Claims and Bad Faith Law Blog

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LITIGATION AND PREVENTION OF INSURER BAD FAITH MARICOPA & PA. HYPERLINKS.

 

 

Dennis J. Wall, No Good Cause, No Dispute, No Protective Order, Maricopa County Lawyer 11 (Maricopa County Bar Ass'n Oct. 2021), Download Article Published Maricopa Lawyer. Oct 2021.

Dennis J. Wall, Access by Nonparties to Discovery, Despite Stipulated Protective Orders:  Just the Beginning?, 24 Civ. Litig. Update 7 (Pa. Bar Ass'n Civ. Litig. Section Fall 2021), Download CivilLitFall2021.

Both articles ©Dennis J. Wall.  All rights reserved.

FLORIDA, STATUTORY BAD FAITH, AND FORCE-PLACED INSURANCE

The Florida Legislature may have added a force-placed insurance, statutory bad faith cause of action when it enacted the following Unfair Method of Competition and Unfair or Deceptive Act or Practice effective June 16, 2021:

(1) Unfair methods of competition and unfair or deceptive acts.--The following are defined as unfair methods of competition and unfair or deceptive acts or practices:

* * *

(z) Sliding.--Sliding is the act or practice of any of the following:

* * *

4. Initiating, effectuating, binding, or otherwise issuing a policy of insurance without the prior informed consent of the owner of the property to be insured.[1]

At least arguably, every homeowner with a mortgage owns the property to be insured.  Force-placing an insurance policy is also at least arguably "initiating, effectuating, binding or otherwise issuing a policy of insurance" on "the property to be insured."  By definition, force-placed insurance policies are placed by force without the prior informed consent of the homeowner.

            The argument that the Florida Legislature has intentionally or otherwise enacted a statutory provision which makes lender force-placed insurance an actionable unfair method of competition or unfair or deceptive act or practice, may be undercut by the Florida Legislature's adoption of the following provision at the same time in the same legislation:

5. Mailing, transmitting, or otherwise submitting by any means an invoice for premium payment to a mortgagee or escrow agent, for the purpose of effectuating an insurance policy, without the prior informed consent of the owner of the property to be insured. However, this subparagraph does not apply in cases in which the mortgagee or escrow agent is renewing insurance or issuing collateral protection insurance, as defined in s. 624.6085, pursuant to the mortgage or other pertinent loan documents or communications regarding the property.[2]

These two subparagraphs which have just been quoted, subparagraphs 4 and 5, respectively, of paragraph (z), subsection (1) of Florida's Unfair Methods of Competition and Unfair or Deceptive Acts or Practices Act or UCDPA,[3] have apparently not yet been reconciled by a court of competent jurisdiction as these words are written.  Their reconciliation remains in the arguments yet to come from practitioners, and others.  However it is worth pointing out that the Florida Legislature could have made subparagraph 4 subject to the same exception as it wrote in subparagraph 5 but it did not do so.

[1] Fla. Stat. § 626.9541(1)(z)4.

[2] Fla. Stat. § 626.9541(1)(z)5 (emphasis supplied).

[3] Fla. Stat. § 626.9541(1)(z)4&5.

There are all kinds of questions about statutory bad faith, including express causes of action, implied causes of action, preemption, civil remedy notices, and damages.  Many of the questions are asked and answered in statutes and interpreted in third-party bad faith cases, see generally 1 DENNIS J. WALL, §§ 3:28-3:30, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, 2022 Supplements in process), and in first-party cases too.  See generally 2 id. §§ 9:14-9:16.

Insurer bad faith ramifications of force-placed insurance are addressed in 2 id. §§ 9:33-9:35.  The whole field of force-placed insurance, also known as lender-placed insurance, and also known as lender force-placed insurance, is a book by itself.   There was no book on the subject so I wrote the first one that I know of.  Still very much in use today, it was published by American Bar Association Publishing in 2015, LENDER FORCE-PLACED INSURANCE PRACTICES.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

LIABILITY CARRIER RESERVED RIGHTS INCLUDING REIMBURSEMENT, RECOVERS INDEMNITY AND DEFENSE EXPENSES.

In a recent opinion, a U.S. District Judge in Massachusetts held that with respect to an underlying action, a liability carrier had no duty to defend or indemnify either of the two parties which the carrier subsequently sued in the carrier's action for declaratory relief and for reimbursement.  The two defendants sued by the carrier are its policyholder and an additional insured, both of whom it defended and for whom it entered into the settlement of the underlying action.

Besides holding that the liability carrier had no duty to defend or indemnify, the Court in this case further held that the carrier is entitled to reimbursement from the defendants.  Berkley Nat'l Ins. Co. v. Granite Telecomm's LLC, ___ F. Supp. 3d ___, No. 21-10626-RGS, 2022 WL 3021107, at *4-*6 (D. Mass. July 29, 2022).

The recent opinion mentions that Berkley, the liability carrier, defended and settled only after being threatened with a  lawsuit under "[Mass. Gen. Laws ch.] 176D," but it does not appear to repeat the significance of the liability carrier's reservation of rights, as the Court did in an earlier Order in this case.

The Court in this case cited its earlier Order as a short-hand reference for the background behind the parties' dispute.  In that earlier Order,  the Court denied the policyholder's and the additional insured's motion for judgment on the pleadings, pointing out that the liability carrier in this case reserved the right to reimbursement from them:

Berkley capitulated, but reserved its right to subsequently deny coverage under the Policy’s bacteria and pollutant exclusion provisions and seek reimbursement.

Berkley Nat'l Ins. Co. v. Granite Telecomm's LLC, Doc. No. 78, Order Denying Motion for Judgment on the Pleadings at 3, filed March 28, 2022 (D. Mass. No. 21-10626-RGS), 2022 WL 899423, at *1.

That made all the difference.  See generally 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:6, Informing the Insured:  Insurer Assertion of Rights to Reimbursement From the Insured of Clearly Noncovered Indemnity and Defense Expense (3d Edition Thomson Reuters West, 2022 Supplements in process).

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

BURDENS OF PROOF OF BAD FAITH--WHO HAS THE BURDENS?

Burdens of proof -- Who Has The Burdens is the title of § 3:95 in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, 2022 Supplements in process).  The burdens of proof in a bad-faith cause of action under Rhode Island law are recognized, although in apparent dicta, in Shannahan v. R.I. Interlocal Risk Mgmt. Trust, 269 A.3d 737, 740 (R.I. 2022).

In that case, the Supreme Court of Rhode Island emphasized that the plaintiff in a bad-faith action must demonstrate the absence of a reasonable basis for denying the claim, or an intentional, reckless failure to properly investigate the claim.   That particular case involved an otherwise unspecified claim "in which plaintiffs had asserted that defendant wrongfully and in bad faith denied plaintiffs' underlying third-party insurance claims[.]"

This apparently was dicta because the Supreme Court had already declared that the plaintiffs were not the defendant's "insureds" and that they were not assignees of any insureds, either, so that they had no standing to pursue a bad-faith cause of action against that carrier.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

THE FILED RATE DOCTRINE: MORE LESSONS FROM THE FIELD.

For good or ill, the filed rate doctrine has been introduced into the field of insurance.   Learning the lessons from the field in which the FRD began, which is the field of utility regulation, is important.  That might seem obvious, but perhaps because the FRD is so new to insurance, few insurance practitioners incorporate learning the lessons from the field of utility regulation into their insurance practice. 

In Wabash Valley Power Ass'n v. Fed. Energy Reg. Comm'n, Nos. 20-1286 & 20-1348, 2022 WL 3036393 (D.C. Cir. Aug. 2, 2022), a utility lost its attempt to bar users from challenging its rate.  The utility-rate-setter declared that a rate could not be challenged  because the charge was "filed" in contracts written by the utility and submitted to the utility by the users who had to sign the contracts.  The contracts contained a provision that the user agreed that the rates it paid to the utility under the contract were fair and reasonable.

The administrative agency, in this case the Federal Energy Regulatory Commission (FERC), rejected the utility's position, and the Circuit Court of Appeals for the District of Columbia affirmed.

The Court's summary was succinct.  The Court's opinion went directly to the point:

    This case presents a question of how to determine the reasonableness of rates  for the sale of electricity from an energy cooperative to its individual member utilities. The rates are fixed by majority vote of the utilities. Contracts between the cooperative and certain members purport to impose a presumption that the rates are just and reasonable. In rejecting these contracts, the Federal Energy Regulatory Commission concluded that the rates are not entitled to a presumption of reasonableness under [Supreme Court decisions].

Wabash Valley Power Association, 2022 WL 3036393, at *1.

A rate can be challenged even if the party setting the rate makes the other parties sign contracts that declare the rate "just and reasonable."  Those in the insurance field who have ears to hear, let them hear, to borrow a Biblical phrase.

Please read the disclaimer.  ©2022 Dennis J. Wall.  all rights reserved.

PLAINTIFF COULD NOT ESTABLISH SUMMARY JUDGMENT, BUT BOTH MOTIONS DENIED.

In Ventrice v. Lexington Ins. Co., No. 16-660, 2022 WL 3013078 (D.N.J. July 28, 2022) (stated NOT FOR PUBLICATION),  the District Judge summarized New Jersey law on insurer bad faith:

To establish a claim for bad faith, a plaintiff must demonstrate that “(1) the insurer lacked a fairly debatable reason for denying coverage, and (2) insurer knew of or recklessly disregarded the lack of a reasonable basis for denying coverage.” Stiso v. State Farm Fire & Cas. Co., No. 13-5741, 2015 WL 7296081, at *9 (D.N.J. Nov. 18, 2015). “A claim is fairly debatable if a plaintiff cannot establish as a matter of law a right to summary judgment on the substantive claim, i.e., the underlying contract claim.” Laing, 2014 WL 4953250, at *3 [Laing v. Am. Strategic Ins. Corp., No. 14-1103, 2014 WL 4953250, at *2 (D.N.J. Oct. 1, 2014)]  (internal citation and quotation marks omitted).

Ventrice, 2022 WL 3013078 (page numbers not available from Westlaw at the time of publication).

In this case, differences in the facts made entering summary judgment for either side impossible in the eyes of the District Judge.  Accordingly, the Court denied both parties' motions for summary judgment on the bad faith counts.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

PRESCRIBING TIMES, PLACES, MANNER HOLDING ELECTIONS ALWAYS SUBJECT, NEVER ABSOLUTE.

The Constitution of the United States provides, in part here pertinent:

The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.

U.S. Const. art. 1, § 4.  Much has been made of this "Elections Clause" by at least 4, maybe 5, Justices currently sitting on the Supreme Court.  See Supreme Power,  published here.

They have advanced a theory that this clause makes State legislatures "independent," meaning not subject to review by anyone or anything except the federal Supreme Court on which they now sit.  Not reviewable by other federal Courts.  Not reviewable by State Supreme Courts or any State Courts at all.  Not subject to State Constitutions.

This was the basis for accepting review in Moore v. Harper.  The North Carolina Supreme Court held that because the legislature's districting legislation violated provisions of the North Carolina State Constitution, the districting was invalid.  This group of federal Justices, confident of a majority vote, shares the collective aim of announcing that the North Carolina Supreme Court's invalidation of Republican-legislated Congressional districts in that case cannot withstand their gaze. 

Under their "independent state legislatures" theory, the districting prescribed by the North Carolina Legislature is not subject to anyone else's review even if, as in this case, the highest Court of the State held that the districting violated a provision of the North Carolina Constitution that guarantees fair and free elections, among other provisions of the North Carolina Constitution.

This theory suffers from many fatal infirmities, not the least of which is that the U.S. Supreme Court has already rejected it.  In fact, in Smiley v. Holm, 285 U.S. 355, 52 S. Ct. 397 (1932), the Court reversed the exact same view now advanced by some of the Justices currently sitting in Washington. 

Without getting too much into the weeds, as they say, in Smiley the Supreme Court of Wisconsin held that the State legislature was independent of review even if the Wisconsin Legislature's redistricting legislation was vetoed by the Governor of Wisconsin.  The U.S. Supreme Court detailed this history in Smiley, 285 U.S. at 364-65, 52 S. Ct. at 398-99.

The U.S. Supreme Court held that Article 1, Section 4 of the U.S. Constitution provides that the exercise of authority under that clause "must be in accordance with the method which the state has prescribed for legislative enactments."  Smiley, 285 U.S. at 367, 52 S. Ct. at 399.  Wisconsin's method of enacting legislation was and is the method followed in most if not all States today:  Legislative bills have to be presented to the governor for approval.   A legislative measure "redistricting the state for congressional elections" was  therefore subject to review by the Governor of Wisconsin, like any other legislative measure in Wisconsin.  Smiley, 285 U.S. at 363-64, 52 S. Ct. at 398.

Since in this case the Governor of Wisconsin had vetoed the redistricting bill enacted by the Legislature of Wisconsin when he "returned it without his approval," Smiley, 285 U.S. at 361, 52 S. Ct. at 397, the bill did not become law.  Instead, it was invalid because it did not pass review by the governor.

In Moore v. Harper, the same Elections Clause is raised because the North Carolina Legislature's gerrymandered districting did not pass review by the North Carolina Supreme Court under the North Carolina Constitution.  There really is no difference with past precedent concerning the  Elections Clause in the federal Constitution, and that's the point.

Helen White has pointed out at Justsecurity.org that as recently as 2019, a different makeup of the U.S. Supreme Court held unanimously that State Constitutions could trump State Legislatures' partisan gerrymandering in congressional elections despite the Elections Clause in the federal Constituiton.  Rucho v. Common Cause, ___ U.S. ___, 139 S. Ct. 2484 (2019).  

In 2015, a different majority of Justices rejected the idea that state legislatures are independent authorities by upholding the use of independent redistricting commissions in federal elections to prescribe the "times, places and manner of holding elections for senators and representatives," to again use the words of Article 1, Section 4 of the U.S. Constitution. Ariz. St. Legis. v. Ariz. Indep. Redistrict. Comm'n, 576 U.S. 787, 135 S. Ct. 2652 (2015).

The same four or five Justices who push their unique "independent state legislatures" theory in 2022 are the same Justices who have no use for precedents or for previously settled law.  Rather, they share the view that what they say is the law, rather like their view that State Legislatures are not reviewable except, perhaps, by them or by some other group of Justices who have enough votes.  Their unyielding view is obviously established already; it will not be changed by legal reasoning or resort to things previously decided.

What can be done?  What is a just response to judges making law by lining up votes rather than reasons?

To be continued soon on Claims and Issues Blog, where related issues have previously been addressed.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

THE LESSON OF LINGERING CORONAVIRUS AND OF COVERAGE IS PERSISTENCE.

This article is adapted in part from § 7:20 Virus Exclusions and the Coronavirus Pandemic of Covid-19 in the forthcoming CATASTROPHE CLAIMS:  INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS (Thomson Reuters November 2022 Edition) ©THOMSON REUTERS.

It is worth considering the facts behind the "disease contamination" claim that the policyholder made in Dental Experts, LLC v. Massachusetts Bay Insurance Co.[1]  Dental Experts, the policyholder, operates 73 dental offices along with its affiliates in 9 states and the District of Columbia.  All of them were covered by an insurance policy which contained the following "disease contamination provision":

We will pay the actual covered loss of “business income” or “extra expense” you sustain due to the necessary “suspension” or delay of your “operations” during the “period of Restoration”. The “suspension” must be caused by a disease contamination event declared by the National Center for Disease Control, or the applicable city, county or state Department of Health.[2]

The coronavirus pandemic spread to the states in which Dental Experts and its affiliates were located.  State and local authorities across the country issued orders "suspending the operations of nonessential businesses."[3]  The Dental Experts practices complied and lost business income.

            For present purposes, perhaps the most significant aspect of this case is that Dental Experts made a claim after reading their policy.  They did not rely on what someone told them about how hard it was and still is to claim Business Income coverage.  They did not rely on the headnotes attached to cases involving other kinds of insurance policies.  To say again, they read their policy and they made a claim.

            Their insurance carrier "concluded that Dental Experts was entitled to coverage under the disease contamination provision" and paid indemnity under the policy.[4]  If Dental Experts had not made a claim under the disease contamination provision we would never have seen this case in which Dental Experts and its carrier argued not whether the disease contamination coverage applied, but for how much.

            "Nothing has quite tested the principles of insurance law more in recent memory than the COVID-19 pandemic."[5] 

 

[1] Dental Experts, LLC v. Massachusetts Bay Ins. Co., No. 20 C 5887, 2022 WL 2528104 (N.D. Ill. July 7, 2022).

[2] Dental Experts, 2022 WL 2528104, at *1.

[3] Dental Experts, 2022 WL 2528104, at *1.

[4] Dental Experts, 2022 WL 2528104, at *1 (emphasis added).

[5] Sunstone Hotel Investors, Inc. v. Endurance Am. Spec. Ins. Co., No. SACV 20-02185-CJC(KESx), 2022 WL 2206900, at *1 (C.D. Cal. June 15, 2022).

Please read the disclaimer.  This blog article ©2022 Dennis J. Wall.  All rights reserved.

COURT BIFURCATES, STAYS COVID-19 BAD FAITH CLAIMS.

In Procaccianti Cos. v. Zurich Am. Ins. Co., No. 20-512WES, 2022 WL 2802357, at *4 (D.R.I. July 18, 2022) (USMJ), a Magistrate Judge in Rhode Island granted Zurich American's motions to bifurcate Procaccianti Companies' COVID-19 bad faith claims under Fed. R. Civ. P. 42.

The Magistrate Judge also granted Zurich American's motion to stay all discovery on the COVID-19 claims until coverage had been determined in Procaccianti Companies' favor.

Here is the brief but important background.  Procaccianti Companies operates hotels. Zurich American issued a commercial all-risks property insurance policy to Procaccianti. COVID-19 came.  Procaccianti Companies allegedly lost business and so was damaged as a result.

Procaccianti sued its all-risks property insurance carrier on several grounds including breach of contract and alleged bad faith.

The upshot of the Magistrate Judge's ruling in this case, which is consistent with similar rulings in many other jurisdictions, is that the policyholder will have to prevail on its coverage claims before it can proceed on its bad faith claims.  See generally 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:24, Other Defenses:  Defenses Potentially Available in All Claims and Cases of First-Party Insurance Bad Faith (Thomson Reuters West 3d Edition, 2022 Supplements in process).

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

REASONABLENESS IS A QUESTION OF FACT IN BAD FAITH CASE.

In Robinson v. Charter Oak Fire Ins. Co., No. 20-cv-1534-RMR-MEH, 2022 WL 2753524 (D. Colo. May 26, 2022), the Court applied Colorado law to first-party bad faith claims.  So far as bad faith cases are concerned, the issues in this case under Colorado law are determined in the same way as most if not all other American jurisdictions:

Insurance bad faith claims by their nature present questions of fact unsuitable for resolution on summary judgment except in limited circumstances. Therefore, whether an insurer's conduct was reasonable under the circumstances is ordinarily a question of fact for the jury.

Robinson, 2022 WL 2753524, at *2.  And so it was in this case.

There were two claims for bad faith at issue here.  One was for alleged Colorado statutory bad faith, which put the reasonableness of the carrier's conduct at issue in this case.  Robinson, 2022 WL 2753524, at *2.  The other bad faith claim was for alleged Colorado common law bad faith, which also put reasonableness at issue so far as the carrier's conduct is concerned here.  Robinson, 2022 WL 2753524, at *3.

Accordingly, the Court in this case denied the carrier's motion for summary judgment on both counts of first-party bad faith.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

SANCTIONING BAD FAITH CONDUCT OF ATTORNEYS, PARTIES: INHERENT v. STATUTORY AUTHORITY.

Federal courts, it has been held, have at least two kinds of authority to sanction bad faith conduct of attorneys and parties.

One source of their authority is inherent.  A federal court can sanction a lawyer or a party for acting in bad faith, vexatiously, wantonly or for oppressive reasons.  The standard for imposing inherent sanctions is subjective.  JQ Adams & Sons, Inc. v. Scottsdale Ins. Co., NO. 3:21-cv-492-TJC-PDB, 2022 WL 2643587, at *6 (M.D. Fla. July 8, 2022) (Barksdale, USMJ).

A second source of their authority is under 28 U.S.C.A. § 1927.  The statute authorizes sanctions for unreasonable and vexatious conduct,  which has been held to mean virtually the same thing as bad faith.  The standard is objective.  When the standard is applied to lawyers, the standard measures the conduct of the particular lawyer at bar, against how a reasonable lawyer would have acted.  JQ Adams & Sons, Inc. v. Scottsdale Ins. Co., NO. 3:21-cv-492-TJC-PDB, 2022 WL 2643587, at *6 (M.D. Fla. July 8, 2022) (Barksdale, USMJ).

Whatever the source of sanctions authority, sanctions for bad faith conduct is definitely not good faith.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

ACTIONABLE BAD FAITH DURING LITIGATION MORE THAN COMMON DEFENSIVE TACTICS.

In the course of an insurance coverage case, a federal Magistrate Judge in Pennsylvania was confronted with a motion for leave to amend.  The plaintiffs sought leave to amend their complaint to allege counts for insurer bad faith based on the 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.

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

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

THE QUESTION OF FIRST-PARTY BAD FAITH--INVESTIGATION AND EVALUATION.

The question of bad faith involves insurance carriers' timely investigation and evaluation of claims against policyholders.  In many jurisdictions, the question of bad faith also involves the carrier's conduct before and after the bad faith lawsuit is filed.  See generally 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:6, The Question of Bad Faith -- Timely Investigation and Evaluation Before And After The First-Party Insurer is Sued for Bad Faith (West Publishing Co. 3d Edition, 2022 Supplements in process).

An opportunity for extracontractual exposure based on investigation and evaluation came in Nikfard v. State Farm Fire & Casualty Co.,[1] a first-party case involving loss from a fire.  The fire in that case damaged a rental house owned by the plaintiff policyholder, who made a claim for the damage caused by the fire.  His "first-party property insurance" carrier accepted coverage.  The carrier recommended that the policyholder contact a certain general contractor who doubled as an insurance restoration specialist, which he did.

The g.c. prepared a preliminary estimate of the cost of restoration of the policyholder's house, using a computerized program called Xactimate.  The Xactimate program is familiar both to insurance companies and to coverage practitioners. 

In this case, the evaluation was only intended to be preliminary.  It was never intended to be the basis for the g.c. performing the restoration work.  The preliminary evaluation was $149,900.86.[2]    The carrier seized upon this figure and this computer report and never let go.  However, the evidence showed that the repairs would realistically take at least $100,000.00 more than that before restoration was finished on this particular house.

In fact, the restoration project ultimately cost $334,470.00.  Before the project ended, the carrier paid $174,071.94.

Before the case was over, the carrier would pay $429,702.32.

The policyholder sued, alleging several claims.  One was for breach of contract.  He prevailed on this claim and received $160,398.06, which was the difference between what the project ultimately cost and what the carrier paid.[3] 

The policyholder's final claim among several claims he alleged, was brought under the Consumer Protection Act in Washington.  This claim was successful in generating an award of the policyholder's attorney's fees.  He recovered attorney's fees in the amount of $261,964.00 and costs in the amount of $7,339.36.  He proved his CPA claim in part by proof of a violation of an Unfair Claim Settlement Practices Regulation which has the force of law in Washington, and generally if not identically follows the Uniform Unfair Claim Settlement Practices Acts promulgated by the National Association of Insurance Commissioners and in force across the country.[4] 

In the end, the carrier's reliance on its original investigation and evaluation until the bad faith trial came to an end, cost it another quarter of a million dollars.

 

[1] Nikfard v. State Farm Fire & Cas. Co., No. C19-6001RSL 2021 WL 3620277 (W.D. Wash. August 16, 2021).

[2] Nikfard, 2021 WL 3620277, at *1.

[3] Nikfard, 2021 WL 3620277, at *4.

[4] See WALL, supra, §§ 9:14 (Express statutory causes of action) and 9:15 (Implied statutory causes of action), infra.  The effects of the UCSP Acts in third-party or liability insurance cases are discussed in § 3:28, supra.)

Please read the disclaimer.  This blog article ©2022 Dennis J. Wall.  All rights reserved.

DECLARE YOUR INDEPENDENCE! MAKE EVERY DAY HOPEFUL.

DO WHAT YOU CAN DO.

I am only one, but I am one.

I can do something.

That which I can do, I ought to do.

And that which I ought to do,

By the Grace of God,

I shall do.

I do not know where I first came across this saying.  It seems to me that it applies today every bit as much as it has applied throughout my life, always.

There are people who despair of many things in this country right now.   They could do far worse than putting this saying into effect.  At the moment, nothing attracts more despair than the recent decision of a majority of the U.S. Supreme Court in Dobbs v. Jackson Women's Health Organization.  This is the decision which overruled Roe v. Wade and Casey, rejecting privacy rights over reproductive decisions, with more decisions to come apparently.

Many people say there is nothing to be done.

They are wrong.  They probably mean to say that it will take a long time to overrule Dobbs and to restore privacy rights over reproductive decisions.  But there is definitely something that can be done right now.

Introduce legislation which will enact the law of privacy rights over reproductive decisions.  Base the legislation on Roe v. Wade and Casey as much as those judicial decisions will translate to legislative bills, sure.  But introduce legislation which will enact privacy rights over reproductive decisions.

In the U.S. Congress, we can only be certain that there will be an outcome in the House of Representatives.  We also can be certain what that outcome will be in this case:  The legislation will pass and it will be sent to the U.S. Senate for action there.  Perhaps legislation like this has already passed the House and has been sent to the Senate already.

Leave to the Senate what the Senate will do.

If the measure has passed the House already, pass it again.  Send it again to the Senate. 

Then do it again.

In the Senate, call for a vote.  Filibusters may prevent votes on the substance of the bills, meaning filibusters prevent votes on the bills themselves.  That's fine also.  Regardless, there must always be votes on what the Senators call cloture motions, which are motions to end a filibuster.  Let the cloture votes be recorded, again and again, of all those people in the Senate who deny votes on privacy rights for reproductive decisions.

Record those votes.  There is nothing that politicians fear and dislike more than having their unpopular votes recorded and made public.

Over and over again.

If one of the bills passes both the Senate and the House, perhaps some will say that the process is fruitless because the Supreme Court will strike it down just as a present majority overruled Roe and Casey.  Well, then, if that is the case pass it again.

If the bill passes in 2022, for example, and the Supreme Court strikes it down, when another bill passes – with identical language – say in 2023, the Court did not strike that Act down yet, just the one that passed in 2022.  The current majority think they have the final word?  Let them write the final word, endlessly.  In the meantime, there is more to be done, including in the States.

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

BAD FAITH IS TYPICALLY IN THE FACTS.

"Typically, the question of whether an insurer acted in good faith toward its insured in resolving a claim is an issue of fact for the jury."  Firtell v. USAA Cas. Ins. Co., 332 So. 3d 537, 538-39 (Fla. 4th DCA 2022).

See generally 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:5, The Question of Bad Faith--Presence or Absence of Fault (West 3d Edition, 2022 Supplements in process). 

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

"EMBARRASSED" PORN VIEWERS, PSEUDONYMOUS PARTIES, & SEALING COURT RECORDS: WHAT'S REQUIRED.

The question of sealing the identity of defendants sued by Strike 3 Holdings, LLC is now a thing.  Strike 3 has settled with anonymous defendants in several recent cases in which the defendants are known only by their IP addresses.  The issue in all of these cases is whether the defendant can remain pseudonymous, that is, known only by the pseudonym such as "John Doe subscriber assigned IP address [fill in the blank]."

Two cases decided one day apart will illustrate the issue.  The question was presented "by way of a joint motion to seal" pursuant to Local Civil Rule 5.3 in the case of Strike 3 Holdings, LLC v. John Doe subscriber assigned IP address 108.11.13.20, No. 1:21-cv-17860-NLH-MJS, 2022 WL 2274473 (D.N.J. June 23, 2022) [hereinafter "Strike 3 v. IP address 108.11.13.20"]. (Local Rule 5.3 in the District of New Jersey merits further comment in another article, to be posted here.)   Strike 3 is described in that case as  "the purported owner of copyrights in 'adult motion pictures'[.]"  Strike 3 v. IP address 108.11.13.20, 2022 WL 2274473, at *1.

 In a case decided the day before in the Eastern District of Pennsylvania, the District Judge wrote that the same  "Strike 3 Holdings, LLC produces and distributes pornographic films."  Strike 3 Holdings, LLC v. John Doe subscriber assigned IP address 108.52.236.56, No. 21-5178, 2022 WL 2276352, at *1 (E.D. Pa. June 22, 2022) [hereinafter "Strike 3 v. IP address 108.52.236.56"].

To say again, these two cases illustrate the issue of pseudonymous defendants sued by Strike 3 for their "embarrassing" use of porn such that they settled with Strike 3 and sought to seal their identities because they would be embarrassed if they were identified to the public.

The District Court in New Jersey stated and applied the same Third Circuit law that governed the decisions and led to  the same result  in both cases.  In the New Jersey case, the parties jointly moved to seal the defendant's identity after they settled the plaintiff's claim, whereas in the Pennsylvania case the plaintiff filed the motion to seal after the parties settled.

 The reasons the parties gave for sealing court records  in the New Jersey case are typical:  The parties alleged that "present and prospective  employers" might potentially discover the defendant's involvement in the case "resulting in adverse employment consequences," irreparably tarnishing the defendant's reputation, "and financial losses."  The parties did not identify what "consequences," reputational hits, or  "financial losses" they had in mind in requesting that the defendant's identity be sealed from public view in the amended complaint, the civil cover sheet, a return of summons, and "a declaration of John Doe," the defendant.  The parties' supports were simply not enough to  make the required showing to seal even these documents.  Strike 3 v. IP address 108.11.13.20, 2022 WL 2274473, at *2.

What is required to seal any document in a  court file is specificity.  Mere recitations of embarrassment are not ordinarily enough under Third Circuit case law.  In the New Jersey case, therefore, "[t]he generality of this harm is not sufficient to overcome the presumption of access to court records."  Strike 3 v. IP address 108.11.13.20, 2022 WL 2274473, at *2.

The result in the Pennsylvania case was the same under Third Circuit case law and a similar record.  See Strike 3 v. IP address 108.52.236.56, 2022 WL 2276352, at *2 ("Potential embarrassment is not enough.").

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Dobbs v. Jackson Women's Health Org.

 I always thought that the job of judges was to protect rights.

Until Sam Alito and his gang, I never thought that judges would take established rights away.

There is more to come, I am afraid.  See SUPREME POWER published here on May 25, 2022.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

WHEN PROPERTY CARRIERS RECOUP FROM INSUREDS WHAT THEY PAY TO MORTGAGEES.

In some cases, property carriers can recoup the amounts they paid to mortgagees from their own insureds, the mortgagors.  “Stated another way, ‘[W]hen an insurer pays a mortgagee for loss from an insured’s  arson, the property insurer is entitled to recoupment and restitution of that amount from the insured.’”  Allstate Indem. Co. v. Dixon, No. 6:14-cv-03489-MDH, 2018 WL 11427943, at *7 (W.D. Mo. March 30, 2018), aff’d with opinion, 932 F.3d 696 (8 th Cir. 2019).

When one insured’s act destructive of coverage binds its co-insureds, there is simply no insurance coverage available for damage or loss that results from the destructive act.  This principle appears broad enough to apply even in cases involving destructive acts besides setting fires.  “Where an insurer makes mortgage payments to a mortgagee on the insured’s  behalf because it is required to do so by the policy, and a determination is later made that the insured was not entitled to coverage under the policy, the insured has no right to benefit from the payment.”  Allstate v. Dixon, 2018 WL 11427943, at *8.

In this case, a jury previously found that a destructive fire was set by or at the direction of a husband.  The Court ruled under Missouri law that this act of the husband bound his co-insured wife under their Allstate property insurance policy.  Accordingly, the Court granted the carrier’s “motion to recoup the mortgage payment made to the [mortgagees by the mortgagors-insureds] in the amount of $107,526.29,” among other things.  Allstate v. Dixon, 2018 WL 11427943, at *9, aff’d, 932 F.3d at 703.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.     

DO YOU KNOW THE DIFFERENCE BETWEEN "INDEMNITY RESERVES" & "CLAIM RESERVES"?

In Luxottica of Am. Inc. v. Allianz Global Risks US Ins. Co., No. 1:20-cv-698, 2022 WL 1204870 (S.D. Ohio April 22, 2022),  what the Court identified as "indemnity reserves," the Court held to be protected work product under federal civil procedure in a third-party bad faith case.  Confused yet?  The Court itself was unsure of the exact distinction between "indemnity reserves" and "claim reserves."   Nonetheless, the Court thought itself clear enough on the concepts at issue in this case to rule that indemnity reserves such as in the case at bar designate reserves that are directly related to the carrier's exposure to its insured given the claims involved.  It was such reserves that the Court addressed when it ruled that they are protected work product under federal civil procedural rules in this third-party bad faith case.   Luxottica, 2022 WL 1204870, at *1-*2.

See also 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 8:6 Home Office Claims Files and Setting of Reserves (3d Edition West Publishing Co., 2022 Supplements forthcoming).

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Ocasio v. C.R. Bard: READING THE LOCAL RULES ONE YEAR LATER.

Ocasio v. C.R. Bard, Inc., No. 8:13-cv-1962-CEH-AEP, 2021 WL 2477259 (M.D. Fla. June 17, 2021) was decided on June 17, 2021.

Three were 7 lawyers of record by my count.  Four were from outside Florida.  These 4 were obviously the lead counsel and the remaining lawyers apparently served as local counsel.

The decision in this case by Judge Honeywell was to deny unopposed motions of the plaintiffs and of the defendants to seal certain deposition transcripts.  The parties jointly requested the Court to seal “53 deposition transcripts that the parties intend to play at trial.”  Ocasio, 2021 WL 2477259, at *1.

The Court denied this unopposed joint request to seal testimony for several reasons.

First, the defendants represented to the Court that sealing the entire set of 53 deposition transcripts was the narrowest method they knew of keeping proprietary information confidential.  Judge Honeywell’s answer was that “the Court finds this blanket statement to be unsupported and improbable.”  Ocasio, 2021 WL 2477259, at *2.

Next, the parties proposed to read or play the depositions “in open court and thus the matter will not be kept confidential from any member of the general public attending the trial.”    Ocasio, 2021 WL 2477259, at *2.

Third, the fact that the parties declared these transcripts to be confidential did not by itself make them confidential.  Ocasio, 2021 WL 2477259, at *2.

In short, for all these reasons the parties did not jointly show “good cause” and they did not in their unopposed motions overcome the presumption of public access to these documents.  Ocasio, 2021 WL 2477259, at *2.  But none of these reasons was the main reason for decision here.

The most important reason for denying the parties’ joint unopposed motions to seal was that they apparently did not read Middle District of Florida Local Rule 1.11(a).  Whether they read it or not, they obviously did not follow it.  If they had, they might have succeeded.  Local Rule 1.11(a), relied on by the Court as a basis for its Order, provides in full as follows:

Rule 1.11 - Filing Under Seal in a Civil Action

• PUBLIC RIGHT OF ACCESS. Because constitutional law and common law afford the public a qualified right of access to an item filed in connection with the adjudication of a claim or defense, sealing is unavailable absent a compelling justification. Sealing is not authorized by a confidentiality agreement, a protective order, a designation of confidentiality, or a stipulation.

M.D. Fla. Local Rule 1.11(a) (emphasis added).

The lesson for practitioners is pretty well summarized (if I do say so myself) in the title of my Letter to the Editor about the Ocasio v. C.R. Bard decision, published in the August 1, 2021 edition of The Florida Bar News:  Read The Local Rules.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

A COURT EXPLAINS WHY REINSURANCE WORLD IS A SPECIAL PLACE.

A federal Court applying Illinois law recently held that there is no statutory bad-faith claim against a reinsurer's agents under 215 Ill. Comp. Stat. (ILCS) 5/155 because that statute does not apply to reinsurance contracts or to reinsurers' agents.  The federal Court followed a legion of State Court decisions.  Stonegate Ins. Co. v. Fletcher Reins. Co., No. 21 CV 3523, 2021 WL 5769528, at *7-*8 (N.D. Ill. December 6, 2021).  As the Court wrote:  "Given this precedent, it is clear that Section 155 does not permit a bad faith claim to be brought against a reinsurer’s agents, such as the Defendants. In other words, Stonegate cannot bring a claim against Defendants under Section 155, because Section 155 pertains only to insurance contracts – not reinsurance contracts."  Stonegate, 2021 WL 5769528, at *8 (emphases by the Court).

See generally 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 6:11, Primary And Excess Insurers And Reinsurers:  A Working Definition of Reinsurance--The Effect of Reinsuring Agreements or Treaties (3d Edition Thomson Reuters West, 2022 Supplements in process).

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

EXCESS CARRIERS AND PRIMARY CARRIERS IN NEW JERSEY, AND BEYOND.

When a court describes the importance of excess vs. primary coverage, it is a beautiful thing to excess carriers and their coverage counsel.  In CNA Ins. Co. v. Selective Ins. Co., 354 N.J. Super. 369, 383, 807 A.2d 247, 255 (N.J. Super. Ct. App. Div. 2002), the court stated it this way:

    Whether a carrier provides true excess coverage or primary coverage with an excess “other insurance” clause is meaningful. In a true primary-excess relationship between insurance companies, the excess carrier has a reduced risk of exposure and an increased reliance on the primary carrier.  [Citation omitted.] The true excess carrier may rely on the primary carrier to act reasonably in (1) discharging its claims-handling obligations; (2) discharging its defense obligations; (3) properly disclosing and apprising the excess carrier of events which are likely to effect that carrier's coverage; and (4) safeguarding the rights and interests of the excess carrier by not placing the primary carrier's own interests above that of the excess insurer. 

CNA Insurance v. Selective Insurance, 354 N.J. Super. at 383, 807 A.2d at 255.

Please read the disclaimer.  This blog article ©2022 Dennis J. Wall.  All rights reserved.

LISTENING AS THE WITNESS TESTIFIES.

One of the things that lawyers need to do better when they take depositions is listen to what the witness has to say.

I heard Mr. Bill Stepien testify today by deposition at the Jan 6 Committee Hearing.  He testified that he told the Grievance Boy about the so-called “Red Mirage” phenomenon.  That is a mirage caused when in-person votes are counted on Election Day, and Republican (“Red”) candidates often tend to be in the lead until early voting, absentee, and mail-in ballots are counted later.  The whole counting process can takes days.  For those reasons, in 2020 Mr. Stepien counselled against declaring victory on Election Night based only on the in-person vote totals, because it was just too early.

I heard Mr. Stepien also testify in his deposition testimony that was “read” (or more accurately, seen and heard via video), that he told the Grievance Boy this in 2016 as well.  He testified several times, actually, that he had done this in 2016.  And that was only in the small portions of his deposition testimony that we could see and hear today.

So, the Grievance Boy knew in 2016 that we cannot know who won a national election until all the votes are counted, not just the in-person votes that are counted on Election Day.

I did not hear any follow-up questions or testimony, but as I say, I did not hear (or “read”) the entire deposition.  Certainly, I did not hear any mention of that testimony about Mr. Stepien’s counsel in 2016 at today’s Hearing, and I did watch the entire Hearing.

I hope there was follow-up at the deposition, and that there will be follow-up now both during the Committee’s remaining investigation and during the Department of Justice’s investigation, if any, of the January 6 Attack on the U.S. Capitol.  As I said toward the beginning, one of the things that lawyers need to do better is listen to what the witness is actually saying.  Sometimes we get so tied up in what we want to ask witnesses that we may not pay enough attention to the witnesses’ testimony.  After all, the testimony is why the lawyers and witnesses are there in the first place, whether the testimony is developed in a deposition or at trial.

In the end, it may also be true that one of the things that everyone receiving witness testimony needs to do better – not just the lawyers asking the questions -- is to listen to what the witnesses are saying.

Were you listening today, Merrick?

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

PROVIDED DEFENSE COUNSEL: LIABILITY TO THE INSURER FROM DEFENDING INSURED?

It seems that things have changed somewhat in Florida with the decision in Arch Ins. Co. v. Kubicki Draper, LLP, 318 So. 3d 1249 (Fla. 2021).  In Kubicki Draper, the Florida Supreme Court answered the following question certified to it by Florida's Fourth District Court of Appeal:

WHETHER AN INSURER HAS STANDING TO MAINTAIN A MALPRACTICE ACTION AGAINST COUNSEL HIRED TO REPRESENT THE INSURED WHERE THE INSURER HAS A DUTY TO DEFEND.

Kubicki Draper, 318 So. 3d at 1251.  The Supreme Court answered this question "in the affirmative," then quashed the Fourth District's decision and remanded.  To be clear here, the liability insurance carrier Arch was the entity that retained Kubicki Draper, LLP to defend Arch's insured.  Kubicki Draper, 318 So. 3d at 1251.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

CIVIL REMEDY NOTICE: FOCUS ON THE SPECIFICS.

In Gooden v. People's Trust Insurance Co.,[1] Florida's Fourth District Court of Appeal decided an issue of Civil Remedy Notice specificity:  The essence of Civil Remedy Notice specificity is that a Civil Remedy Notice can contain quotations of provisions of Florida's Bad Faith Statute, and provisions of Florida's version of the NAIC's Unfair Settlement Practices Act, and still meet the Bad Faith Statute's specificity requirements.[2] 

More to the point, every one of the nine statutory provisions Ms. Gooden quoted in her CRN were relevant to her Bad Faith claim against People's Trust.  Her CRN's invocation of just one of her insurance policy provisions was also relevant.  As the Fourth District panel described the CRN:

Gooden's civil remedy notice cited nine statutory provisions and a single policy provision, listing only the statutory and policy provisions relevant to his [sic] allegations.[3]

Further, Gooden's CRN explicitly stated what the carrier would need to do to cure its alleged bad faith. 

In the judgment of the Fourth District, this specificity distinguished Ms. Gooden's CRN from the CRN involved in Julien v. United Property & Casualty Co.[4]  Julien was the subject of an earlier article posted here.  The Fourth District decided both cases, Gooden and Julien.

In the judgment of the trial court, in contrast, the Gooden CRN looked like the Julien CRN and so the trial judge dismissed Gooden's statutory bad faith claim for supposed failure "to meet section 624.155's specificity requirements."  However, in Gooden,  the Fourth District had a different judgment, and so the Fourth District said, "We reverse."[5] 

 

[1] Gooden v. People's Trust Ins. Co., 336 So. 3d 331 (Fla. 4th DCA 2022).

[2] The statute's specificity requirements are set out in Fla. Stat. § 624.155(3)(b).

[3] Gooden, 336 So. 3d at 332 (emphasis added). 

[4] Julien v. United Prop. & Cas. Co., 311 So. 3d 875 (Fla. 4th DCA 2021). 

[5] Gooden, 336 So. 3d at 331.

 

Please read the disclaimer.  This blog article ©2022 Dennis J. Wall.  All rights reserved.

SUPREME POWER.

There is a theory by which some members of the U.S. Supreme Court want to exercise supreme power.  A combination of things -- inadequate legal reasoning and bad historical research --   may be why this theory has not appeared in any of the U.S. Supreme Court's majority opinions as yet.  It can only be found in citations to some long-ago concurring opinions and to a few modern dissents.

This theory is often called the Independent State Legislatures Theory, but it is broader than its name.  It posits that State Legislatures have really been "independent" of any other decider of State law issues since 1789 when the U.S. Constitution was adopted.  This theory does not account for the fact that State Legislatures could not exist unless State Constitutions provide for them.  They have no "independent" existence separate and apart from the State Constitutions that authorize them.

This theory is generally traced to a concurring opinion written by then-Chief Justice Rehnquist in Bush v. Gore, 521 U.S. 98, 121 S. Ct. 525 (2000).  The crux of Chief Justice Rehnquist's concurrence in Bush v. Gore is that the U.S. Supreme Court declared the State Legislature to be the supreme arbiter of State law in Bush v. Gore, 531 U.S. at 112, 121 S. Ct. at 534 (Rehnquist, C.J., concurring).

The Chief Justice was joined in that opinion by two other Justices, Scalia and Thomas.  They based their decision on U.S. CONST. art. II, § 1, cl. 2, which reads in full as follows:

Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress: but no Senator or Representative, or Person holding an Office of Trust or Profit under the United States, shall be appointed an Elector.

It is not often noted, but this theory of "independent State Legislatures" surfaced by three Justices in Bush v. Gore was explicitly rejected by four other Justices in the same case.  In an opinion written by Justice Ginsburg, four Justices expressly rejected the legal reasoning and history offered as the bases of this theory.   Bush v. Gore, 521 U.S. at 141-43, 121 S. Ct. at 549-50 (Ginsburg, J., dissenting; joined by Justices Souter, Stevens, and Breyer).

The theory that State Legislatures are supreme arbiters of law in the States regardless of State Constitutions and State Supreme Courts surfaced again in February 2022.   That is the only date we have, so far, for what has come to be called the "draft Alito opinion" in Dobbs v. Jackson Women's Health Organization, Download Scotus-initial-draft-opinion Dobbs v. Jackson Women's Health Org. circa 02.10.22 (67 pages with 31 pages of attachments), an emerging development commented on in the two blog articles that preceded this one, the first on May 3, 2022 and the second on May 5, 2022.

Without repeating what was stated in either of those earlier articles, the draft Alito opinion in Dobbs recites:   "Our decision returns the issue of abortion to those {State] legislative bodies."  Dobbs, Alito draft opinion, at 61 (U.S. No. 19-1392) ("Alito draft opinion," date unknown as of the time of this writing; there is of course no Docket Entry Number for this document).  While the draft continues on for a few more words, the Alito draft opinion concludes the majority's holding with the following:

We therefore hold that the Constitution does not confer a right to abortion.  Roe [v. Wade, 410 U.S. 113, 93 S. Ct. 705 (1973)] and Casey [Planned Parenthood of S.E. Pa. v. Casey, 505 U.S. 833, 112 S. Ct. 2791 (1992)] must be overruled, and the authority to regulate abortion must be returned to the people and their elected representatives.

Dobbs, Alito draft opinion, at 65 (U.S. No. 19-1392).  By referring to the people's "elected representatives," the author of the draft clearly has State Legislators in mind.

One month later, in March 2022, Justice Samuel Alito wrote another opinion.  This one was written on the shadow docket, and it was a dissent from a denial of a motion to stay the North Carolina Supreme Court's opinion holding that the North Carolina Legislature's redistricting of Congressional elections violated a number of provisions of the North Carolina Constitution.

One of those North Carolina State Constitutional provisions guarantees that  "[a]ll elections shall be free."  Harper v. Hall, 868 S.E.2d 499, at ¶ 181, p. 553 (N.C. 2022).

The North Carolina Speaker of the House, one State Representative, and a handful of State Senators appealed to the U.S. Supreme Court and requested a stay of the North Carolina Supreme Court's ruling.  Justice Alito agreed with them, calling them "the North Carolina Legislature" at one point, and was joined in his dissent by two other Justices, Gorsuch and Thomas.  Moore v. Harper, 595 U.S. ___, 142 S. Ct. 1089, 1090 (U.S. March 7, 2022) (Alito, J., dissenting from denial of requested emergency stay).  A fourth Justice, Kavanaugh, would have granted certiorari or discretionary review he wrote, but would not grant a stay.  (Within two weeks, the appellants filed a petition for certiorari review.)

To sum up these developments, at least three and possibly four or five current Justices of the U.S. Supreme Court are willing to sign on to a theory that makes them supreme in deciding which matters of State law should be decided by State Legislatures and not by State Courts or State Constitutions.

In the end, there is no end to federal overreach under this theory.  State Legislatures would have the final (or even the only) word on State law issues whenever a majority of the United States Supreme Court would say so.  On its face, this is bad reasoning, ignorant of context and a superficial review of history.  It is not a true theory, at last; it is simply a thin cover for what will result in the end in the U.S. Supreme Court's supreme power.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

WHERE FACTS, NOT SO MUCH ALLEGATIONS, DEPLOY A DEFENSE.

When facts determine a liability carrier's duty to defend, it's the allegations of fact that are relevant and not so much the allegation "labels" that a plaintiff -- or a liability carrier contesting its duty to defend -- put on them.  This is the rule that was applied under Illinois law, for example, in a case involving one of the more well-known arrangers in financial schemes:  Zurich Am. Ins. Co. v. Ocwen Fin. Co., 990 F.3d 1073, 1078 (7th Cir. 2021) (under Illinois law, duty to defend is determined by "considering whether the facts alleged describe potentially covered liability").

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

UNFAIR CLAIMS SETTLEMENT PRACTICE ACTIONABLE UNFAIR OR DECEPTIVE ACT, PRACTICE?

There is a question which many courts are addressing concerning whether and when an Unfair Claims Settlement Practice is actionable as an Unfair or Deceptive Act or Practice.

Given this judicial debate, it is worth noting when an Unfair Claim Settlement Practice Act violation has been held to be the equivalent of an Unfair or Deceptive Act or Practice for purposes of a Consumer Protection Statute.  See McGilloway v. Safety Ins. Co., 488 Mass. 610, 618, 174 N.E.3d 1191, 1199 (Mass. 2021).

Please read the disclaimer.  This blog article ©2022 Dennis J. Wall.  All rights reserved.

THERE'S A GOOD FAITH DUTY TO DO something.

TOTALLY IGNORING THE INSURED'S RISK IS NOT AN OPTION.

"Where the liability is clear and injuries are so serious that an excess judgement is likely, an insurer must do more than merely wait for a settlement offer; the insurer has an affirmative duty to initiate settlement negotiations."[1] 

 

[1] Ellis v. GEICO Gen. Ins. Co., 541 F. Supp. 3d 1371, 1380 (S.D. Fla. 2021), aff'd with opinion, No. 21-12159, 2022 WL 454176 (11th Cir. Feb. 15, 2022).  The trial court granted the carrier's motion for summary judgment of no bad faith in Ellis.

 

The Duty to Initiate Settlement Negotiations is explored at length in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:16 (West Publishing 3d Edition, 2022 Supplements forthcoming).  With the forthcoming publication of its 2022 Supplements, LITIGATION AND PREVENTION OF INSURER BAD FAITH draws on over 5,000 authorities.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

 

Central Issue in First-Party Bad Faith is the Carrier's Reasonableness.

"The central issue with regard to Plaintiff’s bad faith claims is the reasonableness of Defendant’s conduct."  So said the U.S. District Court for the District of Colorado in an Underinsured Motorist Case with Bad Faith Claims in Chinnock v. Safeco Ins. Co. of Am., No. 20-cv-00918-RM-NYW, 2022 WL 1469545, at *5 (D. Colo. May 10, 2022).

The same observation was made much earlier, in case law and in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH, § 9:3, The Question of Bad Faith (West Publishing Co. 3d Edition, 2022 Supplements forthcoming).  Since at least 1991, the clear majority of courts follow the rule of reason in assessing first-party insurer bad faith liability:

    CITING TO [AN EARLIER VERSION OF] THIS SECTION, a summary judgment for the carrier in a first-party bad faith case was affirmed in Cruz v. American United Ins. Co.[,580 So. 2d 311, 312 (Fla. 3d DCA 1991):]

 

The legal standard governing an insurer's settlement conduct is one of reasonableness. D. Wall, Litigation and Prevention of  Insurer Bad Faith § 9.03 (1985).

 

This is the clear majority view of the question.

 

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.