Claims and Bad Faith Law Blog

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P.S. to "MEET THE JUDGES WHO RESTORED THE REPUBLIC FOR NOW."

United States Supreme Court (AP / Jacquelyn Martin)

If (some say when) they ask for an emergency blockade of the Eleventh Circuit's decision to allow the United States to continue to investigate criminal violations involving the confidential documents found under a Court-authorized search warrant to investigate criminal violations, and also that part of the Eleventh Circuit's decision to allow the United States to continue to evaluate the damage done to our national security, then it might be worth knowing who the U.S. Supreme Court Justice is who handles emergency applications for a stay of Eleventh Circuit Orders:

U.S. Supreme Court Justice Clarence Thomas.

Think they'll ask for an emergency blockade of the Eleventh Circuit's decision?

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

MEET THE JUDGES WHO RESTORED THE REPUBLIC FOR NOW.

Eleventh Circuit Court of Appeals, Atlanta, Georgia (Image Eleventh Circuit Court of Appeals Website)

On September 21, 2022, a federal appellate court ruled that while its appeal is pending, the United States can use the classified materials it confiscated from the beach resort in South Florida under an authorized search warrant, to investigate whatever crimes may have been committed and to review whatever damage was done to national security.  They also ruled that the United States does not have to submit the classified documents to a special master to review in the meantime.

With their unanimous order, they restored the Republic, at least for now.  Meet the Judges.

JUDGE ROBIN S.  ROSENBAUM is the senior judge among the three judges on this panel.  She has been on the Eleventh Circuit since 2014.  Having turned 56 this year, she is also the oldest of the three judges on this panel.  Judge Rosenbaum is familiar with the inner workings of most of the parties in this case, having worked as a Trial Attorney in the Department of Justice, as an Assistant U.S. Attorney in the Southern District of Florida, as a U.S. Magistrate Judge in the Southern District of Florida, and as a U.S. District Judge in the Southern District of Florida.

A graduate of the University of Miami Law School, she was nominated by President Obama and she was confirmed to the Eleventh Circuit by a vote of 91 to 0.

JUDGE BRITT GRANT was a Justice of the Georgia Supreme Court before she went to the Eleventh Circuit in 2018.  A graduate of Stanford Law School, Judge Grant was confirmed by a vote of 52-46.  She is 44 years old and a Republican by party.

JUDGE ANDREW L. BRASHER rounds out this panel of three Judges.  Judge Brasher turned 41 this year and has been on the Eleventh Circuit since June 2020.  Previously he was appointed a U.S. District Judge in Alabama where he served for about a year before going to the Eleventh Circuit.  A graduate of Harvard Law School, he too is a Republican by party.

Contrary to Mainstream Media and Alternate Media headlines, this decision did not resolve the appeal in favor of the United States, although that is the likely outcome after this ruling.  Also, this panel which decided the motion (called a "motions panel") may not be the same panel of Judges who will decide the entire appeal.  So it's on with the appeal and let's win there!

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

EFFICIENT PROXIMATE CAUSE DOCTRINE, EXPLAINED.

"Under Washington law," said the Washington Supreme Court in a recent decision, coverage under  the efficient proximate cause doctrine works like this:

1. A covered peril sets in motion a causal chain.
2. The last link of the causal chain is an uncovered peril.
3. It does not make any difference if events within the causal chain, taking place after the causal, covered peril sets the chain in motion, are themselves excluded by the policy even if they are causes-in-fact of the loss at issue.

All this is explained in Seattle Tunnel Ptrs. v. Great Lakes Reins. (UK) PLC, ___ P.3d ___, ¶ 33, 2022 WL 4241893, ¶ 33, at *8 (Wash. Sept. 15, 2022).  See generally Dennis J. Wall, Efficient Proximate Cause Doctrine, § 7:3 in JOHN K. DiMUGNO, STEVEN PLITT, and DENNIS J. WALL, CATASTROPHE CLAIMS / INSURANCE COVERAGE FOR DISASTERS (Thomson Reuters May 2022 Ed.).

The case in which this was explained is a coverage case which grew out of a major construction project in Seattle.  The project involved a tunnel and a "tunnel boring machine" or "TBM."  The machine broke down, the project stopped, and insurance claims and litigation ensued.

The policy at issue is a builder's all-risk policy with a "Machinery Breakdown Exclusion" or "MBE."  The issue came down to a relatively narrow question:  Were the design defects which caused the TBM to break down a covered peril or perils, so that there was coverage under the efficient proximate cause doctrine, or was the design defect excluded by the policy's MBE?  (Washington, D.C. does not have an exclusive franchise for acronyms, apparently.  Acronyms are used everywhere including in Washington State.) 

As the Washington Supreme Court put it, the efficient proximate cause doctrine could apply only if the initial event, here, the design defects at issue, were a covered peril under the builder's all-risk policy at issue:

This would first require a finding that the Policy covers damage for design defects and that those design defects caused damage to the TBM.  Under those circumstances, the efficient proximate cause rule might provide coverage for the last link in the causal chain, even if it Is an excluded peril (i.e., the machinery breakdown).

Seattle Tunnel Partners,  2022 WL 4241893, ¶ 33, at *8.

That ruling was foreclosed by an earlier ruling at all levels of this case.   The trial court granted summary judgment that design defects were an excluded peril, the Court of Appeals affirmed the trial court, and the Supreme Court affirmed the Court of Appeals.  Seattle Tunnel Partners,  2022 WL 4241893, ¶ 4, at *1.

And so a long story made short is that the causal event was not covered, so the efficient proximate cause doctrine did not apply.

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

FEDERAL COURT PROCEDURES FOR ASSIGNING JUDGES TO CASES AFFECT OUTCOMES.

Judge's Gavel (Thomson Reuters West via LinkedIn)

In Patterson v. Mahwah Bergen Retail Grp., Inc., No. 3:21cv167 (DJN), 2022 WL 4287200 (E.D. Va. Sept. 16, 2022) (adopting report and recommendation, with modification, after Federal Court Rules were amended governing assignment of Bankruptcy Judges), a U.S. District Judge recognized the effects of Federal Court Procedures for assigning judges to cases:  The Federal Court Procedures for assigning judges to cases affect outcomes.

How true.  This is so clear that we can even see this in today's headlines.

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

UBER DRIVES AWAY, SUBCONTRACTS INSURANCE, DRIVER HAS NO RECOURSE.

 

A dark galaxy alongside a bright star (Image by NASA)

In  Valentine v. James River Ins. Co., No. 1:20-cv-01638-CMA-SKC, 2022 WL 4112210 (D. Colo. Aug. 1, 2022) (USMJ), an Uber driver was injured in an automobile collision with an uninsured motorist.

The Uber driver, Ms. Elet Valentine, sued Uber, an Uber subsidiary, and James River Insurance Company which issued a liability insurance policy to the subsidiary to cover Uber driving operations.  James River "offered Plaintiff $250,000 multiple times, which she rejected each time."  Valentine, 2022 WL 4112210, at *1.  "Ultimately," Ms. Valentine's suit against Uber and its subsidiary was "to recover the amounts she has not received from James River."  Valentine, 2022 WL 4112210, at *1.  

From the beginning, Uber distanced itself from the Uber driver.  It did not sign a contract with her.   That is Uber's business model.

Instead, a wholly owned subsidiary of Uber contracted with the Uber driver.  The opinion gives the subsidiary's name, which is Raiser, LLC.  The opinion does not describe what relationship existed between the Uber driver and Raiser, apart from Raiser's contractual obligation to obtain liability insurance for Uber drivers.

The contract called for the subsidiary to obtain liability insurance for driving operations for Uber.   Although the opinion does not say so, I am intuiting that California law imposed a level of uninsured motorist coverage, perhaps the $250,000.00 that James River kept offering Valentine.  She was not satisfied with that offer because apparently the extent of her injuries, or her or her lawyers' evaluation of her injuries, was greater than $250,000.00.  She brought suit against Uber and Raiser in particular for the amount of her damages that exceeded $250,000.00.

At any rate, Ms. Valentine's contract with Raiser called for Raiser to purchase liability insurance and for all we know from the opinion,  that is what Raiser, the Uber subsidiary, purchased, namely, liability insurance.  No word in the contract or the opinion about uninsured motorist coverage, and no word either about coverage for the full extent of the drivers' injuries, just liability coverage per the express words of the contract written by the subsidiary (or by Uber, the facts are unclear as to who wrote the contract at issue in this case, except that the contract clearly was not written by the Uber driver).

The driver sued Uber and the subsidiary for  breach of contract and for what she alleged as "the nondelegable doctrine" (which the Magistrate Judge analyzed both as "vicarious liability" and as "nondelegable doctrine," finding that neither was an independent claim for relief).  In  this case, the Magistrate Judge recommended that Uber's motion for summary judgment, and its subsidiary's motion for summary judgment,  be granted.

That left any remaining cost of the Uber driver's medical bills incurred while driving for Uber, with the driver who had the misfortune of a rear-end collision with an uninsured motorist while driving for Uber.  It will be recalled that no UM coverage was at issue here as such.   Parenthetically, in a footnote the Magistrate Judge reported a separate recommendation that James River Insurance Company's motion for summary judgment should be granted also.  Valentine, 2022 WL 4112210, at *1 n.2.  

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

SHOW COMPELLING REASONS TO SEAL, EVEN WHEN SEALING IS UNOPPOSED.

Editing (LexisNexis)

In Apex Op's, LLC v. Rosenberg, No. 2:22-cv-01169-RFB-DJA, 2022 WL 4112201, at *1 (D. Nev. Aug. 22, 2022) (Albregts, USMJ), Everything Blockchain, Inc. filed a motion to dismiss with exhibits.  It also filed a motion to seal one of the exhibits to its motion to dismiss.  "Blockchain moves to seal the exhibit because it is a copy of a settlement agreement between other parties in the litigation.  Blockchain explains that the settlement agreement contains a confidentiality provision, designed to protect the confidential business terms and nature of the agreement." Apex Operations, 2022 WL 4112201, at *1 (record reference omitted).

Even though Blockchain's motion to seal was unopposed, it was denied.  The Magistrate Judge denied the motion effectively holding, although not stating it, that an unopposed motion to seal is not sufficient to seal a document in a Court file.  The Magistrate Judge in this case did expressly rule that in the Ninth Circuit a confidentiality provision in a settlement agreement is not enough by itself for a Court to seal the agreement. 

 "A party seeking to seal judicial records submitted in conjunction with dispositive motions bears the burden of meeting the “compelling reasons” standard ….  Under that standard, “a court may seal records only when it finds ‘a compelling reason and articulate[s] the factual basis for its ruling, without relying on hypothesis or conjecture.’ ” [Citations omitted.]   Under Local Rule 7-2(d), the failure of an opposing party to file points and authorities in response to any motion constitutes a consent to the granting of the motion." Apex Operations, 2022 WL 4112201, at *1.

The Magistrate Judge went on to recognize that "[h]owever, courts in this district have explained that '[t]he mere fact that the parties’ settlement agreement may contain a confidentiality provision, without more, does not constitute a compelling reason to seal the information.'” Apex Operations, 2022 WL 4112201, at *1.

Accordingly, Blockchain's motion to seal was denied, without prejudice to submit compelling reasons to seal or, taking a so-called "middle approach" to the presumption of public access to Court records, to propose redactions to the other parties' settlement agreement that Blockchain attached to its motion to dismiss.  Apex Operations, 2022 WL 4112201, at *1.

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

Asking "By What Right" Challenges Their Right to Hold Office. Ever.

(One of the last photographs taken of Abraham Lincoln)

New Mexico and its citizens and its State Courts have all shown the way to challenge the right of insurrectionists to hold -- and run for -- office:  Ask courts to declare by what right those people hold -- or seek -- office under the Fourteenth Amendment, Section 3 of the United States Constitution.  (In litigation, to ask "by what right" usually means pleading the writ of quo warranto or something similar.)

As you may already know, Section 3 of the Fourteenth Amendment was written to bar people engaged in insurrection or rebellion against the United States to ever hold office.  Then, it meant former Confederates.

Now, it means office holders (and office seekers) even though they did not engage in violence so long as the proof in court shows that they did engage in insurrection, as in the case of Download State of New Mexico ex rel. White v. Griffin Findings of Fact Conclusions of Law and Judgment filed Sept. 6 2022 (N.M. Dist. Ct. 1st Dist. Santa Fe County No. D-101-CV-2022-00473).

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

'The Constitution represents popular opinion.'

(Sun Sentinel Handout)

In Download State of New Mexico ex rel. White v. Griffin Findings of Fact Conclusions of Law and Judgment filed Sept. 6 2022 (N.M. Dist. Ct. 1st Dist. Santa Fe County No. D-101-CV-2022-00473), New Mexico District Judge Francis Mathew ruled that because the defendant violated the Fourteenth Amendment, Section 3,  "effective January 6, 2021" the defendant is no longer entitled to hold public office and shall not hold state or federal office in the future.

"Mr. Griffin disregards that the Constitution itself  reflects the will of the people and is 'the supreme Law of the Land.'"  Id., ¶ 67, p. 44.

The Judge who wrote this opinion graduated from Notre Dame the year after I did.  He went on to the University of Notre Dame Law School.  Back in the day, he would have been called "a Double Domer."

Today, he is rightfully called Judge.

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

"The Court denied their request to be friends of court."

(Peter Ringenberg / University of Notre Dame)

On August 30, 2022, seven "former federal prosecutors and state and federal governmental officials who served in Republican administrations," including former Massachusetts and New Jersey Governors William F. Weld and Christine Todd Whitman, filed their motion to appear as friends of the court and brief the unique issues in that case:  Download Trump v. United States Doc. No. 41 Motion to File Amicus Brief filed August 30 2022 (S.D. Fla. No. 9.22-cv-81294-AMC).

As required, they contacted both parties before they filed their motion:  "Defendant consents to the Motion and Plaintiff opposes the Motion."

On September 6, 2022 in an unwritten order the Court denied their request to appear as friends of the court.

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

CONSUMER PROTECTION ACTS AND INSURANCE BAD FAITH ACTIONS

(Blue Moon Image by NASA)

In a decision only recently published on Westlaw, Precision Cranes, Inc. v. Tester Drilling Serv's, Inc., No. 4:18-cv-00019-JMK, 2020 WL 13538682, at *3 (D. Alaska Nov. 18, 2020), the Court held that a UTCPA (Unfair Trade Practices and Consumer Protection Act) statutory claim could not be alleged because the Unfair Claim Settlement Practices Act already occupies the field of unfair methods of competition and unfair or deceptive acts or practices by insurance companies in Alaska.

If the style of this case sounds familiar, another ruling of this Court on the same date in this case was addressed here on August 31, 2022, in an article titled UNFAIR & DECEPTIVE PRACTICES ACTIONS AND IMPLIED COVENANT BREACH ACTION TOGETHER.

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

THE LAW AND UNSEALING SEARCH WARRANT MATERIALS.

 

Editing (LexisNexis)

A recent decision by Chief Judge Beryl Howell of the U.S. District Court for the District of Columbia may shed some light on issues pending in the South Florida case of Trump v. United States.  The issues are masterfully laid out in the Reply Memo of the United States, here:  Download Trump v. United States Doc. No. 48 Response of USA to P's M For Judicial Oversight and Additional Relief filed August 30 2022 (S.D. Fla. No. 9.22-cv-81294-AMC).

The recent judicial decision came in the search warrant materials case of In re Application of Los Angeles Times Communic's LLC to Unseal Ct. Records, Misc. Action No. 21-16 (BAH), 2022 WL 3714289 (D.D.C. Aug. 29, 2022).  Although the L.A. Times Communications Application to Unseal Court Records case involved not private access but rather  public access to Court records, the case involved Court records which are very similar to at least some of the records sought to be unsealed in South Florida, including a search "warrant application, search warrant, supporting affidavit, and docket sheet" and "a motion and accompanying memorandum supporting continued sealing of the redacted portions of the search warrant materials[.]"   Unseal Court Records, 2022 WL 3714289, at *4.

Moreover, with the numbers of interested parties who seek to file amicus briefs or motions to intervene in the Southern District of Florida case accumulating by the day, the precise issues of public access to Court records will or may be litigated. 

For all these reasons, the rulings in the L.A. Times Communications Application to Unseal Court Records case in D.C. may enlighten the proceedings in South Florida.

There were two categories of redactions at issue in the District of Columbia case.  At least some of the materials have counterparts in the South Florida case.  The two categories of redacted materials involved in D.C. are:

(1) those aimed at protecting third-party privacy interests, including, among other things, the “private financial information” of third parties; “information gained from the cooperation of private third-party witnesses[;]; and the descriptions of DOJ's “law enforcement techniques and processes in the course of the investigation,” and (2) those meant to preserve the due process interests of investigative targets “against whom the probable cause allegations in the warrant were made” but were not charged with any criminal offenses.

Unseal Court Records, 2022 WL 3714289, at *6 (record references for internally quoted material omitted).. 

The materials sought to be unsealed are similar in both cases, the one in D.C. and the one in West Palm Beach, but the D.C. case involved a closed criminal investigation and of course the South Florida case involves search warrant and top-secret materials in what are apparently a number of ongoing investigations.  Still, the Unseal Court Records Court's resolution may be helpful in the South Florida case.

As to the first category of redacted materials, the redactions aimed at protecting the third-party privacy interests identified above -- including private financial information, information gained from witnesses, and descriptions of law enforcement techniques, sources and methods in the government's investigation -- the Court in D.C. held that the continued sealing of those materials is appropriate after considering common law and First Amendment presumptions of public access to them.  Unseal Court Records, 2022 WL 3714289, at *6.   The Court's detailed analysis is set forth in id. at *6-*7 and *10.

With respect to the second category of redacted materials, which may be accurately described as "the due process" materials, such materials require a different result depending on an examination of factors such as "misuse of a public office," whether the concealed information has already been disclosed in public, and whether disclosure would harm legitimate privacy or law enforcement interests.  Unseal Court Records, 2022 WL 3714289, at *7.  In the context of the D.C. case, the Court ordered disclosure of "DOJ's proposed redactions intended to preserve the due process interests of investigative targets" who were targets of probable cause outlined in the search warrant but against whom criminal proceedings were closed.  Unseal Court Records, 2022 WL 3714289, at *10.

In South Florida, of course, part of the materials sought to be unsealed are National Defense Information top secrets which have never been disclosed to the public by anyone at this point.  Whether they have been disclosed to anyone at all, is unknown at present.

The parties, their lawyers and the Court in the U.S. District Court for the Southern District of Florida may raise or ignore the rulings in the L.A. Times Communications Application to Unseal Court Records case in D.C.   Whatever choice they make, the Unseal Court Records decision will almost certainly be part of any appeal.

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

UNFAIR & DECEPTIVE PRACTICES ACTIONS AND IMPLIED COVENANT BREACH ACTION TOGETHER.

(Aurora From ISS Image Courtesy of Captain Kelly & NASA)

In a decision that has just been published, Precision Cranes, Inc. v. Tester Drilling Serv's, Inc., No. 4:18-cv-00019-JMK, 2020 WL 13538683 (D. Alaska Nov. 18, 2020), the plaintiff Precision was allowed to amend its complaint against two defendant insurance carriers that issued payment bonds on a project in the Arctic.  Precision had already sued on what is generically known as a UDAP (Unfair & Deceptive Practices) statutory claim, in this case, specifically under the Alaska Unfair Trade Practices and Consumer Protection Act (“UTPCPA”).  Now Precision requested leave to add a claim for breach of the implied covenant of good faith and fair dealing, apparently at common law.

The District Court granted Precision's motion for leave to amend its complaint even though the motion came late and over the objections of the defendant carriers.  Precision, 2020 WL 13538683, at *3.  This case involved Alaska substantive law, which the federal Court clearly read as allowing both a UDAP action and a bad faith action based on the same facts, even though the two causes of action are similar but distinct on the law.

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

SOMETIMES PARTIAL PAYMENT MAY NOT BE ENOUGH GOOD FAITH.

 

(Black Hole Image Courtesy of NASA)

Sometimes even partial payment may not be enough to establish good faith as a matter of law.  In Rutledge Inv's L L C v. Scottsdale Ins. Co., No. 2:21-CV-00364, 2022 WL 3704212 (W.D. La. Aug. 26, 2022), the Court denied the property carrier's "motion for partial summary judgment to dismiss" a "bad faith claim related to Hurricane Laura."

This despite the fact that the record shows that the carrier made an advance payment one week after the Hurricane struck and, further, that the carrier agreed to "issue payment on the undisputed claim" five weeks after that.  Rutledge, 2022 WL 3704212, at *1.

Proof of loss:  advances are the subject of § 2:10 by Dennis J. Wall, in JOHN K. DiMUGNO, STEVEN PLITT, and DENNIS J. WALL, CATASTROPHE CLAIMS / INSURANCE COVERAGE FOR DISASTERS (Thomson Reuters May 2022 Edition).

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

TFG v. USA UPDATE: WHY IS THIS CASE HERE, JUDGE ASKS.

(C.D. Cal.)

 

On August 23, 2022 Judge Aileen Cannon entered the following paperless Order in Southern District of Florida Civil Case No. 22-cv-1894-AMC, which has been copied from the electronic docket on PACER:

08/23/2022

10

PAPERLESS ORDER: The Court is in receipt of 1 Plaintiff's Motion for Judicial Oversight and Additional Relief. To facilitate appropriate resolution, on or before August 26, 2022, Plaintiff shall file a supplement to the Motion further elaborating on the following: (1) the asserted basis for the exercise of this Court's jurisdiction, whether legal, equitable/anomalous, or both; (2) the framework applicable to the exercise of such jurisdiction; (3) the precise relief sought, including any request for injunctive relief pending resolution of the Motion; (4) the effect, if any, of the proceeding before Magistrate Judge Bruce E. Reinhart; and (5) the status of Plaintiff's efforts to perfect service on Defendant. Signed by Judge Aileen M. Cannon on 8/23/2022. (AMC) (Entered: 08/23/2022)

As we said in an article published yesterday, Judge Aileen M. Cannon was appointed by the alleged owner of the searched premises.

So it's on to Friday, August 26, 2022.

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

TFG v. USA CIVIL COVER SHEET: "NO RELATED CASE"?

There is a Civil Cover Sheet in the new civil case addressed yesterday, which I write here for algorithm purposes to protect the innocent as they used to say on Dragnet, as:  TFG v. USA, Southern District of Florida Case No. 22-cv-81294, .  Here is the Civil Cover Sheet:

As we said yesterday, the signature appears to come from Evan Corcoran, Esquire, one of the attorneys of record for the alleged owner of the searched premises.  

Lawyers will immediately recognize the standard question in this form, which is question numbered VI, RELATED/RE-FILED CASES, in particular the standard question in every federal Civil Cover Sheet in the country:

b) RELATED CASES

___ YES  ___ NO  DOCKET NUMBER:

Although this question was left blank in this case, the answer of course is that there is a related case, and its Docket Number is Southern District of Florida Criminal Case No. 22-mj-8332-BER.  That of course is the search warrant case involving the alleged owner's searched premises.

The question is simple.  Why do you think it was not answered?

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

CLAIMS BARRED AGAINST "PAY TO PLAY," BRIBED AND APPROVED RATES.

(Image of Jupiter / NASA & AP)

In South Branch LLC v. Commonwealth Edison Co., Nos. 21-2861, 21-2872 & 21-2873, 2022 WL 3581782 (7th Cir. Aug. 22, 2022), two judges on a Seventh Circuit panel led by Judge Diane Sykes reached for an immunity that the trial court did not touch to bar claims against ComEd:  the filed rate doctrine.

Judge Sykes has reached out to the filed rate doctrine to bar claims in other cases; in this case the trial court dismissed the plaintiffs' RICO claims against ComEd on other grounds entirely.

The record left no doubt but that the rates in question were approved by the regulatory agency as a result of favorable legislation for higher rates.  "To secure passage of favorable legislation, ComEd engaged in a yearslong 'pay to play' scheme[.]"  The scheme in short involved bribes paid to Illinois State Government officials in order to secure the legislation.  ComEd, 2022 WL 3581782, at *1.

Because of the filed rate doctrine, the plaintiffs could not sue.  The two judges on the panel held that they were not "injured" under RICO as a result.  ComEd, 2022 WL 3581782, at *3.

The remaining judge on the panel concurred but expressly stated that she would not rule on the basis of the filed rate doctrine in this case.  Instead, she based her vote on an 1810 decision that in her eyes prohibits judges from inquiring into the motives of legislators.   ComEd, 2022 WL 3581782, at *6

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

VIRGINIA UNFAIR CLAIM SETTLEMENT PRACTICES STATUTE NOT ACTIONABLE IN 2022.

(Bridge Collapse / USA TODAY)

Virginia's Unfair Claim Settlement Practices Act is codified in VA. CODE ANN. § 38.2-510.  It parallels the National Association of Insurance Commissioners' Model Unfair Claim Settlement Practices Act in pertinent part.  See generally 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH, § 3:28 (addressing statutory bases of bad faith in third-party claims) (3d Edition West Publishing Co., 2022 Supplements in process); 2 id., §§ 9:14 & 9: 15 (Express and Implied Causes of Action, respectively, under bad faith statutes in first-party cases).

The Virginia Unfair Claim Settlement Practices Act does not convey a cause of action, however.  Sustainable Sea Prod's Int'l, LLC v. Am. Emp. Surplus Lines Ins. Co., No. 3:21cv697, 2022 WL 3573247, at *4 (E.D. Va. Aug. 19, 2022).

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

"IT AIN'T OVER TILL IT'S OVER": Constitutional PRESUMPTION, PUBLIC ACCESS?

(Photo by NASA)

All that the defendant had to do to keep declarations and exhibits sealed that the plaintiff filed, was to settle in exchange (at least in part) for a stipulation to dismiss with prejudice.

That is the perhaps unintended effect of the otherwise well-reasoned decision in the case of Lohnn ex rel. Lohnn v. Int'l Bus. Mach's Corp., No. 21-cv-6379 (LJL),  2022 WL 3359737 (S.D.N.Y. Aug. 15, 2022) (Liman, J.).

The case involved an estate's action against IBM.  The case settled with a joint stipulation for dismissal with prejudice.

The case settled before the Court could rule on Plaintiff's motion for summary judgment.  The Plaintiff had previously  filed "declarations and exhibits" under seal in support of its motion for summary judgment.  The issue now was whether the declarations and exhibits filed in the Court file should be kept sealed, or whether they were publicly accessible with redactions.  Lohnn, 2022 WL 3359737, at *1.

The defendant, IBM. argued that the declarations and exhibits filed in the Court file were not "judicial documents" entitled to public access because of its settlement before the Court could rule on the Plaintiff's summary judgment motion.    Lohnn, 2022 WL 3359737, at *2.

The Court rejected this argument and held that the declarations and exhibits are indeed "judicial documents" entitled to a presumption of public access, even though the defendant settled before the Court could rule on the plaintiff's motion for summary judgment.  Lohnn, 2022 WL 3359737, at *3.

However, that did not end the story in this case.  It might even be said that the story only began at this point.

In ruling that the fact that although the defendant settled the case before the Court could rule on the motion for summary judgment, the settlement and the joint stipulation for dismissal with prejudice did not affect the "judicial documents" status of declarations and exhibits filed in the Court file such that they are  clothed with a common law presumption of public access nonetheless, was a ruling directly contrary to the opposite ruling in Giuffre v. Maxwell, No. 15 Civ. 7433 (LAP), 2020 WL 133570 (S.D.N.Y. Jan. 13, 2020).

The Court further ruled in this case that the common law presumption of public access did not end the matter.  Rather, the Court applied a balancing test and held that the presumption of public access to the judicial documents at issue was outbalanced by the defendant's interest in secrecy here.  Lohnn, 2022 WL 3359737, at *5-*6.

In so ruling, the Court carefully pointed out that it was ruling on the only presumption of public access argued in the decision at bar, which was the common law presumption of public access and not the First Amendment right of public access.  Moreover, the Court invited the Constitutional issue in the future:  "However, the Court's decision to keep these declarations and exhibits sealed is without prejudice to a motion by an intervenor to unseal the documents on First Amendment grounds."  Lohnn, 2022 WL 3359737, at *6 n.4.

More remains to be done on the issue of whether there is a constitutional presumption of public access to testimonial and documentary evidence filed in a Court file, even if a defendant settles the case in exchange for a joint stipulation for dismissal with prejudice before the Court can rule on the motion supported by the evidence filed in the Court file.

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

FIRST-FILED STAYS WHERE IT IS, OPIOID LAWSUITS OR NOT.

(Courthouse, Baltimore, Md./New York Public Library Digital Collections)

In an UNPUBLISHED opinion, with a caution on its face to CHECK COURT RULES BEFORE CITING, the Delaware Superior Court determined that a  coverage case with respect to Opioid Lawsuits against CVS will remain pending in Delaware, at least for now.  The decision is In Re:  CVS Opioid Ins. Litig., Consol. C.A. No. N22C-02-045, 2022 WL 3330427 (Del. Super. Ct. Aug. 12, 2022).

The Court was faced with two competing lawsuits and a motion to dismiss or stay based on forum non conveniens.  The first lawsuit was filed in Delaware by CVS's insurers for a declaration that the carriers do not provide insurance coverage for indemnity or defense of the Opioid Lawsuits against CVS.  The Opioid Lawsuits against CVS are pending in Multi-District Litigation centered in the Northern District of Ohio.  There are also some Opioid Lawsuits pending against CVS in State Courts.

The second lawsuit of concern was a lawsuit filed in Rhode Island by CVS against its insurers, after the insurers filed their lawsuit in Delaware.  CVS sued in Rhode Island for insurance coverage and also for alleged insurer bad faith.

The Delaware Court ruled that the Delaware case having been filed first, it is CVS's burden to establish forum non conveniens by showing that CVS faces an "overwhelming hardship" to litigate the Delaware case in Delaware.  In re:  CVS Opioid Insurance Litigation, 2022 WL 3330427, at *7.

The Court held that CVS did not meet its burden.  Under this decision, the Delaware lawsuit filed by CVS's carriers for declaratory relief relative to coverage for the Opioid Lawsuits against CVS, remains pending in Delaware accordingly.

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

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.