanup of contaminated property located in the state. Cozen O’Connor previously provided summaries of the pertinent provisions of the legislation, which can be located here (May 7, 2013 Alert) and here (June 18, 2013 Alert).  In sum, the legislation amended the existing Oregon Environmental Cleanup Assistance Act (“OECAA”) under ORS 465.479, et seq. to impose stricter claims handling regulations, create a statutory cause of action for violation of the regulations, and allow punitive damages to be awarded if the court finds the insurer acted unreasonably. The amendments are now codified,

Posted in environmental cleanup, Oregon insurance claims handling

Coverage Opinions Remain Privileged in Bad Faith Action Even Where Gist of Recommendation is Set Forth in Letter to Insured

As a matter of first impression, the Supreme Court of West Virginia recently held that coverage opinion letters were protected by the attorney-client privilege even though the insurer subsequently sent correspondence to its insured that included the recommendation of coverage counsel.  State of West Virginia ex Rel Montpelier U.S. Ins. Co., No. 13-1172, 2014 WL 1408487 (W. Va. Apr. 10, 2014).  The Court conducted an in camera examination of the documents the insurer claimed were privileged. The insured argued that because the insurer disclosed the recommendation of the coverage opinion letters to the insureds, the attorney-client privileged was waived.  The insureds relied on the third-party disclosure exception to the attorney-client privilege.  The Court surveyed cases nationwide and found no authority

Posted in Attorney-Client, Bad Faith, West Virginia Insurance

The Hawaii Supreme Court Answers “Other Insurance” Provisions and the Duty to Defend

The Hawaii Supreme Court in Nautilus Ins. Co. v. Lexington Ins. Co., — P.3d —-, 2014 WL 560805 (2014), answers the following certified questions from the 9th Circuit on “other insurance” provisions and the duty to defend: 1. Whether an insurer may look to another insurer’s policy in order to disclaim the duty to defend, where the complaint in the underlying lawsuit alleges facts within coverage. Unless another insurer’s policy is specifically named in the first insurer’s policy, an insurer may not look to another insurer’s policy in order to disclaim the duty to defend, where the complaint in the underlying lawsuit alleges facts within coverage. 2. Whether an “other insurance” clause that purports to release an otherwise primary insurer

Posted in Bad Faith
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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