The Bad Faith Sentinel - May 2012


In This Issue:

- Court of Appeals of Wisconsin Holds That a “Fixed Third-Party Beneficiary” May Bring Bad Faith Claim Against Insurer pages 1 - 2

- California Court of Appeals Holds No Bad Faith for Failure to Name Insured as Co-Plaintiff on Subrogation Claim pages 2 - 3

- Eastern District of Kentucky: Insurer Cannot Split Claim of Privilege When it Relies on Advice of Counsel to Defend Bad Faith Claim pages 3 - 4

- Court of Appeals of Arizona Orders $55 Million Bad Faith Punitive Damages Award to be Reduced to $155,000 pages 4 - 6

- California Court Holds Suit Limitation Provision Barred Claims Despite Language Barrier page 6 - 8

Excerpt from Court of Appeals of Wisconsin Holds That a “Fixed Third-Party Beneficiary” May Bring Bad Faith Claim Against Insurer -

Meleski v. Schbohm LLC, et al., No. 2010AP2951, 2012 WL 1499859 (Wis. Ct. App. May 1, 2012)

In Wisconsin, a third-party may directly bring a bad faith claim against an insurer if the third party’s rights under the policy are fixed.

Patricia Meleski alleged that she was injured when she fell on property owned by Schbohm LLC (“Schbohm”). Meleski filed suit against Schbohm and its insurance carrier, Partners Mutual Insurance Company (“Partners Mutual”), for personal-injury and medical-expense damages. Under the policy, Partners Mutual agreed to pay medical expenses for bodily injury caused by an accident on or next to premises owned by Schbohm, regardless of fault. However, Partners Mutual refused to pay Meleski’s medical expense claim without reasonable proof that Schbohm was responsible for payment. Consequently, Meleski brought an action against Partners Mutual for bad faith. The circuit court dismissed Meleski’s bad faith claims because she was not in privity of contract with the insurer.

Please see full newsletter below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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