Being guilty of Bad Faith does not mean that an insurance company was found guilty BECAUSE it was a bad person. Sometimes maybe it has done bad things, but its Bad Faith conduct is what will lead to a Judgment against it for Bad Faith, as in this recent decision, which officially has not been released for publication and is subject to revision or withdrawal: Johnson v. Tennessee Farmers Mutual Insurance Co., 2006 WL 2467134 (Tenn. August 28, 2006), which you can access at Tennessee Supreme Court public site .
Mr. Johnson had an auto policy which provided him with stated liablity provisions and with Uninsured Motorist Coverage. He filed suit after a judgment was entered against him for more than his liability limits, contending that the excess judgment was caused by his insurance company's refusal to settle. He obtained a verdict of Bad Faith against the insurance company in the trial court (Circuit Court), which was reversed by the intermediate appellate court (Court of Appeals), and which was, finally, reinstated against the insurance company by the Tennessee Supreme Court.
While the underlying liability case was pending against Mr. Johnson, the auto insurance carrier settled Mr. Johnson's U.M. claim and a U.M. claim made by the Plaintiff in the underlying case also. The carrier paid policy limits "to each policyholder," said the Supreme Court. At the trial of the Bad Faith claim based on the carrier's refusal to settle the underlying liability case against Mr. Johnson, the Circuit Court allowed evidence of the U.M. payment with a cautionary instruction to the jury that the evidence was allowed "'only for you to consider, along with everything else as it relates to circumstantial evidence, as to whether or not it was bad faith on failure to pay the liability claims.'" The Circuit Judge further instructed the jury, apparently at the conclusion of all the evidence, that the insurance company's payment or delayed payment of Mr. Johnson's U.M. claim does not mean that the insurance company was guilty of Bad Faith in failing to pay the liability claim against Mr. Johnson.
The Tennessee Supreme Court approved these instructions, held that they "correctly instructed the jury," reversed the Court of Appeals, and reinstated the Bad Faith Judgment against the insurance company that Mr. Johnson obtained after he received a favorable jury verdict in the Circuit Court.
In short, being a bad person was not the standard of legal liability for Bad Faith in Mr. Johnson's case, according to the decision (tentatively, at present) reached on August 28, 2006, link provided above to the public site.
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
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