In many states, pleading and proving the existence of a valid contract is necessary for both a breach of contract cause of action and also for a viable bad faith claim, and the Alabama Supreme Court addressed exactly that issue last year in Alfa Life Ins. Corp. v. Kolza 159 So.3d 1240 (Ala., Aug. 22, 2014). The case involved a life insurance claim.  The plaintiff’s decedent had applied for a policy and filled out an application that misstated his driving record.  He then received a “Conditional Receipt” that afforded $100,000 in coverage while the application was pending.  He was subsequently given a medical examination that disclosed high cholesterol levels and a family history of heart disease.  He died in an…

In an opinion handed down last week, the Sixth Circuit Court of Appeals refused to adopt a new cause of action under Kentucky law for a reverse bad faith claim by an insurer against its insured where the Kentucky Supreme Court had not previously done so in State Auto Prop. & Cas. Ins. Co. v. Hargis, — F.3d –, 2015 WL 2081922, 2015 U.S. App. LEXIS 7475 (6th Cir., May 6, 2015).  The Sixth Circuit further refused to certify the question to the Kentucky Supreme Court for review.  Slip Op. at *4-5. At issue in this case was a fire loss sustained to the insured’s, Lori Hargis, residential home.  State Auto Property and Casualty Insurance Company (“Insurer”) insured the home. …