The opinion in Andrew v. Century Sur. Co., 134 F. Supp. 3d 1249 (D. Nev. 2015) is long. That is probably because it is largely a reconsideration of an earlier ruling.
The Federal District Judge reconsidered the consequences to a liability carrier of wrongfully denying its insured a defense.
Even where there is no sordid or other "bad faith" conduct, the Court concluded that the liability carrier's exposure for wrongfully denying a defense is governed by an old rule: Breach of a contractual duty can give rise to consequential damages.
As the Court put it in this case:
In Nevada, the amount expected to be paid under a contract is not the only measure of damages for a breach. Nevada also allows recovery of consequential losses. Thus, if the default judgment was a reasonably foreseeable consequence of Century's breach, then Century is liable for the entire amount of the default judgment as consequential damages resulting from the breach of its duty to defend, regardless of the policy limits.
Andrew v. Century Sur. Co., 134 F. Supp. 3d 1249, 1257-58 (D. Nev. 2015).
Or, as the Court succinctly summarized its new holding, giving voice to the majority view on this issue as it did so: "There is no special rule for insurers that caps their liability at the policy limits for a breach of the duty to defend." Andrew v. Century Sur. Co., 134 F. Supp. 3d 1249, 1259 (D. Nev. 2015).
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