Claims and Bad Faith Law Blog

MAKING "TOUGH DECISIONS".

   With so many people in Washington, D.C. saying lately that they make "tough decisions," here is a story that comes to us from the Middle East.

   A lawyer wanted to know what is a tough decision.  Or when is a decision tough, exactly.  A clergy member and a party member answered the lawyer.

   The clergy member was walking in a dangerous area.  He saw a person bleeding and beaten, lying on the ground.  This was evidence to the clergy member that this was indeed a dangerous area.  In fact, he thought that the perpetrators of this mayhem might still be about.  It was a tough decision, he said, but he decided to walk around the bleeding person and leave him in the dust.  He passed by the other side, even though it was a tough decision, he said again for emphasis.

   The party member, traveling separately from the clergy, also saw the same person bleeding and beaten, lying on the ground.  He too drew the only possible conclusion, he thought, which was that he was in a truly dangerous area and he had to get out of there immediately for his own safety sake.  For him, too, it was a tough decision but he also decided to pass by the other side of the beaten and bleeding person.

   Then there came an outlier.  Like the first two, he saw the beaten, bleeding person lying in the dust.  Unlike the first two, his decision was to help.  This third traveler bent over the bleeding person and bound up his wounds.  The third traveler then put the beaten person into his car (and since the beaten person was no longer bleeding, the clergy and the party member pointed out, so that he could not bleed all over the upholstery or something, that meant that this was not really a tough decision in their eyes).  The third traveler drove over to a nearby motel to put the beaten person up for the night.  Although he himself had to continue on his own journey, the third traveler left enough money with the motel desk clerk to cover the beaten person's room and board for another day or two if necessary, saying that if the bill came to more, he would pay it on his return trip.

   So, there you have it.  That is the story that comes to us about making tough decisions.  Which of these, in your opinion, actually made a tough decision?

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

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WHEN THE DEFENSE LAWYER REPRESENTS THE BAD FAITH PLAINTIFF ...

... AND THE INSURANCE COMPANY MOVES TO DISQUALIFY THE PLAINTIFF'S ATTORNEYS IN THE BAD FAITH CASE.

    "The case presently before the Court raises issues regarding Defendant's attempt to settle Plaintiff's claim for insurance proceeds and to obtain a release from further liability for its insureds ... by tendering a check for the $50,000 bodily injury policy limits to Plaintiff."  Merrett v. Liberty Mutual Insurance Co., 2013 WL 2710717 *1 (M.D. Fla. June 12, 2013)(Richardson, USMJ), objections overruled and Order aff'd by District Judge, 2013 WL 5330258 (M.D. Fla. September 23, 2013)(Howard, USDJ).  However, alleged bad faith failure-to-settle was not the issue in this third-party bad faith decision; it was the claim.

   This particular decision in the Merrett case was narrowly focused on whether the liability insurance company made a sufficient showing that the plaintiff's attorneys should be disqualified from representing the plaintiff in the third-party bad faith case.

   The insurance company's motion was directed to both of the plaintiff's attorneys.  One of those lawyers was the underlying defense attorney hired by the insurance company to represent the policyholder-insured in the underlying case.  The liability carrier made an argument often made as to why the underlying defense lawyer should be disqualified from representing the current plaintiff in the present bad faith case.  The carrier argued that the previous defense lawyer was a necessary witness in the plaintiff's bad faith case, and that it, the defendant, was going to call the previous defense lawyer as a witness in the bad faith case.

   The defendant carrier added a factual wrinkle to the standard argument in this particular case.  According to the carrier, this particular lawyer was "'the critical decision maker'" about whether or not to settle in the underlying case.  The carrier further argued that this meant that no other witness could testify about the plaintiff's settlement positions in the underlying case.  Merrett v. Liberty Mutual Insurance Co., 2013 WL 2710717 *1 (M.D. Fla. June 12, 2013)(Richardson, USMJ), objections overruled and Order aff'd by District Judge, 2013 WL 5330258 (M.D. Fla. September 23, 2013)(Howard, USDJ). 

    The legal question was whether on the record in the bad faith case it had been legally established that the lawyer's testimony would be "sufficiently adverse" to the bad-faith plaintiff's interests as to require his disqualification as one of his client's attorneys in the bad faith case.

   In an unusual legal ruling, compared to previous precedents in most U.S. jurisdictions, the Merrett Magistrate Judge in Florida ruled that the plaintiff's  lawyer could be disqualified because the defendant said it intended to call the plaintiff's lawyer as a witness.    The ruling included a double burden of proof, which held that where the defendant argued for disqualification because it was going to call the former defense lawyer as a witness, then the defendant carrier would have to show both that the lawyer is a "necessary witness" and that the lawyer's testimony would be "sufficiently adverse" to the client's interests to warrant disqualification in the bad faith case.  Merrett v. Liberty Mutual Insurance Company, 2013 WL 2710717 *3 (M.D. Fla. June 12, 2013)(Richardson, USMJ), objections overruled and Order aff'd by District Judge, 2013 WL 5330258 (M.D. Fla. September 23, 2013)(Howard, USDJ).  The U.S. District Judge agreed with this view of the applicable law.  Merrett v. Liberty Mutual Insurance Co., 2013 WL 5330258 *3 & n.8 (M.D. Fla. September 23, 2013)(Howard, USDJ).

   The Court concluded in this case that the carrier's double hand was not enough to win the disqualification issue in this case.  Merrett v. Liberty Mutual Insurance Company, 2013 WL 2710717 *3 (M.D. Fla. June 12, 2013), objections overruled and Order aff'd by District Judge, 2013 WL 5330258 *3 (M.D. Fla. September 23, 2013)(Howard, USDJ). 

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

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Related articles

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

FLORIDA AND CALIFORNIA BAD FAITH STATUTES COMPARED TO OTHER STATES.

   The Florida Bad Faith Statute is Fla. Stat. § 624.155.  It provides a statutory remedy which includes damages and can include the assessment of punitive damages.

   The California Bad Faith Statute is found in Cal. Ins. Code § 790.03(h).  It does not provide for damages let alone for the assessment of punitive damages.

   Both statutes are based on model legislation developed over decades by the National Association of Insurance Commissioners.

   All these and many other Bad Faith Statutes are explored in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH ch. 3 (West 3d ed., 2014 Supplement in process) regarding Third-Party Bad Faith cases, and in 1 id. ch. 7 in the differing contexts of actions by third parties and by excess carriers, primary carriers, and reinsurers; and in 2 id. § 9:14 regarding First-Party Bad Faith Claims.

Please Read The Disclaimer.  Copyright 2014 by Dennis J. Wall.  No claim to original U.S. Government works.

   

IMPLIED COVENANT IN ALL CONTRACTS INCLUDING FINANCING.

 

   The case of Idaho Trust Bank v. Bancinsure, Inc., 2014 WL 1117027 *10 n. 9 (D. Idaho March 20, 2014) involved an alleged refusal to extend financing which in turn was an alleged breach of contract under Idaho law.  The Court in this case observed this about Idaho law, which is consistent with many other U.S. jurisdictions:  "The covenant of good faith and fair dealing is a covenant in contract, not in tort.  A claim for a breach of that covenant, therefore, sounds in contract and not in tort."

 

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

Please Read The Disclaimer.

CALIFORNIA STATE COURT REJECTS GOOD FAITH DUTY TO INITIATE SETTLEMENT NEGOTIATIONS.

          In at least one of the iterations in the tortured history of the Yan Fang Du case previously posted here, the Federal Ninth Circuit Court of Appeals tried to invent a good-faith duty to initiate settlement negotiations for liability insurance companies in California.

          Since the Yan Fang Du Federal case was decided, a California State Court has refused to adopt such a rule in the absence of California authorities.  There is no duty to initiate settlement negotiations at the present time in California, even when the insured's liability is probable and the injured claimant's damages are "great," according to the California State Court deciding the case of Reid v. Mercury Insurance Co., 220 Cal. App. 4th 262, 277, 162 Cal. Rptr. 3d 894, 906 (Cal. 2d DCA, Div. 8, 2013), review denied (unreported) (Cal. January 21, 2014).

 

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

Please Read The Disclaimer.

"GOOD NEWS"? 800,000 STOP LOOKING; 288,000 FIND PART-TIME WORK.

          800,000 people have reportedly stopped looking for work, says the latest jobs report.  288,000 people found part-time work.  Newspapers and other reports present this to us as though we should believe that it is good news.  See, e.g., Nelson D. Schwartz, "Jump in Payrolls is Seen as a Sign of New Optimism / 288,000 Workers Added / Some Dark Signs, With Wages Flat and Job Seekers Daunted" p. A1, col. 1 (New York Times Nat'l ed., Saturday, May 3, 2014).

          The stats are real enough.  The reports that 800,000 people have stopped looking work and another 288,000 people found part-time work are accurate.  This however is obviously not good news at all.  The reports that this is good news go beyond spin to bad faith. 

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

 Please Read The Disclaimer.