Cozen O’Connor: Bad Faith

Bad Faith

Featured Publication:

Georgia: No Bad Faith Trap Where a Policy Limits Demand Lacked a Response Deadline [Alert]

On March 11, 2019, the Georgia Supreme Court provided a victory for insurers when it found that an insurer did not act in bad faith by failing to accept a policy limits demand that lacked a deadline to respond and was abruptly withdrawn after 41 days, even though the insurer had already determined that the insured’s likely exposure exceeded policy limits.

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Extracontractual claims pose a unique set of risks to insurers, implicating their business operations and opening potentially vast exposures. Today, it is not enough to have good coverage counsel. Insurers need counsel with deep and specific bad faith and extracontractual experience. Cozen O’Connor’s team of dedicated extracontractual/bad faith attorneys have been practicing in this field for decades.

Our bad faith attorneys defend insurance clients in litigation alleging first- or third-party extracontractual claims related to all lines of business, including property, general liability, professional liability and D&O, life/health/disability and automobile policies. We handle litigation arising from claims handling, underwriting, excess verdicts, uninsured or under-insured motorist coverage, consent judgments, default judgments and garnishment actions. Our attorneys have successfully defeated individual and class claims seeking actual and consequential damages, statutory penalties, punitive damages, attorneys’ fees and policy benefits.

Because Cozen O’Connor is a global leader in the area of insurance coverage and claims litigation, we are often able to defeat breach of contract assertions at the outset, thereby mitigating any extracontractual claims. When appropriate, our attorneys are able to negotiate quick and quiet resolutions to bad faith claims. Because they involve questions of honor, duty and essential fairness, these cases are qualitatively different from other coverage disputes. Our lawyers are able to create practical frameworks for discussion, incentivize reasonable conduct and mutuality, and find solutions that limit insurer exposure.  

When bad faith and extracontractual disputes must be tried, our attorneys have the proven ability to go to court—and win. We regularly and successfully defend major insurers in multi-million bad faith matters in state, federal and appellate courts throughout the U.S. Success is not defined simply by getting a defense verdict, but by winning in way that protects clients’ bottom lines and brands.

 

SERVICE AREAS

  • Successfully defend bad faith litigation from inception through trial
  • Design strategies to defeat institutional bad faith cases
  • Respond to policy limit and time limit demands and analyze potential exposures
  • Assist in the withdrawal of a defense while avoiding bad faith, waiver and estoppel claims
  • Respond to unreasonable discovery requests and consent judgments
  • Bifurcate bad faith claims for discovery and trial, when necessary
  • Avoid or limit impact of policyholder’s assignment of rights
  • Negotiate settlements in bad faith cases with multiple insureds/claimants, multiple insurers, limited insurance; avoid or defend against collusive settlements
  • Monitor underlying litigation and assess impact on coverage issues and potential exposure

Experience

Publications

Massachusetts: Third-Party Claim Handler Made Reasonable, Prompt Efforts to Settle Nursing Home Liability Claim, and Therefore Was Not Liable For $14 M Excess Verdict [Avoiding Insurance Bad Faith Blog]

April 02, 2019

On March 18, 2019, the First Circuit Court of Appeals affirmed a decision holding that Sedgwick Claims Management Services made reasonable and prompt efforts to settle a nursing home liability claim, and therefore was not liable for a $14M excess verdict despite the fact that the highest pretrial...

Georgia Supreme Court Spares Insurance Company from a $5.3 Million Bad-Faith Verdict [Avoiding Insurance Bad Faith Blog]

March 20, 2019

Last week, the Georgia Supreme Court confirmed that an insurance carrier’s duty to settle a claim against its policyholder arises only after an injured claimant presents a “valid offer” to settle within policy limits. In First Acceptance Insurance Company of Georgia v. Hughes,[1] the Court found...

Georgia: No Bad Faith Trap Where a Policy Limits Demand Lacked a Response Deadline [Alert]

March 15, 2019

On March 11, 2019, the Georgia Supreme Court provided a victory for insurers when it found that an insurer did not act in bad faith by failing to accept a policy limits demand that lacked a deadline to respond and was abruptly withdrawn after 41 days, even though the insurer had already determined that the insured’s likely exposure exceeded policy limits.

The Supreme Court of Texas Clarifies That a Party Can Testify as an Expert Witness without Waiving the Attorney-Client Privilege [Avoiding Insurance Bad Faith Blog]

March 12, 2019

Litigation usually involves complex issues related to technology, products, or business processes. In many cases, clients are the best subject-matter experts of their craft. Nevertheless, attorneys are sometimes hesitant to designate a client or a client’s employee as an expert witness for fear of...

QUITE THE SPLIT: LOUISIANA THIRD CIRCUIT COURT OF APPEAL APPLIES TEN-YEAR PRESCRIPTIVE PERIOD TO CONTRACT-BASED BAD FAITH CLAIMS [Avoiding Insurance Bad Faith Blog]

March 05, 2019

In a surprising decision on rehearing, on February 4, 2019, a panel of the Louisiana Third Circuit Court of Appeal reversed itself and held that bad faith claims arising out an insurance contract are subject to a ten-year prescriptive period rather than a one-year prescriptive period.[1] Fils v....

Montana Holds Insured’s Stipulated Judgment Was Collusive and Unreasonable [Alert]

February 05, 2019

Kristie M. Abel discusses how Abbey/Land demonstrates that an insurer can successfully contest such a judgment, however, the insurer needs to meet a high burden in order to prevail.

New York Bad Faith Update: Appellate Department Rejects Heightened Pleading Standard [Alert]

February 01, 2019

Laura Dowgin discusses the decision in D.K. Prop., Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA and notes that while it resulted in a favorable outcome for the policyholder there has been no shift in New York bad faith law.

In Rhode Island, No Duty of Good Faith to Third Party Claimant [Avoiding Insurance Bad Faith Blog]

January 22, 2019

In Summit Insurance Company v. Stricklett, --- A.3d ---, No. 2017185APPEALPC12536, 2019 WL 190358, (R.I. Jan. 15, 2019), the Supreme Court of Rhode Island held that – similar to many jurisdictions - the duty to act in a reasonable manner and in good faith settling a claim does not run to the...

ALLEGED BAD FAITH FAILURE TO ADVISE POLICYHOLDER OF CONSEQUENCES OF SETTLEMENT CONDUCT CAUSES INSURER TO SETTLE $22 MILLION LAWSUIT [Avoiding Insurance Bad Faith Blog]

January 07, 2019

Progressive recently settled a bad faith lawsuit with the guardians of a child injured in a car accident driven by a Progressive policyholder, Earl Lloyd. Progressive faced liability for an underlying judgment in excess of $22 million against Lloyd, who had purchased a $10,000 auto policy from...

From Birdseed to Crop Dusting, Liability-Triggering Event Determines Number of Occurrences [Avoiding Insurance Bad Faith Blog]

November 27, 2018

Texas applies the “cause” test to determine the number of accidents or occurrences, but its emphasis on the “liability-triggering event” requires an analysis of intervening causes. The Fifth Circuit Court of Appeals doubled-down on its focus on the liability-triggering event, reversing the trial...

Fort Worth Court of Appeal Reverses Judgment Awarding Bad Faith Damages Against Insurer [Avoiding Insurance Bad Faith Blog]

November 14, 2018

While the November 8, 2018 Court of Appeal of Texas, Fort Worth Division opinion reverses a trial court’s judgment on grounds of legal insufficiency and standing, the court’s analysis and application of current Texas bad faith law is of much more interest. The trial court judgment held that Old...

The Florida Supreme Court Pushes Florida Bad Faith Standard Closer to Negligence in Harvey v. GEICO Decision [Avoiding Insurance Bad Faith Blog]

October 23, 2018

The Florida Supreme Court recently decided Harvey v. GEICO Gen. Ins. Co., No. SC17-85, 2018 WL 4496566, at *1 (Fla. Sept. 20, 2018), an important case setting forth what many will try to argue has lessened the standard for bad faith law in Florida to one of negligence plus. The case has a...

Crypto Covered Under Homeowner’s Policy? Ohio Trial Court Holds Coverage and Bad Faith Claims for Bitcoin Theft Survive Motion for Judgment on the Pleadings [Avoiding Insurance Bad Faith Blog]

October 15, 2018

From the high market cap Bitcoin, Ether, Ripple, and Litecoin, to the quirky Fonziecoin, Selfiecoin, Pizzacoin, and (thank you, Dennis Rodman) Pot Coin, we have all been blasted by news of crypto and blockchain, and tales of kids in their parents’ basements getting rich off this new wonder that many...

Texas Federal Court Holds Rock Dust Discharged into Stream is Excluded “Pollutant,” so Insurer Owed No Duty to Defend or Indemnify, and Committed No Bad Faith [Avoiding Insurance Bad Faith Blog]

August 13, 2018

On July 10, 2018, Judge John H. McBryde of the United States District Court for the Northern District of Texas, Fort Worth Division, held an insurer owed no coverage to a New Jersey rock quarry owner for the accidental pumping of crushed rock particles into a stream. The policy’s pollution exclusion...

Texas Supreme Court Clarifies Whether Bad Faith Liability May Exist in Absence of a Policy Breach [Global Insurance Alert]

April 20, 2018

Greg Hudson discusses the Texas Supreme Court's decision in Menchaca v. USAA Texas Lloyds Company. The court articulates five rules when extracontractual causes of action are available even when there has been no breach of the insurance policy and clarifies the procedural steps a court should follow in determining which rule applies.

Individual Claim Adjuster Is Subject To Bad Faith and Consumer Protection Lawsuit [Global Insurance Alert]

April 03, 2018

Michael D. Handler and Jordan A. Hess discuss the Washington Court of Appeals reversal of a trial court’s dismissal of the bad faith claim against a claims adjuster, holding that individual insurance adjusters could be liable for violating the CPA if they caused financial injury by engaging in unfair or deceptive acts or practices that impact the public interest.

Illinois Appellate Court Holds Insurer Owed Coverage in Fatal Chicago Gang Shooting Lawsuit, but Insurer Did Not Commit Bad Faith in Denying Claim [Avoiding Insurance Bad Faith Blog]

March 30, 2018

On March 1, 2018, an Illinois appellate court held an insurer breached its duties to defend and indemnify a grocer after gang members shot and killed a young woman and injured another outside of the Chicago grocer. The court interpreted “liability arising out of . . . premises” language in an...

Is It Bad Faith to Exercise a Contractual Right? [Avoiding Insurance Bad Faith Blog]

December 14, 2017

A recent malpractice case highlighted this issue.  In Johnson v. Proselect Insurance, the doctor/insured contended that the insurer acted in bad faith by settling a claim after trial without the doctor’s consent.  The doctor contended that the case should have been appealed, which would have...

PA Supreme Court Addresses Level of Proof Required Under Statutory Bad Faith Claim [Avoiding Insurance Bad Faith Blog]

September 29, 2017

In an opinion dated September 28, 2017, the Pennsylvania Supreme Court, Western District, considered as an issue of first impression the level of proof required to prevail in a bad faith claim, examining the elements of a bad faith insurance claim under the PA bad faith statute, 42 Pa.C.S. Section...

Texas Amends Insurance Code In Response To Weather Claims [Avoiding Insurance Bad Faith Blog]

August 14, 2017

On May 26, 2017, Texas Governor Greg Abbot signed into law Texas House Bill 1774/Senate Bill 10. The new law makes changes to the Texas Insurance Code that will impact the way in which weather claims are brought and how those claims may be defended. The new law becomes effective on September 1,...

Washington Appeals Court Shoots Holes in Bad Faith Setup, Attorney-Client Privilege

June 29, 2017

Jonathan Toren discusses a recent Washington Court of Appeals decision on three important issues for insurers relating to bad faith actions.

Texas Supreme Court Clarifies Viability of Statutory Extracontractual Claims in Absence of Coverage [Global Insurance Alert]

April 11, 2017

Alicia G. Curran and Ron Tigner discuss the Texas Supreme Court's decision setting forth five “distinct but interrelated rules” that govern the relationship between contractual and extracontractual claims in the first party insurance context.

Washington Supreme Court Limits “Insurance Fair Conduct Act” — Three Things Insurers Must Know [Global Insurance Alert]

February 03, 2017

Michael D. Handler discusses yesterday's Washington Supreme Court decision interpreting the state’s 2007 IFCA — the decade-old legislation that created a new statutory cause of action against an insurer, prescribing penalties for violating any one of 37 regulations set forth in the WAC.

Washington Court Rejects Bad Faith Coverage by Estoppel Because Insured Was Insulated from Liability [Global Insurance Alert]

December 16, 2016

William F. Knowles and Katie M. Sluss discuss a decision by the Division I Washington Court of Appeals that granted partial relief to an insurer and held that if an insured is legally insulated from any exposure to a tort victim, the presumption of harm in a bad faith claim against the insurer is rebutted and there is no coverage by estoppel.

Washington Supreme Court: Corporate Attorney’s Communications With Former Employees Not Privileged [Global Insurance Alert]

October 21, 2016

William Knowles and Jonathan Toren discuss the latest Washington Supreme Court decision regarding the attorney-client privilege and whether it protects a corporation’s attorney’s communications with former employees of the corporation.

Colorado Supreme Court Limits Use of Extrinsic Evidence and Reasonable Expectations Doctrine [Global Insurance Alert]

June 23, 2016

Chris Clemenson and John Daly discuss a Colorado Supreme Court decision holding that extrinsic evidence can only be used to interpret ambiguous policy language, not unambiguous policy language.

Bad Faith Attorneys’ Fees Are Compensatory Damages in Determining Cap On Punitive Damages [Global Insurance Alert]

June 10, 2016

Julie Molander discusses a recent California Supreme Court case that could be a harbinger of future appeals attempting to expand the constitutional cap on punitive damages.

Defense Costs Under Alaska Law Are Sunk [In The Know]

April 18, 2016

Stacey Farrell discusses a recent Alaska Supreme Court Case that concluded insurers cannot seek reimbursement for defense costs incurred defending uncovered claims.

Hawaii Supreme Court Holds a Primary Insurer Cannot Gamble with the Excess Insurer’s Money [Global Insurance Alert]

July 30, 2015

The Hawaii Supreme Court, providing three separate reasons, held that the excess insurer could bring a cause of action for equitable subrogation.

Pennsylvania Supreme Court Rules Statutory Bad Faith Claims are Assignable [Global Insurance Alert]

December 23, 2014

On December 15, 2014, the Supreme Court of Pennsylvania held that bad faith claims brought pursuant to 42 Pa. C.S. § 8371 may be assigned by an insured to an injured third party under Pennsylvania law. See Allstate Prop. & Cas. Ins. Co. v. Wolfe, No. 39 MAP 2014 (Pa. Dec. 15, 2014).

Fifth Circuit Reaffirms the Importance of a Reasonable Claim Investigation Prior to Denial [Global Insurance Alert]

November 18, 2014

In Santacruz v. Allstate Texas Lloyds, Inc., 2014 WL 5870429 (Nov. 13, 2014), the 5th Circuit allowed a policyholder to pursue a claim for common law and statutory bad faith even though the policyholder repaired the alleged damage before the insurer was able to observe that damage.

Texas Supreme Court Clarifies Scope and Application of the “Anti-Technicality” Statute [Global Insurance Alert]

September 08, 2014

In Greene v. Farmers Insurance Exchange, the Texas Supreme Court clarified the scope and application of § 862.054 of the Texas Insurance Code, the “anti-technicality” statute, holding that the clause would only operate in situations where the policyholder affirmatively violated an obligation created under the policy. The court further held that public policy did not change this result, despite the concurring opinion of two justices that argued that the court’s opinion created confusion as to whether and when public policy would dictate a different result. Specifically, the concurrence argued that the majority opinion failed to distinguish the instant case from prior cases involving a “nonmaterial breach” by a policyholder.

Ninth Circuit Water Loss Case Provides Guidance On Bad Faith Standard for “Genuine Dispute” [Global Insurance Alert]

August 07, 2014

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 9th Circuit, relying on California law, upheld a grant of summary judgment dismissing the insured’s business interruption claim as speculative. In addition, by a split decision, it reversed in part and remanded in part the trial court’s exclusion of the testimony from the insured’s expert witnesses under Daubert standards. Finally, and most importantly, the Court of Appeals reversed a grant of summary judgment concerning the insurer’s “genuine dispute” defense, holding that bad faith was an issue for the jury under the facts of the case.

Third Circuit Holds Insurer’s Interpretation of Employer’s Liability Exclusion is Fairly Debatable [Global Insurance Alert]

August 05, 2014

A recent 3rd Circuit decision, ArcelorMittal Plate, LLC v. Joulé Technical Services, Inc., 558 Fed.Appx. 205 (3d Cir. 2014) reiterates that under New Jersey law, an insurer does not act in bad faith when denying a claim that is “fairly debatable.” Although the court disagreed with the insurer’s application of the policy’s employer’s liability exclusion to preclude coverage, it also held that there was no basis to impose bad faith liability on the insurer.

Illinois Court Outlines Elements to Consider for Good Faith Analysis of Settlement Demand [Global Insurance Alert]

June 02, 2014

Plaintiff John Z. Huang represented Yongping Zhou in a deportation suit. Mid-suit, Zhou terminated the representation and retained another attorney. Throughout the course of the litigation, Zhou hired several more attorneys and ultimately succeeded in vacating his domestic violence conviction after spending two years in an Immigration and Naturalization Service detention center. Zhou then sued Huang for legal malpractice.

Addressing Policy Limit Challenges and Avoiding Bad Faith Claims [Property Casualty 360]

June 01, 2014

Insurers facing policy limits demands must act cautiously under even the best of circumstances to avoid threats of bad faith. The situation becomes far more complicated when the insurer receives a policy limits demand and it insures multiple insureds and/or additional insureds. Complete chaos can ensue when an insurer has multiple insureds and/or additional insureds, and the claimant’s counsel is only willing to release one insured and/or additional insured for the insurer’s available policy limits.

Court Escalates a $4 million Covenant Judgment to a $20 million Bad Faith Judgment [Global Insurance Alert]

May 06, 2014

Last week, the Washington Court of Appeals held that “in an insurance bad faith case, the amount of a reasonable covenant judgment sets a floor, not a ceiling, on the damages the jury may award.” Miller v. Safeco Ins. Co., No. 68594-5-1. The claim arose out of an automobile accident in 2000, when Patrick Kenny, the at-fault driver, rear-ended a cement truck, severely injuring his three passengers.

Florida Court Permits Bad Faith Claim by a Michigan Citizen Against a Michigan Insurer [Global Insurance Alert]

April 29, 2014

In Betzdolt v. Auto Club Group Insurance Company, a Michigan resident was allowed to proceed with a bad faith claim against her insurer in Florida, even though the insurer did not sell policies in Florida, did not deliver policies in Florida, and was not authorized to write insurance policies in Florida. Betzdolt arises in the context of a third-party liability case (car accident) in which the Michigan resident was being defended by the Michigan insurer in Florida.

A Good Faith Review of 2013 [Global Insurance Alert]

February 05, 2014

With the arrival of the new year, many are applying the mantra “out with the old, in with the new.” Although this may be motivational for personal resolutions, it does not generally apply in the context of law as last year’s law is often the basis for this year’s lawsuit. The best strategy to prevent bad faith litigation is to be aware of the current trends and decisions (see links). The following bad faith decisions showcase some of the best and the worst holdings for insurers in 2013. We will continue to monitor and report on any major developments in 2014.

Contractual Liability Exclusion Clarified by Texas Supreme Court in Ewing Constr. v. Amerisure [Global Insurance Alert]

January 27, 2014

In Ewing Construction Co. Inc. v. Amerisure Ins. Co., No. 12-0661, 2014 WL 185035 (Tex. Jan. 17, 2014), the Texas Supreme Court held that a general contractor who agrees to perform construction work in a “good and workmanlike manner” does not “assume liability” for damages arising out of the contractor’s defective work so as to trigger the contractual liability exclusion in a commercial general liability policy. This holding substantially clarifies the Texas Supreme Court’s prior holding in Gilbert Texas Construction LP v. Underwriters at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010).

Pennsylvania District Court Considers Bad Faith Setup as Affirmative Defense [Global Insurance Alert]

December 16, 2013

As a matter of first impression under Pennsylvania law, the court in Shannon v. New York Central Mutual Insurance Company, No: 13-cv-1432 (M.D. Pa. Nov. 20, 2013) denied a motion to strike an insurer’s defense of “bad faith set-up,” asserted in response to a bad faith claim based on the insurer’s alleged failure to settle a claim.

Alabama Supreme Court Corrects the Perception that a Alabama Law Contemplates Two Bad Faith Torts [Global Insurance Alert]

October 24, 2013

In Brechbill v. State Farm Fire & Cas. Co., No. 1111117, ___ So. 3d ___, 2013 WL 5394444, 2013 Ala. LEXIS 126 (Ala. Sept. 27, 2013), the Alabama Supreme Court held that there is only one, as opposed to two, causes of action for bad faith. More important, the Alabama Supreme Court held that a bad faith claim, no matter how plead, will not survive when an insurer can show a debatable reason for the denial.

Florida No-Fault Examination Under Oath Requirement – One of These Policies Is Not Like the Other [Global Insurance Alert]

September 05, 2013

Due to changes effective January 1, 2013, the Florida Motor Vehicle No-Fault Law now codified the insured’s obligation to submit to an examination under oath. At first it may seem odd that the Florida legislature had to go to such great lengths to incorporate, and explicitly condition, the receipt of no-fault benefits on the insured’s submission to an examination under oath. However, a brief look at the recent trends leading to this change demonstrates why the Florida legislature rewrote insurance contract law in the no-fault context.

An Insurer Cannot Claim That It Was Unaware of Claims Handling Statutes As A Defense To Bad Faith [Global Insurance Alert]

September 05, 2013

The South Dakota Supreme Court in Bertelsen v. Allstate Insurance Co. (1) held that an insurer cannot avoid bad faith liability by claiming it did not know about controlling claims handling statutes, and (2) reaffirmed that an insurer cannot rely upon claimants to provide a copy of the applicable laws (i.e., a copy of the claims handling statutes), especially in the absence of a request.

Pennsylvania Federal Court Precludes Testimony of Proposed Bad Faith Expert for the Second Time [Global Insurance Alert]

July 08, 2013

In the recent decision of Schifino v. Geico General Ins. Co. et al., 2013 WL 2404115 (W.D.Pa. 2013), and for the second time in less than a year, the district court for the Western District of Pennsylvania precluded a plaintiff from offering expert testimony supporting an insurer’s alleged bad faith. The district court reasoned that expert testimony addressing the reasonableness of an insurer’s claims handling in denying a claim was unnecessary as a matter of evidence and interfered with the fact finding role of the jury.

NY Court to Insurers: If You Breach Your Duty to Defend, You May Lose Your Defenses to Indemnification [Global Insurance Alert]

June 14, 2013

The New York Court of Appeals, New York’s highest state court, recently held – in what appears to be a new position in New York – that an insurer that breached its duty to defend could not later rely on otherwise applicable exclusions to deny coverage for indemnification.

No Bad Faith Recovery Based on Insurer’s Investigation of Claims under Connecticut Law

June 12, 2013

On certification from the U.S. District Court for the Northern District of Alabama, the Supreme Court of Connecticut recently issued an opinion holding that an insurer’s bad faith conduct in the investigation of a third-party liability insurance claim does not provide a basis for recovery under Connecticut law. Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 2013 Conn. LEXIS 187 (Conn. June 11, 2013).

Estee Lauder v. OneBeacon Insurance Group – Expanding the Scope [Global Insurance Alert]

May 15, 2013

The decision, which ordered the defendants to produce documents and the clerk to unseal papers filed in motion practice, represents a new and troubling broadening of the scope of discovery in bad faith cases.

Superstorm Sandy is Causing New York and New Jersey Legislators to Reconsider Passing Legislation that Would Establish a Private Right of Action for Bad Faith Claim Handling [Global Insurance Alert]

April 05, 2013

Policyholders in New York and New Jersey presently have no private right of action against insurance companies for alleged violations of each state’s respective statutory claim handling guidelines – New York’s Unfair Claim Settlement Practices Act, N.Y. Ins. Law § 2601, and New Jersey’s Unfair Claim Settlement Practices Act, N.J. Admin. Code tit. 11, §§ 2-17.6 and 2-17.7. Although the New York and New Jersey statutes each prohibit insurers from engaging in unfair claim settlement practices, neither allows insureds the right to enforce the laws or seek damages for a violation by filing a lawsuit against the insurer. Rather, the Insurance Department for each state are vested with the exclusive power of enforcement, and then only when an insurer engages in a pattern of violations demonstrating that the mishandling of claims is a general business practice. That may soon change, however.

Courts Continue to Split on Whether Defense Obligation Is a First Party Benefit Under Colorado Law, but Agree Duty to Defend Is a Joint and Several Obligation [Global Insurance Alert]

March 19, 2013

In D.R. Horton, Inc.—Denver v. Mountain States Mutual Casualty Co., No. 12-cv-01080 (February 25, 2013), another U.S. District Court judge for the District of Colorado determined a liability insured seeking defense costs from its insurer may qualify as a “first-party claimant” for purposes of Colorado’s Unfair Claim Settlement Practices Act, potentially entitling the insured to recover unpaid defense costs, attorneys’ fees in prosecuting the recovery action and two times the unpaid defense costs as a penalty.

The Washington Supreme Court Holds That in First-Party Bad Faith Litigation There Is a Presumption of No Attorney-Client Privilege [Global Insurance Alert]

March 15, 2013

When an insured sues an insurer for bad faith, how much of the claims file maintained by the insurer is discoverable? In a 5-4 decision, the Washington Supreme Court recently weakened insurers’ ability to protect confidential communications with their attorneys in first-party claims where the insured has alleged bad faith. Cedell v. Farmers Insurance Company of Washington, No. 85366-5 (February 22, 2013). The court held that, in the context of a first-party claim for bad faith claim handling and processing, courts must apply a presumption that there is no applicable attorney-client privilege. The court further held that an insurer would be entitled to overcome the presumption by showing that its counsel was providing legal advice as to the insurer’s potential liability and was not acting in the insurer’s “quasi-fiduciary” function. Upon this showing, the insurer is entitled to an in camera review where the trial court will determine if the privilege applies, subject to the insured’s assertions that the privilege does not apply due to an exception, including the civil fraud exception.

Finding Bad Faith in Kentucky Requires Evidence of Outrageous Conduct By Insurer [Global Insurance Alert]

February 13, 2013

In its recent decision in Powell v. Cherokee Insurance Company, Case No.: 5:09-CV-00205, the U.S. District Court for the Western District of Kentucky reaffirmed that in a third-party bad faith lawsuit alleging failure to timely settle a personal injury claim, the third-party claimant must produce evidence of conduct by the insurer that is outrageous, because of the defendant’s evil motive or his reckless indifference to [her] rights in order to establish a bad faith claim under the Kentucky Unfair Claims Settlement Practices Act (UCSPA).

Third-Party Bad Faith Litigation - Insurers' Attorney-Client Privilege and Work Product Doctrine Protections Limited by Tripartite Relationship in Underlying Liability Action [Global Insurance Alert]

January 14, 2013

In what may be the continuation of a trend toward the erosion of the attorney-client privilege and work product doctrine in bad faith litigation, another court has held that an insurer's communications with defense counsel retained for the insured in an underlying liability suit are discoverable and not subject to the attorney-client privilege or work product doctrine in a subsequent third-party bad faith lawsuit, under Georgia law.

Does A Bad Faith Cause of Action Survive an Appraisal Award? The Answer May Be "It Depends" [Global Insurance Alert]

November 15, 2012

Earlier this year, the U.S. District Court for the Southern District of Texas ruled an insured can pursue its bad faith claim even where the insurer made timely payment of the appraisal award and the court dismissed the breach of contract claim on summary judgment. Intermodal Equip. Logistics, LLC and Sea Train Logistics, LLC v. Hartford Accident & Indem. Co., No. 3:10-cv-00458 (S.D. Tex. Galveston Div. May, 24, 2012).

Fifth Circuit Rejects Insured's Efforts to Secure Independent Counsel

November 06, 2012

On October 15, 2012, the U.S. District Court of Appeals for the 5th Circuit – applying Texas law – addressed another Cumis counsel matter. See Coats, Rose, Yale, Ryman & Lee, P.C. v. Navigators Specialty Ins. Co., No. 12-10055, 2012 WL 4858194 (5th Cir. Oct. 15, 2012).

Texas Supreme Court Revisits Ruttiger Extracontractural Liability in Workers' Compensation Claims All But Vanquished [Global Insurance Alert!]

September 25, 2012

Texas Supreme Court Revisits Ruttiger Extracontractural Liability in Workers' Compensation Claims All But Vanquished - Global Insurance Alert! - On June 22, 2012, the Texas Supreme Court, in Texas Mutual Insurance Company v. Ruttiger, withdrew its original August 26, 2011 opinion, substituting it with an opinion that even further limits a claimant’s extra-contractual rights in a workers’ compensation matter.

Florida Appellate Court Holds that Appraisal Award Constitutes a 'Favorable Resolution' and Permits Insured to Pursue Bad Faith Claim [Global Insurance Alert]

September 20, 2012

Florida Appellate Court Holds that Appraisal Award Constitutes a 'Favorable Resolution' and Permits Insured to Pursue Bad Faith Claim - Global Insurance Alert - The Florida District Court of Appeal, Fourth District, recently held that an appraisal award in favor of an insured constitutes the "favorable resolution" of an action for insurance benefits necessary to proceed with a statutory first-party bad faith action under Florida law. Trafalgar v. Zurich Ins. Co., 2012 WL 3822215 (Fla. App. 4 Dist. Sept. 5, 2012).

Recent Arizona Court Opinion Reduces Ratio of Bad Faith Punitive Damages Award to a 1:1 Ratio to Compensatory Damages [Global Insurance Alert]

July 24, 2012

Recent Arizona Court Opinion Reduces Ratio of Bad Faith Punitive Damages Award to a 1:1 Ratio to Compensatory Damages - Global Insurance Alert - In its recent decision, the Arizona Appellate Court, Division One, affirmed a bad faith verdict in the amount of $155,000 and held that the $55 million punitive damages award against the insurer was “unconstitutionally excessive.”

Florida Supreme Court Confirms: No Common Law First Party Bad Faith Cause of Action [Global Insurance Alert]

June 15, 2012

On May 31, 2012, the Florida Supreme Court rendered its 32 page, long-awaited decision in QBE Insurance Corp. v. Chalfonte Condominium Apartment Association, Inc. The court reaffirmed that Florida does not recognize the common law duty of good faith and fair dealing in the context of a first-party claim, a claimant only has a statutory first-party bad-faith cause of action, and Florida courts shall not rewrite insurance contracts.

The Erosion Continues: Washington Supreme Court Expands the Olympic Steamship Rule and Finds a Viable Bad Faith Claim by a PIP "Insured" [Global Insurance Alert!]

February 13, 2012

The Erosion Continues: Washington Supreme Court Expands the Olympic Steamship Rule and Finds a Viable Bad Faith Claim by a PIP "Insured" - Global Insurance Alert! - In Matsyuk v. State Farm Fire & Cas. Co., 2012 Wash. LEXIS 119 (Feb.9 2012), the Washington Supreme Court held that: (1) a tortfeasor's insurer that provides both Personal Injury Protection (PIP) and liability coverage must pay a pro rata share of the attorney fees incurred by the PIP insureds via the equitable "common fund" doctrine, even though the insurer derived no benefit from the "fund"

Multiple Claimants And Insufficient Policy Limits — Slicing Up The Pizza Pie Without Getting Burned! [Mealey's Litigation Report: Insurance Bad Faith]

May 06, 2008

Unique problems arise when an insured is facing multiple claims, liability is clear and the policy limits may be insufficient to settle all claims. How is the claims professional to handle this?

Insight: Fair Conduct Laws Are Anything But [BEST'S REVIEW]

February 01, 2008

Insight: Fair Conduct Laws Are Anything But - BEST'S REVIEW - "Be fair to one another." It’s one of the simplest rules of any relationship. Yet ongoing
legislative attempts to require fairness in the insurer-insured relationship involve unilateral requirements for insurers that are inapplicable to policyholders. Case in point: Washington State’s recent voter-approved Referendum 67.It ratifies the state’s Insurance Fair Conduct Act, which provides a new statutory basis for a wide range of so-called "insured bad faith" claims.

California Supreme Court Holds “Genuine Dispute” Defense to Bad Faith Claim [Insurance Coverage Alert!]

December 13, 2007

California Supreme Court Holds “Genuine Dispute” Defense to Bad Faith Claim - Insurance Coverage Alert! - CALIFORNIA SUPREME COURT HOLDS “GENUINE
DISPUTE” DEFENSE TO BAD FAITH CLAIM REQUIRES
INSURER TO THOROUGHLY INVESTIGATE AND
OBJECTIVELY EVALUATE UIM CLAIM WHEN MADE, EVEN
IF CLAIM IS ULTIMATELY PAID IN FULL

Washington Supreme Court Concludes That Insurer Acted In Bad Faith Via Subpoena And Ex Parte Communications To An Arbitrator [Insurance Coverage Alert]

October 22, 2007

Washington Supreme Court Concludes That Insurer Acted In Bad Faith Via Subpoena And Ex Parte Communications To An Arbitrator - Insurance Coverage Alert - The Washington Supreme Court, sitting en banc, recently held that an insurance
company acted in bad faith by issuing a subpoena to and engaging in ex parte
communications with an arbitrator. The Court further stated that the insurer did not
rebut the resulting presumption of harm to the insured and that the insurer had not

Washington State Passes New Bad Faith Law With Penalties, Requiring 20-Day Notice Before Litigation [Insurance Coverage Alert - 5/21/2007]

May 21, 2007

Washington State Passes New Bad Faith Law With Penalties, Requiring 20-Day Notice Before Litigation - Insurance Coverage Alert - 5/21/2007 - Effective July 21, 2007, Washington State’s new “insurance fair conduct act” (“Act”)
will expand the range of private claimants’ remedies against an insurer for a proven
“bad faith” denial of coverage. Statutory penalties, including un-capped treble
damages, are made available under the Act for (1) an insurer’s unreasonable denial of
a claim for coverage or payment of benefits

Washington State Legislature Considers Bill on New Insurance Bad Faith Claims and Remedies [Insurance Coverage Alert - 3/7/07]

March 07, 2007

Washington State Legislature Considers Bill on New Insurance Bad Faith Claims and Remedies - Insurance Coverage Alert - 3/7/07 - The Washington State Legislature is considering a bill called the

Summer 2006 [Insurance Coverage Alert!]

June 27, 2006

Summer 2006 - Insurance Coverage Alert! - Colorado court of appeals refuses to follow browder and affirms judgment in favor of insured.

Events & Seminars

Past Events

Review of Significant Bad Faith Cases in 2018

February 13, 2019 - WEBINAR

Advanced Insurance Bad Faith

December 12, 2018 -

Webinar: Bad Faith on the Acela Corridor

October 24, 2018 - Webinar

15th Annual Course Advanced Insurance Law

June 28, 2018 - San Antonio, TX

Bad Faith Litigation in the US

September 18, 2017 - London

Bad Faith Liability: Prevention and Control

May 16, 2017 - New Orleans, LA

2017 CLM Annual Conference

March 29, 2017 - Nashville, TN

Houston Claims Association's February CE Seminar

February 08, 2017 - Houston, TX

2015 Seattle Insurance Litigation Seminar

September 18, 2015 - Seattle, WA

2015 CLM Annual Conference

March 25, 2015 - Palm Desert, CA

2014 Seattle Insurance Seminar

September 25, 2014 - Seattle, WA

PLRB 2013 Large Loss Conference

November 18, 2013 - Jacksonville, FL

2013 Seattle Insurance Conference

September 25, 2013 - Seattle, WA

ACI: Bad Faith Litigation

November 30, 2010 - Orlando, FL

Mealey's Bad Faith Litigation Conference

September 24, 2007 - Philadelphia, PA

In The News

Cozen O’Connor Names Six New Shareholders

September 07, 2017

Cozen O’Connor is proud to announce the promotion of six members to shareholders of the firm: David Brisco (San Diego), Michael de Leeuw (New York), John Dickenson (West Palm Beach), Jonathan Lichtenstein (Philadelphia), William Walsh (Seattle), and Ingrid Welch (Philadelphia).

Texas Ruling Could Mean Bigger Paydays For Policyholders

April 11, 2017

Stephen Pate discusses the recent Texas Supreme Court decision that restored protections for policyholders by putting teeth back into statutory provisions that penalize carriers for deceptive practices in an opinion insurance lawyers say is one of the most important in recent history.

Pa. High Court Case May Expand Insurers' Bad Faith Exposure

November 07, 2016

A health insurer recently asked Pennsylvania's high court to overturn an appellate decision loosening the standard for punitive bad faith penalties in a case over a cancer insurance claim that experts say could lead to a surge in bad faith claims by policyholders if the justices find that ill intent on the insurer's part is not required. Abby Sher of the Bad Faith Practice Group comments.

Insurance Journal Covers Cozen O'Connor Florida Claims Handling Webinar Series

August 03, 2015

The Global Insurance Department presented a two-part webinar series addressing Florida claims handling issues arising out of first and third party claims and litigation in June, 2015.

Charles Jesuit Discusses New Jersey Bad Faith for Insureds

February 27, 2015

Charles (Chuck) Jesuit of the Global Insurance Department discusses the New Jersey Supreme Court’s recent refusal to alter the judicial standards around bad faith claims in insurance coverage disputes in this Law360 article titled ''NJ Justices' Bad Faith Ruling Has Silver Lining For Insureds.''

Charles Jesuit Discusses PA Supreme Court Bad Faith Claims Decision

January 15, 2015

Charles (Chuck) Jesuit of the Global Insurance Department is quoted in a Law360 article titled "Bad Faith Suits Poised To Rise After Pa. Assignment Ruling." He discusses the ruling in Allstate v. Wolfe that policy holders can assign claims under a state bad faith insurance law to third-party claimants. Chuck says this decision “gives third-party claimants and their counsel another arrow in their quiver when negotiating settlement,” however; Chuck does not think the decision will significantly affect insurers’ behaviors.

Contacts

Alicia G. Curran

Member

acurran@cozen.com

(214) 462-3021

Irene K. Yesowitch

Member

iyesowitch@cozen.com

(415) 593-9633

Michael W. Melendez

Member

mmelendez@cozen.com

(415) 593-9610

People

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