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POSTSCRIPT TO "GOT COMPLAINTS? YOU CAN KEEP THEM SECRET FROM THE PUBLIC."

I was working on a longer article that would include what I think the FTC strategy is in keeping some allegations and claims a secret in its recent complaints (of all places), but that is taking longer than expected.  I will post an article later in the week.

Today, I wanted to add the Reply that I got from the Federal Trade Commission.  Specifically, the Reply written by an FTC spokesperson, here:

In both cases, the companies and defendants who provided the information will have to provide legitimate justification for preventing redacted information from being revealed.

 Victoria Graham, FTC spokesperson.

E-mail from Victoria Graham, Spokesperson, Federal Trade Commission, to the author (Sept. 29, 2023, 12:32 PM ET)(on file with author).

P.S.

Although the FTC's Reply through Ms. Graham was apparently sent early in the afternoon on Friday, September 29, 2023, I was not notified by my spam filter that it had been blocked, until that Friday evening.  I am taking this opportunity on the next following working day to add this Postscript to Friday's posted blog article.)

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

LOOK AT THE LENDER, NOT THE CARRIER.

The insurmountable bar of "third-party beneficiary" status in homeowners' actions against force-placed insurance carriers, is obvious now if ever it was in doubt.  These are lawsuits filed by homeowners who are forced to  pay insurance premiums without a corresponding legally recognized right to receive benefits under the policy when there is a loss.

In Zabala v. Integon Nat'l Ins. Co., No. 20-22221-Civ-Scola, 2020 WL 3977380 (S.D. Fla. July 14, 2020), the Court dismissed such a homeowner's complaint with prejudice because the lender and the carrier did not intend to benefit the homeowner when the lender ordered a force-placed insurance policy from the carrier, even though they charged the homeowner for the premiums.

(Parenthetically, Westlaw released the Zabala decision in the middle of September, 2023.)

The Court said that its decision derived in the first place from Florida law, which requires an intent of contracting parties to benefit the party claiming the right to sue as an intended or third-party beneficiary.  Zabala, 2020 WL 3977380, at *2.  This represents the general trend of the federal case law to deny homeowners who are forced to pay insurance premiums the right to sue when the insurance is denied, as was the case for example in Zabala.  See the article posted here on December 7, 2022, for example, WHEN DEFENDANTS, NOT JUDGES, SAY WHO CAN SUE.

In Zabala, as in most of these cases, the judge wrote that the Court's decision was based on the law, although the force-placed insurance policy also declared that the homeowner was not an intended beneficiary.  Zabala, 2020 WL 3977380, at *3. 

The reality is, however, that a lender and an insurance carrier can force a homeowner to pay premiums for an insurance policy that benefits only the lender simply by declaring that they do not intend to benefit the party paying the premiums.

The Zabala Court made this clear when it expressly rejected the homeowner's argument "that he has standing to pursue this action as a third-party beneficiary to protect his own interest as a homeowner for the insured property."  Zabala, 2020 WL 3977380, at *4.  This Southern District of Florida  Court then went on to reject reliance on contrary Middle District of Florida case law as "misplaced."  Moreover, the Middle District cases in question "did not involved policies" like the one at bar, the Zabala Court said.  Zabala, 2020 WL 3977380, at *4. 

That is certainly one view of the situation, and the result in Zabala exemplifies it.  A different view is available, however, which Zabala and its predecessors and progeny have left uncited and untouched.

The different view is the flip-side of the situation exemplified in Zabala where the homeowner sued only the carrier and not the lender.  The difference involves, rather, suing the lender, not the insurance carrier. 

When the lender's alleged failure to include the homeowner on the force-placed insurance policy is alleged as a breach of the lender's fiduciary duty, the homeowner-mortgagor's claims have been allowed:

Instead, the mortgagors alleged that the lender force-placed insurance (LFPI) was objectionable on the basis of two allegations:  (1) they were forced to pay excessive premiums under the  LFPI policy and (2)  the lender failed to include them on the policy.  On these two allegations, they claimed that the lender acted in bad faith and breached fiduciary obligations under Florida law as a result.

The case is Meyer v. Bank of Am., N.A., No. 3:21-cv-1088-HES-JRK, 2022 WL 18492520 (M.D. Fla. Aug. 18, 2022).  This decision and its implications were addressed in an article posted here on February 1, 2023, EXCESSIVE PREMIUMS & NOT INCLUDING MORTGAGORS ON LFPI POLICY:  CLAIMS ALLOWED.

The lesson from the case law is clear, it seems:  Before any lawsuit is filed by or on behalf of a homeowner forced to pay insurance premiums in such situations, look at the lender, rather than at the carrier; look at the mortgage contract rather than the force-placed insurance contract.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

GOT COMPLAINTS? YOU CAN KEEP THEM SECRET FROM THE PUBLIC.

 

In two cases filed within the space of a week, the Federal Trade Commission has kept the public from seeing complaints that have been filed on behalf of the American public.  Only the Courts, the defendants, and the FTC can see the public's complaints, so far. 

The first case is Federal Trade Commission v. U.S. Anesthesia Ptrs., Inc. (S.D. Tex. No. 4:23-cv-03560).  Download Federal Trade Commission v. U.S. Anesthesia Ptrs. Inc. Complaint DE 1 filed Sept. 21 2023 (S.D. Tex. No. 4.23.cv.03560).  In its 106-page complaint in that case, which the FTC filed on September 21, 2023, the FTC brought an antitrust lawsuit against a private equity firm for the first time.

The claims alleged in the complaint all come back to a central allegation that the private equity firm and its associated entities hiked the cost of reimbursement rates for anesthesia services in Texas through a conspiracy based on the acquisition of competitors.  However, the allegation is repeatedly blacked out, i.e., redacted.  See, e.g., id. at ¶ 91, p. 30; ¶ 107, p. 34; ¶ 111, p. 35; ¶ 115, p. 36; ¶ 118, p. 37; ¶ 128, p. 40; ¶ 133, p. 41; ¶ 140, p. 43; ¶ 148, p. 45; and many more.

We do not know why.  I researched the Local Rules of the United States District Court for the Southern District of Texas where this case was filed, but I could find nothing to explain this.  

I would show you the FTC's motion to seal portions of the complaint but I cannot.  It's not available to the public, meaning you and me.  It is available to the people's representatives, of course, meaning the FTC – the very party that sealed it from public view.

The FTC filed its motion to seal portions of the complaint "temporarily" but we cannot read the FTC's reasons for sealing any part of the complaint, or know what the FTC considers a "temporary" seal in that case.  Incredibly, the FTC filed its motion to seal under seal.

I am going to send an E-Mail to the FTC attorney who signed the complaint, Kara Monahan, Esquire, one of eleven FTC attorneys listed on the complaint. I will let you know if I get a meaningful Reply.

In the meantime, we can perhaps find some enlightenment from another case that the FTC filed in September, this one against Amazon.  (Or perhaps, not, as we shall see.)

In Federal Trade Commission v. Amazon.com, Inc. (W.D. Wash. No. 2:23-cv-01495-JHC), Download Federal Trade Commission v. Amazon.com Inc. Complaint DE 1 filed Sept. 26 2023 (W.D. Wash. No. 2.23-cv-01495) , the FTC alleged in a 172-page complaint it filed on September 26, 2023 that Amazon violated antitrust laws by favoring its own sales and putting up obstacles to competitors' sales on the Amazon website, in essence.  Amazon runs what it calls a "marketplace," also known as a "fulfillment center," which includes products offered for sale by third parties.

The FTC alleged in pertinent part that Amazon violated antitrust laws by the use of a "Project Nessie," which Amazon describes on its website apparently as a monitoring system.  However, once again we in the public do not know why "Nessie" allegedly offended antitrust laws.  All or nearly all of the allegations of Amazon's antitrust liability based on Nessie are blacked out. Id., ¶ 417, p. 123 of 172, through ¶ 463, p. 132 of 172. 

Even the amount of money that the FTC alleged that "Amazon's Project Nessie has already extracted ... from American households" is blacked out from public viewing.  The likely first example of this blackout is in id., ¶ 4, pp. 5-6 of 172.

The FTC blames Amazon for its redactions.  Plaintiff's Motion for Leave to Temporarily Seal Portions of the Complaint, DE 2 at 2, 3-4, filed Sept. 26, 2023 (W.D. Wash. No. 2:23-cv-01495-JHC).  Download Federal Trade Commission v. Amazon.com Inc. Motion for Leave to Temporarily Seal Portions of the Complaint DE 2 filed Sept. 26 2023 (W.D. Wash. No. 2.23-cv-01495).

The FTC helpfully highlighted the hidden complaint with the allegations Amazon contended before suit would be "confidential," id. at 4,  but we cannot see it.  The hidden complaint is, well, hidden.

The FTC helpfully also filed a public version of its complaint which, as we have already seen, is heavily redacted.  "Plaintiffs have filed a public version of the Complaint that redacts all information designated as confidential by the producing parties."  Id. at 4.

That raises the issue of why the FTC filed its request to seal parts of the complaint at all.  The FTC said this:  "The FTC makes this request to comply with its regulations governing treatment of confidential information submitted to the FTC during its pre-complaint investigation and to give affected parties an opportunity to ask the Court to seal portions of the Complaint on a permanent basis.  The FTC is not claiming confidentiality with respect to any information that is the subject of this Motion."  Id. at 1-2.  [Emphasis added.]  The FTC also wrote that its request to seal was based on a "federal statute and FTC rules."  Id. at 3-4.  [Emphasis added.]

In sum, the FTC motion to seal is expressly filed "pursuant to" regulations, a federal statute, and rules.  The FTC motion did not identify which regulations, statutes, or rules that the FTC had in mind when it filed this motion.

I am going to E-Mail the FTC lawyer, once again, in this case the FTC lawyer that signed this motion, Susan A. Musser, Esquire.  She is one of seventeen FTC lawyers on the complaint, in addition to dozens of lawyers representing multiple States.  Once again, I will let you know if I get a meaningful Reply.

Parenthetically, the FTC asked once again for a "temporary" seal, in this case, for "14 days."  The FTC is supposed to represent the people, but in this case the FTC is keeping secrets from the public including how much Amazon allegedly bilked them. That amount is something that the FTC is going to have to put in evidence anyway.

For its part, Amazon's general counsel, David Zapolsky, Esquire, said in a statement that the FTC complaint is wrong on the facts and on the law.  That may be, or maybe not.  We simply cannot evaluate such comments if we the public cannot even read the complaint.

The Local Rules of the Western District of Washington are clear, however.  Here is a link to the Local Civil Rules from the Court's website so that you can read the Rules yourself.  Local Civil Rule 5(g) begins with this sentence:  "There is a strong presumption of public access to the court's files."  There are "only two circumstances" when a party may file a document under seal in a lawsuit in the Western District of Washington:  one is if "a statute, rule, or prior court order expressly authorizes" it, and the other is by filing a motion in compliance with LCR 5(g)(2)(B) & LCR 5(g)(3).

We have already looked together, you and I, for a regulation, statute, or rule that expressly authorizes filing a partly-blacked-out FTC complaint, but we have not found any.  (As of this writing, no court orders authorizing secrecy have been entered in either case.)

As for FTC's motion to seal, you have the opportunity to do what the Court in Washington and perhaps Amazon is going to have to do, and that is compare the motion to the Local Civil Rules to see how closely the FTC motion followed the Rules.

"Only in rare circumstances should a party file a motion, opposition, or reply under seal."  LCR 5(g)(5).  Apparently, the amount and at least one of the methods by which Amazon allegedly gouged its customers and third-party vendors alike is one of those rare circumstances in the eyes of the Federal Trade Commission.

As I said earlier, if I receive meaningful Replies to my E-Mails I will let you know.  These and similar blackouts of all or parts of a complaint's allegations have ramifications for insurer bad faith cases.  TO BE ADDRESSED IN AN ARTICLE TO FOLLOW ....

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

BAD FAITH EXPOSURE EVEN THOUGH NO DEMAND WITHIN LIMITS.

After citing Illinois, South Dakota, and Tennessee cases, the Court in Sacred Heart Health Serv's v. MMIC Ins., Inc., ___ F. Supp. 3d ___, 2023 WL 3742544, at *26 (D.S.D. May 31, 2023). held that "an insurer may be liable for bad faith even if it did not receive a demand to settle within policy limits." 

Decisions involving the duty to initiate settlement negotiations in third-party cases like Sacred Heart, including the decisions relied on in that case, are discussed at length in § 3:16 in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (3d Edition West Publishing Company, with 2023 Supplements).

FLORIDA APPRAISAL DID NOT DETERMINE CARRIER'S LIABILITY OR INSURED'S DAMAGES.

Under the Florida Bad Faith Statute in first-party cases -- which is the only source of a bad-faith claim or cause of action in a first-party case in Florida -- there must first be a determination of the carrier's liability and of the insured's damages, among other things.  An appraisal award of the difference between Replacement Value and Actual Cash Value did not determine the carrier's liability, so it was held to be a legally insufficient springboard for the statutory first-party bad faith claim in Ricol Holdings, LLC v. Westchester Surplus Lines Ins. Co., ___ F. Supp. 3d ___, No. 3:23cv12248-TKW-ZCB, 2023 WL 4948005, at *3-*4 (N.D. Fla. July 26, 2023).

 

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.  Express statutory causes of action in first-party bad faith cases, including under Florida law, are discussed at length in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:14 (3d Edition West Publishing Co., 2023 Supplements).  Far from being overlooked or forgotten, third-party cases are discussed in multiple sections in Volume 1, id., including Statutory Bases of Liability for Bad Faith in claims involving Settlement, § 3:28, in claims involving Refusal to Defend, § 3:63, and in claims involving the Conduct of the Defense, § 3:92.

WHEN WILL FEDERAL COURTS SHUT DOWN IF GOVERNMENT SHUTS DOWN?

Reuters reports that if there is a government shutdown because there is no agreement in the U.S. Congress to continue funding the federal government past September 30th, then the federal Courts will shut down two weeks after that.  See Nate Raymond, US Judiciary Can Keep Operating For 2 Weeks if Government Shuts Down, REUTERS online September 19, 2023.

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

INSURER BAD FAITH, FLORIDA CONFIDENTIAL, TRADE SECRETS, CERTIORARI, ALL!

In Progressive Select Ins. Co. v. Lloyd's of Shelton Auto Glass, LLC, 367 So. 3d 586 (Fla. 2d DCA 2023), an insured's assignee sued for insurer bad faith and to compel production of the insurance company's alleged secret pricing agreement with a windshield replacement company.  

    The trial court directed the release of the carrier's Provider Agreement, subject to a confidentiality agreement that the insured had entered into with the carrier.  Progressive, 367 So. 3d at 587.

    The carrier filed this appeal seeking certiorari review because, it contended, release of the Provider Agreement would reveal "trade secrets."

    The appellate court declined to review the order.  Progressive, 367 So. 3d at 587-88.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

Certiorari review of discovery orders concerning Claims Adjuster's Files in particular in first-party bad faith litigation is discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 12:5 (3d Edition West Publishing Company, 2023 Supplements in process).

 

 

 

TRIAL COURT DO-OVER FOR SEALED DOCUMENTS IN INSURANCE BAD FAITH CASE ....

AND DISCRETION REGARDING REFUSAL TO COMPEL DISCLOSURE OF DISCOVERY TO STRANGERS TO THE LITIGATION.

In Good v. Farmers Ins. Co., ___ P.3d ___, 2023 WL 5951464 (Okla. Ct. Civ. App., Div. 3, Decided Feb. 15, 2023 & Mandate Issued Sept. 13, 2023), the issue was public access to materials in a closed insurance bad faith lawsuit.

    The underlying, closed bad faith lawsuit arose out of the defendant carrier's denial of a homeowner's insurance claim for damage allegedly due to an earthquake.  As a part of that claim in litigation, the homeowners-plaintiffs alleged that the carrier "wrongfully engaged in a pattern and practice of denying earthquake damage claims."  Good, 2023 WL 5951464, ¶ 2, at *1.

    There were two kinds of materials at issue.  One kind consisted of "three hundred and fifty-two filings in the [underlying] case up to the date of the filing of the dismissal with prejudice."  Good, 2023 WL 5951464, ¶ 4, at *2.  The other set of publicly undisclosed materials consisted of more than "ten million pages of documents and multiple depositions of [the insurance carrier's] officers and executives[.]"  Good, 2023 WL 5951464, ¶ 5 n.5, at *2 n.5.

    The plaintiffs in the second lawsuit, Cole and Teri Newby, were also homeowners with an earthquake claim for coverage under a policy issued by the same carrier.  They filed a motion to intervene in the underlying case for the purpose of accessing both the sealed documents in the court file and the voluminous materials produced by the carrier in the underlying case.  Their motion was denied.

    On appeal, the Oklahoma Court of Civil Appeals first held in this case that the trial court had erred regarding its denial of access to the Newbys regarding the sealed documents in the court file of the underlying case.  The Oklahoma appellate court ruled that the nonparty Newbys had standing to intervene for the purpose of asserting the right of public access to all these documents and materials, the documents undisclosed and sealed, and the undisclosed discovery materials as well.  Good, 2023 WL 5951464, ¶ 8, at *3.

    This ruling that nonparties to an insurance bad faith lawsuit have standing to assert public access to materials involved in that lawsuit is potentially important to other insurance bad faith lawsuits in other jurisdictions in which trial courts have entered protective orders barring disclosure of such materials in similar cases.

    Further, as the Newbys contended, the Oklahoma appellate court ruled that the trial court failed to follow Oklahoma law when the trial court entered its Protective Order allowing documents in the court file to be sealed.  Good, 2023 WL 5951464, ¶¶ 9-12, at *4-*5.    However, the trial court's failure to follow Oklahoma law favoring public access did not necessarily mean that the trial court's failure made the documents subject to public access.

    Rather, or so the appellate court ruled in this case, although the trial court's Protective Order necessarily had to be reversed, still the matter would be remanded to the trial court to review the merits of the Newbys' request that the documents be made publicly accessible.  See Good, 2023 WL 5951464, ¶12, at *5.

    As to the materials made available by the carrier during discovery in the underlying case, the Oklahoma appellate court ruled that the Oklahoma trial court had the discretion to enter a Protective Order making them publicly accessible, or not accessible at all.  Good, 2023 WL 5951464, ¶¶ 13-14, at *5-*6.  In the precise context of this specific case, "the trial court did not abuse its discretion when it denied the Newbys' request for production of all unfiled discovery documents."  Good, 2023 WL 5951464, ¶ 17, at *7.

    Like the Newbys, nonparties to bad faith litigation in other jurisdictions may win the battle but lose the war of public access, so to speak -- but the potential exists for public access to documents filed in public court files in every case,  and so it existed here.  Most importantly for other litigation, nonparties have standing to sue to require public access in insurance bad faith litigation if this decision is followed elsewhere in that regard.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

Confidentiality and concealment of materials in first-party bad faith insurance cases like Good are discussed throughout §§ 9:28-9:28.100 in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (3d Edition West Publishing Company, 2023 Supplements in process).  The same issues in the context of third-party bad faith cases are discussed in 1 id., §§ 3:107-3:107.100.

THE OPPOSING VIEW: APPLY THE FRD (EVEN WITHOUT EVIDENCE).

In another case in the Western District of Washington, a different federal judge distinguished the Harvey v. Centene Management case we discussed here yesterday.

    In Epstein v. USAA Gen. Indem. Co., 636 F. Supp. 3d 1260 (W.D. Wash. 2022), an insurance case, the claimant alleged "that Defendants have violated the Washington Law Against Discrimination (WLAD) and the Washington Consumer Protection Act (CPA) by forcing lower-ranking servicemembers to pay more for auto insurance than higher-ranking servicemembers. Defendants move to dismiss all of the claims and to strike the request for equitable relief."  Epstein, 636 F. Supp. 3d at 1261.

    The Court applied the FRD in Epstein and distinguished the Harvey decision.  Here, in the eyes of the Court, the plaintiff's claims implicated the FRD.  Epstein, 636 F. Supp. 3d at 1266.  The Court was convinced that the FRD applied because it thought that the relevant administrative agency had approved the rates in question.

    If it was ever a proven fact that the relevant authority approved the rates in question in the Epstein case, I have not been able to find it in the opinion.  For all that appears, it was enough that the Judge thought that the relevant authority had previously approved the rates at issue in that case.  Or perhaps, as happens so often in the case law, the Judge thought it was a fact merely because the insurance companies said so.  Either way, insurance practitioners would do well to pay attention to how the Filed Rate Doctrine is decided in the case law.

Please read the disclaimer.  The filed rate doctrine is discussed particularly in the context of insurance cases in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH §§ 11:26-11:26.50 (3d Edition West Publishing Co., 2023 Supplements in process).  This blog article ©2023 Dennis J. Wall.  All rights reserved.

APPLYING THE FILED RATE DOCTRINE AFFIRMATIVE DEFENSE.

The filed rate doctrine is an affirmative defense.  Counsel should argue it as such.  Judges should treat it accordingly and require a fully developed record before they rule.  In Harvey v. Centene Mgt. Co., 357 F. Supp. 3d 1073 (E.D. Wash. 2018), that is exactly what the judge did.

   Even if a court is not completely convinced, one way or another whether the filed rate doctrine applies or not, the Court in Harvey v. Centene Management Company, LLC[1] rested its decision not to apply a filed rate doctrine at the pleadings stage on procedural grounds as well as substantive grounds at that stage.  The Harvey Court's decision was based on a motion to dismiss and "the better practice" in any case, the Court stated, is to address the filed rate doctrine either on a motion or motions for summary judgment, or at trial.[2]

 

[1] Harvey v. Centene Mgmt. Co. LLC, 357 F. Supp. 3d 1073 (E.D. Wash. 2018).

[2] Harvey, 357 F. Supp. 3d at 1084.

Please read the disclaimer.  The filed rate doctrine is discussed particularly in the context of insurance cases in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH §§ 11:26 - 11:26.50 (3d Edition West Publishing Co., 2023 Supplements in process).  This blog article ©2023 Dennis J. Wall.  All rights reserved.

COVERAGE FOR NATURAL DISASTERS: INSURANCE POLICIES AND CATASTROPHE BONDS.

It is an easy thing to overlook the broader trends of coverage when you focus on how individual claims and cases are decided.  

    It can also be more comfortable.  In Florida, where I live, home insurance companies are excluding coastal areas from any coverage at all, even as the carriers are no longer covering many of the insurable risks in the rest of the State.  Unfortunately, Florida is the tip of the spear as they say.  These trends are happening throughout the United States, not just in Florida.  See, e.g., Jacob Bogage, Home Insurers Cut Natural Disasters From Policies As Climate Risks Grow, WASHINGTON POST, online Sunday, Sept. 3, 2023.

    Also, it's not just insurance companies in the coverage market any more.  Some corporations are issuing their own catastrophe or cat bonds.  The total cat bond market reportedly is North of $41 Billion.  As one capital management director told The Washington Post, "I'm not renting out a room at the local Ramada and pitching a mass audience.  It's still an investment for sophisticated investors.  Our job is to answer the phone."  See David J. Lynch, As Cost of Climate Disasters Grows, Some Profit With Catastrophe Bonds, WASHINGTON POST, online Tuesday, August 29, 2023.

    The "sophisticated investors" who invest in catastrophe bonds include insurance companies eager to offload a risk.  Other investors appear to be venture capital funds and private equity companies, although as the quotation above reveals, these outfits may also sometimes be middlemen between the issuers of the cat bonds and the investors in the bonds.

    The role of private equity may not be precisely clear, but what is clear is that cat bonds are "all or nothing" investments with huge risk and huge returns.  They are issued regarding particular risks, "a particular risk or 'peril' affecting a specific geography, such as a named storm in Massachusetts or an earthquake in Japan."  Id.

Claims Handling Practices in Recent Catastrophes in Australia, Greece, Louisiana, Mississippi, Texas, California, Puerto Rico, Denver, New York, and Miami are explored in Volume 1 of CATASTROPHE CLAIMS / INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS § 2:13 by Dennis J. Wall (Thomson Reuters June 2023 Edition).

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

SETTLEMENT DEMAND, 3 1/2 YEARS OF MEDICAL BILLS, INADEQUATE FOR REMOVAL.

COVID ICU patient in Sarasota, Florida hospital.  (Shannon Stapleton / Reuters)

  A settlement demand for policy limits in a first-party case may not be enough to establish the amount in controversy in the face of other evidence in the record.  This was the state of the record in one such case, even though a settlement demand had been accompanied by three and a half years of past medical bills totaling $34,668.00[1]

 

[1] Gillespie v. Auto-Owners Ins. Co., No. 8:23-cv-296-CEH-AAS, 2023 WL 2755115, at *4 (M.D. Fla. April 3, 2023) ("Without any such support [from the record evidence], Plaintiff's demand of the $100,000 policy limit, or her statement that her damages exceed it, appears to be posturing rather than a reasoned evaluation of her claim.").

The Gillespie decision and other significant cases of alleged first-party insurance bad faith are discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:23, Removal and Remand (3d Edition, West Publishing Company; 2023 Supplements in process).  Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

WAIVER OF A DEFECT IN A CIVIL REMEDY NOTICE.

(Gridview_Imagefull/Florida DACS)

It has been held in a case under Florida law that defects in a Civil Remedy Notice of alleged first-party bad faith can be waived.  In that case, waiver existed when the carrier responded to the CRN without raising any objections to it.  Neal v. GEICO Gen. Ins. Co., 358 So. 3d 749, 752 (Fla. 4th DCA 2023).

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.  Waiver in the first-party insurance bad faith case law is examined in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:14 (3d Edition, West Publishing Company; 2023 Supplements in process).

FRAUD CAN DECEIVE A PERSON. BUT NOT EVERYONE, NOT ALWAYS.

In Discovery Land Co., LLC v. Berkley Ins. Co., NO. CV-20-01541-PHX-ROS, 2023 WL 2503634 (D. Ariz. March 14, 2023), the insureds bought a castle in Scotland, claimed that they were defrauded by their lawyers, added insureds to their policies after a known loss, and then apparently made claims to coverage.

    The two insurance carriers in the case "both filed counterclaims seeking rescission of the change endorsements, arguing Plaintiffs fraudulently added entities as joint insureds after they discovered the losses."  Discovery Land Co., 2023 WL 2503634, at *5.

    The Court entered a summary judgment of no coverage for both carriers.

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.  Fraud allegations in the context of first-party cases such as Discovery Land Company are discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:12 (3d Edition West Publishing Co., 2023 Supplements in process).

"DISABILITY IS MORE PERVASIVE THAN WE THINK ...."

(New York Public Library Digital Collections)

Look, more than 61 million adults in the United States – that's just adults – have one or more disabilities.  And that's before COVID.  We haven't had the post-COVID numbers with long haulers included in there.  Disability is more pervasive than we think, and so if we see disability as touching many more things, places and people than it already does then applying a disability lens becomes even more important.

Professor Jasmine E. Harris, Professor of Law, University of Pennsylvania Carey Law School, quoted in interview by Maya Srikrishnan published by CTR. FOR PUB. INTEGRITY (Aug. 18, 2023).

            Professor Harris is a co-author of a recently published Law Review article in which she and her co-authors suggest and practice providing what they call a "disability lens" to the recent decisions of the U.S. Supreme Court.  "[B]ut it remains possible to glean new insights if we review the Court's work from an alternative perspective, one that does not often inform mainstream accounts."  Jasmine E. Harris, Karen M. Tani, and Shira Wakschlag, The Disability Docket, 72 AM. U.L. REV. 1667 (2023). Download Jasmine E. Harris Karen M. Tani and Shira The Disability Docket 72 AM. U.L. REV. 1667 (2023)

 

Please read the disclaimer. This blog article ©2023 Dennis J. Wall.  All rights reserved.

FIRST-PARTY INSURANCE COOPERATION IN COLORADO.

    A Failure-to-cooperate defense was enacted into Colorado first-party insurance law by statute in 2020.[1]  Colorado provided conditions on a carrier pleading or proving "a failure-to-cooperate defense in an action concerning an insurance policy providing first-party benefits or coverage," however, regardless of whether "the defense is asserted in a court of law or an arbitration[.]"[2]

    As a result of this statute, an underinsured motorist carrier accused of wrongful delay in paying first-party benefits and bad faith was granted summary judgment by the District Court for the insured's rather than the insurer's breach of contract.  The sort of record necessary to reach similar results is displayed in the case in which the UIM carrier obtained its summary judgment:  Aponte v. Allstate Fire & Cas. Ins. Co.,  No. 1:21-cv-01601-CNS-SKC, 2023  WL 129693, at *2 (D. Colo. Jan. 9, 2023).

 

[1] Colo. Rev. Stat. Ann. § 10-3-1118 (West; Westlaw current through legislation effective April 14, 2023 of the First Regular Session, 74th General Assembly [2023]).

[2] Colo. Rev. Stat. Ann. § 10-3-1118(1). 

 

Breach of the cooperation clause in first-party insurance policies, particularly in the context of bad faith claims, is analyzed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:7 (3d Edition West Publishing Company, 2023 Supplements in process).

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

 

WAIVER/NO WAIVER OF INSURER DEFENDANTS' COVERAGE OR POLICY DEFENSES.

Two recently decided cases illustrate the general rule that it is exceedingly difficult to prove an insurer's waiver of its defenses to insurance coverage.  E.g., Legend's Creek Homeowners Ass'n v. Travelers Indem. Co. of Am., 33 F.4th 932, 935, 937 (7th Cir. 2022) (Indiana substantive law; no waiver where there is no unquestioned duty to speak as to assertion of limitations period in an insurance policy, and no implicit waiver in this case, either); Grill House, LLC v. Berkshire Hathaway Homestate Ins. Co., No. 20-cv-2108-WJM-KLM, 2022 WL 1487575, at *4 (D. Colo. May 11, 2022) (no waiver of plaintiff's alleged failure to provide prompt notice).

Questions of waiver of, and of estoppel to assert policy and coverage defenses, are discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:2 (discussing in particular, context of first-party bad faith claims) (3d Edition West Publishing Company, 2023 Supplements in process).

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

WHEN BAD FAITH CLAIMS ARE NOT LINKED TO CONTRACT BREACHES.

It has been held under Pennsylvania's Bad Faith Statute,[1] that a bad faith claim may not always depend on the outcome of a breach of contract claim:  "Under those circumstances, especially when the bad faith claim is not solely based upon a denial of coverage, a bad faith claim is not contingent on the underlying breach of contract claim."[2]

 

[1] 42 Pa. Cons. Stat. Ann. § 8371.

[2]  In re Lewis (Lewis v. U.S. Bank Nat'l Ass'n), 627 B.R. 602, 617 (E.D. Pa. Bankr. 2021).

ASIC has been a very large provider of force-placed insurance policies; it was the subject of the insurance-related claims in this case.  The most frequently alleged claims and causes of action in force-placed insurance cases, including cases involving alleged bad faith, are discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:35 (3d Edition West Publishing Company, 2023 Supplements in process).

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

THE CASE OF THE UNNAMED PLAINTIFFS.

Hiding the names of the plaintiffs in a Federal lawsuit is generally a losing proposition.  A recent announcement of this state of the case law came in Does v. Mills, 39 F.4th 20, 25 (1st Cir. 2022), voluntarily dismissed by stipulation, No. 22-1435, 2022 WL 17367462 (1st Cir. July 14, 2022), 'the case of the putative pseudonymous plaintiffs':  "Those circuit courts that have considered the matter have recognized a strong presumption against the use of pseudonyms in civil litigation."

These issues are analyzed in first-party cases in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:28.100 (3d Edition West Publishing Company, 2023 Supplements in process).  Similar issues arising in third-party cases are discussed in 1 id., § 3:107.100.

This blog article ©2023 Dennis J. Wall.  All rights reserved.

THE IMPORTANCE OF A SPECIFIC SHOWING.

Judge's Gavel.  (Handout Photo by Sun-Sentinel)

The seriousness with which many Federal Courts take the requirement of a specific showing in order to seal information, is illustrated by the bad-faith case of Nichols v. GEICO Gen. Ins. Co., No. 2:18-cv-01253-TL, 2022 WL 579341 (W.D. Wash. Feb. 25, 2022).  In that insurance case, the parties did not present a specific showing to seal "any estimates or calculations regarding the amount of time it will take for review of claim files or to otherwise to try this case."  Nichols, 2022 WL 479341, at *3.

    PACER (the "Public Access to [Federal] Court Electronic Records" database) reveals what this opinion did not reveal:  The plaintiffs in their Second Amended Complaint in this case alleged, among other things, violations of Washington's Insurance Fair Conduct Act (IFCA), 'violations of Washington's Consumer Protection Act, common law bad faith, and breach of the implied covenant of good faith and fair dealing. Merle Nichols v. GEICO Gen. Ins. Co., Doc. No. 16, Second Amended Complaint, filed Sept. 20, 2018 (W.D. Wash. Case No. 2:18-cv-01253-TL).

    The Court found that good cause had not been shown to seal estimates or evaluations of time to review claims files and to try the case.  The Court ruled because of the parties' lack of specificity including failure to comply with the Local Rules regarding motions to seal.  Nichols, 2022 WL 479341, at *3.

    The parties were not specific when they presented their joint motions to seal.  All three motions to seal were apparently prepared by GEICO, were unopposed by the plaintiffs, were submitted "in the form of joint statements," Nichols, 2022 WL 479341, at *1, and were successful only in obtaining a ruling that previous protective orders allowing materials to be sealed "shall remain under seal."    Nichols, 2022 WL 479341, at *2.

    The sealing requests in this case failed from an insufficiently specific showing and from failure to comply with the Local Rules in this regard.

The how and why and best practices of Stipulated Protective Orders and their secrecy protections in particular, are examined in first-party case law in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:28.50 (3d Edition West Publishing Company, 2023 Supplements in process).  These issues arising in third-party cases are discussed in 1 id., § 3:107.50.

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

SEALING PUBLIC RECORDS: LESSONS FROM UTAH AND MISSOURI FEDERAL COURTS.

After documents have been made available to the public, it will be difficult to overcome the presumption of public access and seal them.[1]

          This difficulty was apparently not an obstacle in a decision reported neither in Federal Supplement or in Westlaw:  Loy v. BMW of North America, LLC.[2]  Following the entry of  a previous order in the case,[3] the Court conducted an in camera inspection and denied plaintiffs' motion to compel.[4]  In the course of denying the motion to compel, the Court also denied the plaintiffs' request to remove the confidential designation from certain materials previously presented at a conference.

           The Court noted in its slipsheet opinion that these documents which BMW marked "Confidential," were slides "presented during a conference in Las Vegas, Nevada in 2018[.]"[5] 

 

[1] See Liberty Mut. Fire Ins. Co. v. Michael Baker Int'l, Inc., No. 2:19-cv-00881, 2023 WL 2504575, at *12 (D. Utah March 14, 2023) (Oberg, USMJ).

[2] Loy v. BMW of N. Am., LLC, No. 4:19-CV-00184 JAR, slip op. (E.D. Mo. Oct. 7, 2021).  This is Document No. 112 in the Court File, available on PACER.

[3] Loy v. BMW of N. Am., No. 4:19-CV-00184 JAR, 2021 WL 3930501 (E.D. Mo. Sept. 2, 2021).

[4] Loy v. BMW of N. Am., LLC, No. 4:19-CV-00184 JAR, slip op. at 2 (E.D. Mo. Oct. 7, 2021).

[5] Loy v. BMW of N. Am., LLC, No. 4:19-CV-00184 JAR, slip op. at 1 (E.D. Mo. Oct. 7, 2021).

 

The how and why and best practices of Stipulated Protective Orders and their secrecy protections in particular, are examined in first-party case law in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:28.50 (3d Edition West Publishing Company, 2023 Supplements in process).  These issues arising in third-party cases are discussed in 1 id., § 3:107.50.

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

PROPERTY INSURANCE CLAIMS, PART PAYMENT?

A recently enacted Florida statute was confusingly enacted with two different effective dates, one effective on January 1, 2023 and the other effective on March 1, 2023.  This confusion is likely to persist until the Florida Legislature or a Florida court of competent jurisdiction clears up the matter.  Until such time, Fla. Stat. § 627.70131(7)(a) will confusingly provide in pertinent part:

(7)(a) Within [60 days - eff. January 1, 2023, or 90 days - eff. March 1, 2023] after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer which reasonably prevent such payment.

The effects of Insurer's Payment of Undisputed Covered Amounts--Part Payment of Property Insurance Claims in first-party insurance bad faith cases, including cases dealing with property insurance claims, are discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:27 (West Publishing Co. 3d Edition, 2023 Supplements in process).

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved. 

SEALING AND SECRECY IN FEDERAL CASES.

In Wiens Capital Mgt., LLC v. Advocate Consulting Legal Grp., PLLC, No. 2:23-cv-81-SPC-KCD, 2023 WL 2435806 (M.D. Fla. Feb. 16, 2023) (USMJ), a U.S. Magistrate Judge faced a motion "to seal a portion of the disclosure statement required by Federal Rule 7.1 and Local Rule 3.03 that lists the identities of the individual members of Wiens Real Estate Ventures, LLC[.]"  Wiens Capital Management, 2023 WL 2435806, at *1.  Ventures was the sole member of Management, the plaintiff that filed this lawsuit.  Wiens Capital Management, 2023 WL 2435806, at *1.

The Magistrate Judge denied the motion.  The people who requested secrecy from public view in this case failed to overcome the presumption of public access that governs all Federal cases.

Including Insurance Bad Faith Cases.  The presumption of public access is discussed in the context of Third-Party Insurance Bad Faith cases in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH §§ 3:107, et seq. (West Publishing Co. 3d Edition, 2023 Supplements in process), and in the context of First-Party Insurance Bad Faith cases in 2 id., §§ 9:28, et seq.

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

CIVIL REMEDY NOTICE TO ACT IN GOOD FAITH

Many jurisdictions have "bad faith statutes" which require the claimant to provide a Civil Remedy Notice of Insurer Violation of the statute, and which provide a "cure period" within which the carrier can foreclose litigation over the alleged violation by "curing" it.  The statutory "cure period" is not tolled in Florida when the carrier invokes a policy's appraisal provision after the policyholder has filed a Civil Remedy Notice (CRN).[1]

 

[1] E.g., Apex Roofing & Restor., LLC v. State Farm Fla. Ins. Co., 343 So. 3d 1223, 1225 (Fla. 5th DCA 2022); Zaleski v. State Farm Fla. Ins. Co., 315 So. 3d 7, 12 (Fla. 4th DCA 2021), review denied & attorney's fees awarded, No. SC 21-707, 2021 WL 5292345 (Fla. Nov. 15, 2021).

Statutory and Common Law requirements concerning Civil Remedy Notices, addressed mostly in first-party cases, are set forth in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:21 (West Publishing Co. 3d Edition, 2023 Supplements in process).  Decisions in third-party cases are discussed in 1 id., § 3:30.

CALIFORNIA'S UNFAIR COMPETITION LAW, COVID COVERAGE, AND IMPLIED COVENANT BREACH.

With reference to California's Unfair Competition Law specifically, it may be "that allegations sufficient to support a cause of action for breach of the covenant of good faith and fair dealing are also sufficient to support a claim for violation of the UCL."  Shusha, Inc. v. Century-Nat'l Ins. Co., 87 Cal. App. 5th 250, 303 Cal. Rptr. 3d 100, 114 n. 11 (Cal. 2d DCA, Div. 7 2022) (COVID insurance coverage case involving a commercial policy for lost business income; Century-National did not dispute that possibility in this case), review granted, 307 Cal. Rptr. 3d 1, 527 P.3d 271 (2023).

Express Statutory Causes of Action in first-party cases in the United States are discussed in Section 9:14 of 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Company 3d Edition, 2023 Supplements in process).

This blog article ©2023 Dennis J. Wall.  All rights reserved.

THE ORIGIN OF FIRST-PARTY "BAD FAITH" IN MINNESOTA.

    "In 2008, the Minnesota Legislature created a private cause of action for bad faith in first-party insurance."[1]  The Minnesota statute is Minnesota Statute Section 604.18.[2]

    The Eighth Circuit quickly and clearly summarized the statute in 2022:

    To make a bad faith claim, the insured must establish both that the insurer lacked a reasonable basis for denying the insurance benefits and that the insurer knew it lacked a reasonable basis for denying benefits or acted in reckless disregard of the lack of a reasonable basis.[3]

Or, as the Minnesota Supreme Court put it in a slightly lengthier interpretation, reaching the same result: 

    Several things are clear from the plain text and structure of the statute. First, the burden rests with the insured to prove that the insurer violated the standard of conduct. Second, to prevail, the insured must establish two independent facts: (1) the insurer did not have a reasonable basis for denying the benefits of the insurance policy, and (2) the insurer either knew it lacked a reasonable basis for denying the benefits or it recklessly disregarded the fact that it lacked a reasonable basis for denying the benefits.[4]

 

[1] Friedberg v. Chubb & Son, Inc., 800 F. Supp. 2d 1020, 1025 (D. Minn. 2011) (Keyes, United States Magistrate Judge). 

[2] Minn. Stat. § 604.18 (West; Westlaw current with legislation effective through April 19, 2023 from the 2023 Regular Session).  By its terms, the Minnesota statute allows for an award of costs and attorney's fees under certain conditions.

[3] Wobig v. Safeco Ins. Co. of Am., 40 F. 4th 843, 848 (8th Cir. 2022) (construing and applying Minn. Stat. § 604.18 subd. 2(a)).

[4] Peterson v. W. Nat'l Mut. Ins. Co., 946 N.W.2d 903, 910 (Minn. 2020).

 

Express Statutory Causes of Action in first-party cases in the United States are discussed in Section 9:14 of 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Company 3d Edition, 2023 Supplements in process).

This blog article ©2023 Dennis J. Wall.  All rights reserved.

TWO BITES AT THE "BAD FAITH" APPLE IN NEVADA?

In Nevada, violation of an unfair claims settlement practices statute is apparently separately actionable from the implied duty of good faith and fair dealing.[1] 

 

[1] See Rosas v. GEICO Cas. Co., 365 F. Supp. 3d 1123, 1126-27 (D. Nev. 2019).

Express Statutory Causes of Action in first-party cases in the United States are discussed in Section 9:14 of 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Company 3d Edition, 2023 Supplements in process).

This blog article ©2023 Dennis J. Wall.  All rights reserved.

IS THERE A CONFLICT BETWEEN CONSUMERS AND POLICYHOLDERS?

There is a conflict in the case law as to whether insurance companies can be sued for insurer bad faith conduct under Unfair Trade Practices Acts.  The source of the conflict may lie in the language of the Consumer Protection Laws themselves.  For example, the Court held in Booker v. USAA Gen. Indem. Co., No. 22-1829, 2022 WL 2209287, at *2-*3 (E.D. Pa. June 21, 2022):

Count III of Plaintiff's Complaint asserts a claim under Pennsylvania's Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 P.S. §§ 201–1 et seq., arising from USAA's “conduct and handling” of his UM claim. This claim will be dismissed with prejudice because the UTPCPL does not extend to claims arising out of the handling of insurance claims.

* * *

The UTPCPL applies to conduct surrounding the insurer's conduct in forming the contract.

* * *

The allegations here all relate to USAA's handling of an insurance claim, with no allegations as to misconduct in the sale of the policy. Count III of the Complaint will therefore be dismissed with prejudice.

This conflict is broken down for use in litigated cases and in the prevention of insurer bad faith, in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:14, (West Publishing Company 3d Edition, 2023 Supplements in process).

Please see the disclaimer.  This Blog article ©2023 Dennis J. Wall.  All rights reserved.

INSURER BAD FAITH, INSURER LITIGATION CONDUCT: WHEN IS IT ACTIONABLE?

(Shepard's/McGraw-Hill brochure c. 1985)

In an insurance coverage case, a federal Magistrate Judge in Pennsylvania denied the plaintiffs' motion for leave to amend to state claims for insurer bad faith.  The proposed amendment was grounded on the alleged litigation conduct of the defendant insurer.  The Court's resolution of this issue is instructive:

          Plaintiffs Daniel and Susan Katz's Motion for Leave to File an Amended Complaint (doc. 46) is DENIED. The Katzes argue Defendant USAA Casualty Insurance  Company improperly denied allegations in their Complaint and seek to add allegations and claims of bad faith and breach of contract based on USAA's alleged misconduct. Although an insurer's actions during litigation may support a bad faith claim, such actions must involve more than defensive litigation tactics. [Citations omitted.]  The insurer generally must have taken intentional steps to evade its obligations under the insurance contract or undermine the truth-finding process. [Citations omitted.]  Even if USAA could have been more forthcoming in its Answer and/or produced a more appropriate corporate designee, its responses in the Answer fall within the category of defensive litigation tactics rather than an intentional evasion of its obligations as an insurer. See Answer (doc. 3). The Katzes also may pursue other remedies under the Federal Rules of Civil Procedure to the extent they believe the corporate designee was improper or contradicted USAA's Answer. [Citation omitted.] Because the Katzes' proposed amendments do not support their claims of bad faith or breach of contract, I deny their motion to amend as futile.[1]

 

[1] Katz v. USAA Cas. Ins. Co.,  No. 19-4488, 2021 WL 9031163, at *1 (E.D. Pa. July 19, 2021) (Rice, USMJ). 

The Katz case is one of many cases addressed in Section 9:6, in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Company 3d Edition, 2023 Supplements in process).

Please read the disclaimer.  This Blog article ©2023 Dennis J. Wall.  All rights reserved.

First-Party, Third-Party Bad Faith Different, Even in Florida.

(Black Hole.  Image by NASA)

An outlier observation was made in dicta, well-intentioned dicta if not well-reasoned, but still dicta, in Lewis v. Allied World Spec. Ins. Co., No. 20-cv-20677-ALTMAN/Reid, 2023 WL 2770538 (S.D. Fla. April 4, 2023).

    Citing to Florida Supreme Court decisions in which the Supreme court addressed statutory bad-faith actions under Fla. Stat. § 624.155(1)(b) for alleged bad faith failure to settle, and holding that such statutory actions will always require an underlying determination of liability regardless of whether the statutory bad-faith action has been brought for alleged first-party or third-party bad faith failure to settle, the federal judge concluded from this that all first-party bad faith actions and third-party bad faith actions are always treated the same in Florida.

    Put it down to the fact that this federal judge was appointed in 2019.  He has not been a judge that long.  The only way that this federal judge could have honestly reached such a conclusion is by being ignorant of Florida law in the area of insurer bad faith. 

    Florida is a jurisdiction, for example, where first-party bad faith common law claims do not exist but third-party bad faith common law claims do exist.  In Florida, first-party bad faith claims can only be pursued under the statute addressed by the Florida Supreme Court in the decisions cited by this federal judge, which was otherwise unmentioned in the Lewis opinion.  Thus unburdened by the truth of  Florida insurer bad faith law, the federal judge in Lewis was free to write that Florida courts have always treated "first- and third-party bad-faith claims" the same.  Lewis, 2023 WL 2770538, at *5.

    Not so.  This judicial decision is featured in the context of overwhelming contrary authority in Florida as well as throughout history and the United States, in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:4, The Question of Bad Faith -- Extracontractual Liability of First-Party Insurers as Tort or Breach of Contract:  Differences From Third-Party Claims Situations (West Publishing Company 3d Edition, 2023 Supplements in process).

Please read the disclaimer.  This Blog article ©2023 Dennis J. Wall.  All rights reserved.