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…

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…

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…