Claims and Bad Faith Law Blog

INSURANCE FOR NEW JERSEY PUBLIC OFFICIALS AND ENTITIES?

          New Jersey public officials past and present have caused a lot of people to be angry with them, it seems:

The news in January that Ms. [Bridget Anne] Kelly, a deputy chief of staff to Mr. [Chris] Christie, had given the signal for the lane closings set off other accusations -- about Mr. [David] Samson's conflicts, and misuse of funds intended for recovery from Hurricane Sandy.

Kate Zernike, "Official is Out Amid Scandal on Shut Lanes / Ally Quits Port Agency as Christie Steps Out" p. A1, col. 5 (New York Times Nat'l ed., Saturday, March 29, 2014).

          There is also the matter of untold millions of dollars of Taxpayer money taken from the New Jersey Treasury to pay lawyers for a report of sorts on Governor Christie.  Mr. Christie's current aides refused to disclose the exact amount.  Id.

          This raises questions of insurance availability if and when all this anger turns to actions of some kind in the future.  Will Public Entities and Public Officials Liability Insurance provide coverage to any of these people?

          Is there a potential Directors and Officers Liability insurance policy or policies at risk as a result, as well?

          These are questions which cannot be answered at this time.  One question seems to have been resolved, however.  Even before reports surfaced about past possible conflicts of interest in the payment of Taxpayer funds to his law firm from the Treasury of the Port Authority of New York and New Jersey, Mr. David Samson reportedly was planning to resign from his office as Chair of the Port Authority.  Id.

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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Sandy Money in New Jersey: So, Where Is It Going?

 

PUNITIVE DAMAGES IN INSURANCE BAD FAITH CASES?

          The arguments for and against assessing punitive damages in insurance bad faith cases are explored in "Punitive Damages for Failure to Pay on an Insurance Policy?" posted on February 16, 2014 on Tennessee Insurance Litigation Blog.  It is a pretty comprehensive article.  Check it out if you have any interest in how and when punitive damages are assessed in IBF cases, even IBF cases litigated outside of Tennessee.

          Tennessee Insurance Litigation Blog in general is a worthwhile visit for insurance practitioners of all kinds.  Alternating articles are written on the Blog by an insurance company attorney and a policyholder attorney, and their collaboration inspires everyone who practices insurance law.

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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Affirmative Defenses in First-party Bad Faith Case in Florida.

 

FOOD STAMPS, HEATING, EATING.

          Many of the larger States in the Union have acted to ensure heat to people in cold weather.

          One result of their actions is to ensure that more people are better able to buy food to eat all year long.

          One person called these results "cheating."  See Dan Friedman, "Boehner:  New York, Other States Guilty of 'Cheating and Fraud' on Food Stamps " (New York Daily News online, posted March 13, 2014).

          In whose country are "heating" and "eating" spelled "cheating"?

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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THE AMERICAN LAW INSTITUTE, LIABLITY INSURANCE PRINCIPLES, FIDUCIARY SETTLEMENT.

          This totally exclusive article is available here:  "Fiduciary in Settlement and The American Law Institute's Principles of Liability Insurance Law / Refusing the Shackles of 'Reasonable' Summary Judgments," by Dennis J. Wall, published by West Publishing in 36 Insurance Litigation Reporter 93 (March 2014):    Download Fiduciary in Settlement 3 14 2014 (Copyright 2014 by West).

          The American Law Institute Members Consultative Group will discuss the Principles in less than two weeks, on Friday, March 28, 2014.  Watch this space -- developments important to every insurance professional at the meeting in Philadelphia will be discussed here practically at the moment they occur.

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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BP AND US: NO SHAME.

          Eleven people burned alive on the Deepwater Horizon oil rig run by BP in the Gulf of Mexico.  But apparently that was then and this is now.

          The Government of the United States is again accepting drilling bids in the Gulf of Mexico from BP.  See Clifford Krauss, "U.S. Agrees to Allow BP Back Into Gulf Waters to Seek Oil" p. A1, col. 1 (New York Times Nat'l ed. Friday, March 14, 2014).

          Instead of doing jail time, some people make money.  Others die.

          "Drill BP drill."

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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Ban Lifted, BP Can Bid for Gulf Oil Next Week

 

AFFIRMATIVE DEFENSES IN FIRST-PARTY BAD FAITH CASE IN FLORIDA.

          In a recent decision, a respected U.S. District Judge confirmed and adopted the well-reasoned report and recommendation of a U.S. Magistrate Judge to deny a plaintiff's motion to strike certain affirmative defenses in a statutory first-party bad faith case in Florida.  Cadle v. GEICO General Insurance Co., 2014 WL 793339 (M.D. Fla. February 27, 2014)(Presnell, USDJ; Kelly, USMJ).  However, the affirmative defenses were not stricken because they were well taken but instead because for the most part, they were denials of the complaint and were not really affirmative defenses at all.

          This was the holding with respect to the first, fourth, fifth, and sixth affirmative defenses, namely, that they are not true affirmative defenses but are instead general denials.  In Federal Court, "[w]hen a specific denial is labeled as an affirmative defense, a court will generally treat the defense as a denial and not strike it."  Cadle v. GEICO General Insurance Co., 2014 WL 793339 *2 (M.D. Fla. February 27, 2014).

          That left two affirmative defenses, at least as far as the Court's discussion of the plaintiff's motion to strike.  One was the defendant's second affirmative defense of "setoff".  The plaintiff argued that there is no setoff available in a first-party bad faith case in Florida; the defendant argued that there is.  Neither side cited any supporting authority, however, according to the Court.  It comes as no surprise, then, that the motion to strike this material was denied.  Cadle v. GEICO General Insurance Co., 2014 WL 793339 *2 (M.D. Fla. February 27, 2014).

          Finally, the only remaining defensive matter under discussion on this motion to strike was the third affirmative defense in this case, which was simply that plaintiff's punitive damages claim in this case is barred by Section 627.737(4) of the Florida Statutes.  The motion to strike was denied as moot in this respect because the Court previously granted the defendant's motion to dismiss the plaintiff's request for punitive damages.  Cadle v. GEICO General Insurance Co., 2014 WL 793339 *3 (M.D. Fla. February 27, 2014).

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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Calling a Wrong Number Does Not Initiate Settlement.

 

FOR YOUR INSURED, YOUR COMPANY, YOUR OWN SAKE ... FOLLOW UP.

   When you work for an insurance company and your insured is facing certain liability in excess of policy limits, good faith and fair dealing will almost always require not only that you decide to settle for your company's policy limits, but that you affirmatively act to try to make it happen.

   Follow up, or the Court may write a published opinion if you did not follow up, that the bad faith case against your company is going to a Jury to decide because you did not follow up, as in Diperna v. GEICO General Insurance Co.,  2013 WL 6050759 *8, *10 (M.D. Fla. November 15, 2013) (denying both sides' motions for summary judgment; pointing out that claims representative's "failure to follow up raises the issue of whether GEICO could have reasonably settled the claim if it had merely followed up with [the claimant's attorney] and whether this was something that a reasonably prudent person, faced with the prospect of paying the total recovery, would have done"; and writing without qualifying the observation later in the same opinion, that the claims representative in that case "failed to follow up with [the claimant's attorney] with respect to his settlement offer at all.").

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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DAVID BOIES, HANK GREENBERG PREEMPTED AND DISMISSED TOGETHER.

          In a case with Hank Greenberg's Starr corporation as the plaintiff, and with David Boies as the plaintiff's attorney, a Federal District Court entered its Judgment dismissing Starr's "claims against the Federal Reserve Bank of New York ('FBNY') for breach of fiduciary duty in its rescue of American International Group, Inc. ('AIG') during the fall 2008 financial crisis."  Starr International Co. v. Federal Reserve Bank of N.Y., 742 F.3d 37, 38 (2d Cir. 2014).

          On appeal, the Federal Second Circuit Court of Appeals affirmed the District Court's Judgment of dismissal on the ground that Delaware's law of fiduciary duties, which in other circumstances would govern the FBNY's conduct, was preempted by Federal law in this case.  Starr International Co. v. Federal Reserve Bank of N.Y., 742 F.3d 37, 41-42 (2d Cir. 2014).

          Not even a highly publicized lawyer and a famous client in this case could overcome the presumption of preemption, or to put it another way, the cloak of immunity which has been protecting financial decision-makers since at least 2008.

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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CONFERRING IN GOOD FAITH EFFORT TO RESOLVE THE DISPUTED MOTION.

          Like most Courts in the United States, the U.S. District Court for the Middle District of Florida requires that every lawyer sign a certificate that she or he conferred in a good faith effort to resolve the disputes before filing motions and taking up the time and resources of the Court.  In the Middle District of Florida, this rule is known as Local Rule 3.01(g).

          It is not clear what the lawyers did to confer before January 24, 2014 when they filed their motions in the case of Bradfield v. Mid-Continent Casualty Co., 2014 WL 292202 (M.D. Fla. January 24, 2014).  Whatever they did, it did not appear to comply with the good faith requirement of Rule 3.01(g), and whatever they did, did not satisfy the U.S.  Magistrate Judge in that case that they did comply with the Local Rule.  "It is evident from the parties' pleadings and correspondence that counsel has failed to comply meaningfully with the Local Rules."  Bradfield v. Mid-Continent Casualty Co., 2014 WL 292202 *4 (M.D. Fla. January 24, 2014).

          In the Bradfield case, the plaintiff's lawyer is in Clermont, Florida and the defendant's lawyers are in Miami, Florida.  In the author's experience, out-of-town and out-of-State lawyers have tried, and failed, to comply with Local Rule 3.01(g) by sending EMails and then claiming that you did not reply in time, so they filed their motions.

          Although it is unclear what happened in the Bradfield case, the Magistrate Judge's resulting ruling is pretty clear about Rule 3.01(g) conferences in that case going forward:

Therefore, all future Rule 3.01(g) conferences shall occur only by telephone or in person.  If the Court finds that the parties are not engaging in meaningful telephone conferences, it will require all Rule 3.01(g) conferences be conducted in person.

Bradfield v. Mid-Continent Casualty Co., 2014 WL 292202 *4 (M.D. Fla. January 24, 2014)(Lammens, USMJ).  [Emphasis added.]

          Whatever happened in this particular case, EMails, letters and text messages, by themselves, are clearly not good-faith Rule 3.01(g) conferences before motions are filed in the Middle District of Florida.  Only meaningful in-person and telephone conferences need apply.

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

 Please Read The Disclaimer.

CALLING A WRONG NUMBER DOES NOT INITIATE SETTLEMENT.

          The liability carrier for a defendant in a single-car accident previously issued a policy with $10/$20 limits.  One of the passengers, a minor, sustained serious injuries and one of her fingers was amputated as a result of the accident.  Jaimes v. GEICO General Insurance Co., 534 Fed. Appx. 860,  2013 WL 4106364 *1 (11th Cir. August 15, 2013).

          The evidence established that the carrier knewthat the young girl's injuries "well exceeded the Policy's limits."  The carrier acknowledged that from the day of the accident, "the injury warranted a tender of the Policy's limits."   Jaimes v. GEICO General Insurance Co., 534 Fed. Appx. 860,  2013 WL 4106364 *6 (11th Cir. August 15, 2013).

          Yet the carrier did not tender its policy limits.  The case went to verdict and judgment against its insured for $227,493.85, or over 22 times the individual policy limit and over 11 times the aggregate policy limit.  Jaimes v. GEICO General Insurance Co.,  534 Fed. Appx. 860,  2013 WL 4106364 *2 (11th Cir. August 15, 2013).

          The carrier defended on many grounds including that its conduct may have been negligent, but it did not act in bad faith in failing to settle in this case.  The carrier's adjuster tried to initiate settlement with the injured claimants but he called a wrong number.

After that, he wrote "numerous letters (to multiple addresses) and left a few voicemails (at various numbers)" asking the claimants to contact him.  However, none of the letters or voicemails communicated his company's desire to settle the young lady's injury claim.  Jaimes v. GEICO General Insurance Co., 534 Fed. Appx. 860,  2013 WL 4106364 *1 (11th Cir. August 15, 2013).

          On appeal, the Federal Eleventh Circuit Court of Appeals held that there was sufficient evidence of bad faith under Florida law here.  Jaimes v. GEICO General Insurance Co., 534 Fed. Appx. 860,  2013 WL 4106364 *6 (11th Cir. August 15, 2013).  In particular, the Federal appellate court pointed out that "negligence in handling the underlying claim is not a defense, but rather, is material in determining bad faith."  Jaimes v. GEICO General Insurance Co., 534 Fed. Appx. 860,  2013 WL 4106364 *5 (11th Cir. August 15, 2013).

          One of the carrier's other contentions was equally unavailing.  The carrier contended on appeal that there could be no bad faith because the injured claimant never made a settlement demand for the policy limits "within the time period in which she would have accepted the Policy's limits to settle her claim."  This did not determine the outcome under settled Florida law in this case.  The Eleventh Circuit panel followed Florida law in holding that the absence of a formal demand in such a case as this, does not preclude a finding of bad faith, citing a Florida case decided 23 years before.  Jaimes v. GEICO General Insurance Co., 534 Fed. Appx. 860,  2013 WL 4106364 *6 (11th Cir. August 15, 2013).  To like effect, see Hayas v. GEICO General Insurance Co., 2013 WL 4495196 *2-*3 (M.D. Fla. August 21, 2013)("The Court rejects GEICO's assertion that dismissal is warranted because Hayas has not identified a specific offer to settle that GEICO neglected to accept.").

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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"MR. WATT, TEAR DOWN THIS FHFA WALL!" Coming on Insurance Claims and Issues Blog!

   Night is falling here in the Eastern Time Zone.  Early tomorrow, Monday, March 3rd, Insurance Claims and Issues Blog will begin its exclusive week-long focus on lender force-placed insurance practices concerning residential mortgages.

    Be sure to tune in and turn on to Mortgage Madness this March, starting with "MR. WATT, TEAR DOWN THIS FHFA WALL!"

  © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

 

 Please Read The Disclaimer.