Bad Faith Breach of Contract

News & Analysis as of

Third Circuit Affirms Rescission of $25 Million Contaminated Products Policy

In H.J. Heinz Co. v. Starr Surplus Lines Ins. Co., No. 16-1447 (3d Cir. Jan. 11, 2017), the Third Circuit affirmed a District Court’s order allowing insurer Starr Surplus Lines Insurance Company (“Starr”) to rescind a $25...more

Eastern District of Pennsylvania: No Bifurcation Where Bad Faith Could Exist Independently of Breach of Contract

Eizen Fineburg & McCarthy, P.C. v. Ironshore Specialty Ins. Co., No. 2:16-cv-02461-JHS, 2017 WL 194226 (E.D. Pa. Jan. 18, 2017)? - On January 30, 2011, law firm Eizen Fineburg & McCarthy, P.C. (“the Firm”), purchased a...more

First Department Confirms Hedge Funds Did Not Act in Bad Faith and Affirms Multi-Million Dollar Judgment Against CDS Counterpart

In Good Hill Master Fund L.P. v. Deutsche Bank AG, No. 600858/10-2188B, 2017 BL 19363 (App. Div. 1st Dep’t Jan. 24, 2017), the First Department unanimously affirmed a judgment entered in the Commercial Division of over $90...more

Fifth Circuit Provides Road Map for Review and Trial of Bad Faith Claims in Mississippi

Mississippi essentially has three levels of claim when insurance is at issue: (1) mere breach of contract, allowing recovery of contract damages; (2) breach of contract + no arguable basis for breach, which entitles recovery...more

Insurance – Coverage – Pyrolysis as an “Occurrence”

Tidwell Enterprises, Inc., et al. v. Financial Pacific Ins. Co., Inc. - Court of Appeal, Third Appellate District (December 20, 2016) - According to Merriam-Webster’s Collegiate Dictionary, Pyrolysis is a “chemical...more

The Ghost of Systems Past: “Big Data” Suits Loom, But Old Data Issues Remain Unresolved

2017 could be big for litigation over “Big Data” applications in insurance. This past year saw the filing of several “price optimization” class actions, and claims against a fraud detection tool, similar to the ones used by...more

How Concerned Should Insurers be About Punitive Damages in California?

The California Court of Appeal recently published another opinion about the Nickerson v. Stonebridge Life Insurance case. The court held to its maximum 10:1 punitive-to-compensatory-damages ratio and analyzed whether this...more

Florida Supreme Court Rules Incorrect Denial of Insurance Benefits Can Trigger Award of Attorneys’ Fees to Insured

On September 29, 2016, the Florida Supreme Court held, in Johnson v. Omega Insurance Company (No. SC14-2124), that a homeowner is entitled to an award of attorneys’ fees after an improper denial of insurance benefits. The...more

Arizona Court of Appeals Reverses $1 Million Award of Punitive Damages in Insurance Bad Faith Case for Alleged “Institutional Bad...

In Sobieski v. Am. Standard Ins. Co. of Wisconsin, 2016 WL 5436588 (Ariz.App. Sept. 29, 2016), despite upholding a bad faith judgment for an insurer conducting an unreasonable investigation and denying a claim, the Arizona...more

No Breach Of Contract Or Bad Faith As A Matter Of Law Where Defense Counsel Agreed To Accept Rates Paid By Insurer

Feld v. Fireman’s Fund Ins. Co., Case No. 12-1789 (D.D.C. Sept. 13, 2016). In a case where Saul Ewing represented Fireman’s Fund Insurance Company (“FFIC”), the District Court for the District of Columbia granted FFIC’s...more

In the Tenth Circuit, Colorado’s On-Going Debate over the “Fairly Debatable” Defense

A recent Tenth Circuit Court of Appeals decision, The Home Loan Investment Co. v. St. Paul Mercury Ins. Co., 827 F.3d 1256 (10th Cir. 2016), demonstrates that, although multiple jurisdictions may recognize similar defenses...more

How Appraisal Protects Against Texas Insurance Code Abuse

Insurance practice in Texas has become somewhat rote. Typically, a petition is filed against both an insurance company (that is often not based or incorporated in Texas) and a local adjuster. In addition to a breach of...more

Pennsylvania Supreme Court to Determine if “Motive of Self-Interest or Ill-Will” is Required to Establish a Claim for Insurance...

In Pennsylvania, an insurance bad faith claim requires an insured to show by clear and convincing evidence that the insurer 1) lacked a reasonable basis for denying benefits under the policy, and 2) knew or recklessly...more

Insurance News, Summer 2016

Eight Years after Bi-Economy and Panasia, What is the Law of Bad Faith in New York? Prior to 2008, the law of bad faith in New York seemed fairly well established. A claim for bad faith against an insurer, which might...more

Three Point Shot - Summer 2016

800-Meter Champion Berian Eventually Outpaces Nike Endorsement Suit... Or Did He? World 800-meter champion Boris Berian is seemingly capable of out-running just about anything these days. Berian is just a year removed...more

Don’t Mess with the Texas Prompt Payment of Claims Act: One Court’s Appraisal Result

Virtually all property insurance policies contain an appraisal clause, which outlines the appraisal procedure in broad terms. Those broad terms sometimes do not provide much guidance about the process, or about the effect...more

Liability for breach of obligations

Resolution of the Plenum of the Supreme Court of the Russian Federation No. 7 dated 24 March 2016 'On courts applying certain provisions of the Civil Code of the Russian Federation concerning liability for a breach of...more

No Right to Diminution in Value Damages Following First Party Payment for Costs of Vehicle Repair

In Baldwin v. AAA Northern California (No. A142217, filed 6/13/16), a California appeals court upheld an order sustaining an insurer’s demurrer without leave to amend, dismissing a breach of contract and bad faith lawsuit...more

Subrogation recovery did not violate the made-whole-rule and was not in bad faith per Wisconsin Sup. Ct.

It is highly unusual to find an insurance bad faith case which stems from an insurance company’s subrogation recovery. On July 6th, Wisconsin’s highest court had such a case, reversing the appellate court and holding that...more

Insurance Coverage – Genuine Dispute as Defense to Bad Faith

Clayton D. Paslay, et al. v. State Farm General Insurance Company - Court of Appeal, Second Appellate District (June 27, 2016) - Under the genuine dispute doctrine, an insurer denying or delaying the payment of...more

Genuine Dispute Defeats Both Bad Faith and Elder Abuse

The Paslays sued State Farm for failing to pay a portion of the damage caused to their Pacific Palisades house by a heavy rainstorm and for forcing them to move back into the house while it was still under construction. The...more

California's First District holding closes loophole for evading removal jurisdiction in insurance coverage declaratory relief...

California law has long held that the parent and controlling shareholder of an insured corporation has no standing to sue for breach of contract or bad faith under an insurance policy issued to the corporation. In a published...more

Illinois Appellate Court Holds That Legal Malpractice Claim Was Barred by Six-Year Statute of Repose, and Collateral Estoppel...

Prospect Development, LLC, et al v. Donald Kreger and Schiff Hardin, 2016 IL App (1st) 150433 - Brief Summary - Plaintiff sued a lawyer and his law firm for alleged legal malpractice arising out of the collapse of a...more

Colorado Supreme Court Limits Use of Extrinsic Evidence and Reasonable Expectations Doctrine

On Monday, the Colorado Supreme Court issued its decision in American Family Mut. Ins. Co. v. Hansen, No. 14SC99 (Colo. June 20, 2016), holding that extrinsic evidence can only be used to interpret ambiguous policy language,...more

Treble-Damage Awards as Penalties

Plaintiffs who prove violations of N.C. Gen. Stat. § 75-1.1 are automatically entitled to treble damages under N.C. Gen. Stat. § 75-16. The automatic trebling of damages for 75-1.1 claims often leads to substantial verdicts...more

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