Claims and Bad Faith Law Blog

NO INSURANCE COVERAGE, NO INSURANCE BAD FAITH.

In HSBS Bank USA, N.A. v. Fid. Nat'l Title Ins. Co., No. 3:19-cv-00265-MMD-WGC, 2020 WL 886940 (D. Nev. February 20, 2020), a U.S. District Judge applied Nevada substantive law. The federal court granted the defendant title insurance carrier's motion for judgment on the pleadings in that case with respect to the implied covenant of good faith and fair dealing because there was no insurance coverage in the first place.

The Court granted the defendant carrier's motion as to a claim of what the Court called "contractual" breach of the implied covenant, and also granted the motion as to an alleged "tortious" breach of the implied covenant in that case. "Here, Fidelity had a reasonable basis to deny coverage because HSBC's claim was not covered by the Policy, as discussed above. The Court will therefore grant the MJP [motion for judgment on the pleadings] on HSBC's claim for tortious breach of the implied covenant." HSBS Bank, 2020 WL 886940, at *6.

Where there is no insurance coverage, there is no insurance bad faith: That was the reason for the ruling in this case as in so many other cases in the United States, though not all.

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STIPULATIONS, PROTECTIVE ORDERS, GOOD CAUSE AND ... OUTHOUSE OR IN-HOUSE COUNSEL?

The case of Allscripts Healthcare, LLC v. DR/Decision Resources, LLC, d/b/a Decision Resources Group ["DRG"], No. 19-11038-NMG, 2020 WL 837444 (D. Mass. February 20, 2020), is a contract dispute. The defendant, DRG, wanted to tighten the confidentiality of one document beyond even the stipulated protective order that the parties had already obtained in that case. DRG wanted to "enhance" the existing protective order to bar review of one document by the plaintiff's in-house counsel and limit review strictly to the plaintiff's "outside counsel."

The District Judge's resolution of this matter was clear and succinct:

    A party to a stipulated protective order seeking to modify the order must demonstrate good cause for modification. [Citation omitted.]  DRG fails to proffer a persuasive reason for its speculation that Allscripts’ attorneys, who are officers of the Court and bound by the Protective Order, would flout their duty and disclose to Allscripts’ employees information labeled as “Confidential-Attorneys’ Eyes Only” in violation of the Protective Order.

    Accordingly, DRG’s motion to enhance the Protective Order will be denied.

Allscripts, 2020 WL 837444, at *4-*5.

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SPECIAL APPEALS IN MARYLAND: INSURANCE COVERAGE FOR LEAD POISONING.

Two insurance coverage issues were addressed by the Maryland Court of Special Appeals in Pennsylvania Nat'l Mut. Cas. Ins. Co. v. Jeffers, ___ A.3d ___, No. 960, 2020 WL 502612, at *1 (Md. Ct. Spec. App. January 31, 2020) (stated not released for permanent publication):

    This case involves two issues of insurance coverage that have arisen in the context of judgments for lead poisoning.

[* * *] 

    We shall hold that the insurer in this case was not obligated to indemnify the insured for bodily injury that occurred before its policy period began or after its policy period ended. Although we recognize that an unborn child may suffer bodily injury from exposure to lead while in utero, we shall hold that the evidence in this case was insufficient to establish when any such injury began, and thus insufficient to establish an obligation on the insurer’s part. Finally, we shall hold that the insurer must pay postjudgment interest on the entire amount of the judgment even if it is obligated to indemnify its insured for only part of the judgment.

Based on these rulings, the appellate court reversed a summary judgment effectively entered against the carrier on the issue of interest liability, affirmed a summary judgment in favor of the carrier on the issue of "bodily injury" liability coverage, and remanded.

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GIVING FLORIDA STANDARD BAD FAITH JURY INSTRUCTION HELD REVERSIBLE ERROR.

Giving the Florida Standard Bad Faith Jury Instruction resulted in reversible error when a jury instruction specifically tailored to the insurance bad faith case was called for, in Cooper v. Federated Nat'l Ins. Co., 285 So. 3d 1036, 1038-39 (Fla. 5th DCA 2019).

The Florida Standard Bad Faith Jury Instruction at issue in the Cooper case is Fla. Std. J.I. (Civ.) 404.4. The Coopers requested a complementary instruction based on the theory of their case, that the defendant carrier violated Fla. Stat. § 626.9541(1)(i)3. The trial court's denial of this requested specific instruction as a complement to the Standard Jury Instruction was the basis of its reversible error, in the eyes of the Florida appellate court in this case.

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JUDGE AMY BERMAN JACKSON, WHAT IS YOUR SENTENCE NOW?

This post is updated and changed here from Claims and Issues Blog, where it originally appeared on Wednesday, February 12, 2020.

William Barr's Justice Department has withdrawn its own prosecutors' sentence recommendations for convicted felon Roger Stone. Instead of 7 to 9 years behind bars, Mr. Barr objects. He leaves the substituted recommendation open-ended without committing to anything beyond leaving the sentencing decision to the judge, who will have the final say in any event.

That happened on Tuesday.  On Wednesday, the federal judge presiding over Roger Stone's case was reportedly attacked on Twitter.  As one commentator observed, 'The Marshal's Service will be very busy now, protecting Judge Amy Berman Jackson from physical harm.'  Here is the report in the Washington Post.

This was not an ambiguous criminal case. It was clear from the start to everyone involved. The jury in Mr. Stone's case deliberated for only seven hours before they returned convictions on every count, every charge against Mr. Stone.

"In their initial sentencing memorandum federal prosecutors said that Mr. Stone should serve up to nine years because he threated a witness with bodily harm, deceived congressional investigators and carried out an extensive, deliberate, illegal scheme that included repeatedly lying under oath and forging documents." Katie Benner, Sharon LaFraniere, and Adam Goldman, Justice Dept. Acts to Ease Sentence ... / 4 U.S. Prosecutors Quit Stone Case After Bosses Step In to Overrule Them, NEW YORK TIMES, Wed., Feb. 12, 2020, at A1.

After his indictment and before he was tried, Mr. Stone reportedly also violated the Court's gag orders against speaking out and threatened Judge Amy Berman Jackson, the judge presiding over his criminal case. She is also the judge who will sentence him following his convictions.

One of Mr. Stone's defenses to all this is that Mr. Stone was once riddled with anxiety but that he is much better now, the New York Times reports.

So, Judge Amy Berman Jackson, what sentence if any will you impose for these crimes? "Our nation turns its lonely eyes to you."

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WHEN PERMISSIVE STIPULATIONS BECOME MANDATORY.

In Sanchez v. County of Sacramento, No. 2:19-cv-01545-MCE-AC, 2020 WL 605882 (E.D. Cal. February 7, 2020) (Claire, USMJ), a U.S. Magistrate Judge ordered all parties to execute a stipulated protective order.

The Local Rules for the Eastern District of California where this ruling was made regulate the Mechanics of Obtaining a Protective Order.  Local Rule 141.1(b) (emphasis in the title of this Local Rule).  On its face, it is clearly permissive, certainly where pretrial discovery like that at issue in this case is involved, not mandatory.  See Local Rule 141.1(b)(1).

If U.S. Magistrate Judges in the Eastern District of California are nonetheless empowered to order the parties to stipulate to secrecy orders, are they also empowered to order the parties to stipulate to anything else? And if not, then what are the limits on their power to mandate stipulations of any kind?

And what becomes of the First Amendment right of public access to court files which is recognized, for example, in the same Local Rules of the Eastern District of California?  See Local Rule 141.1(a).

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PARTICULARIZED SHOWING OF COMPELLING REASONS TO SEAL CORPORATE POLICIES & PROCEDURES.

Trevino v. Golden State FC LLC & Amazon.Com, Inc., et al, No. 1:18-cv-00120-DAD-BAM, 2020 WL 550702 (E.D. Cal. 02.04.20) (McAuliffe, USMJ),
is a decision in a case which does not identify the causes of action or claims advanced by employees against Amazon and other corporations.

The decision-in-the-dark, so to speak, continued with a holding that Amazon and the other defendants were entitled to seal certain documents that set out their corporate policies and procedures. Other than conclusions, the decision apparently left the reasoning out of the decision. At least I cannot find the reasoning and if someone else can, I would appreciate learning the knowledge.

The documents to be sealed were filed in the Court File in opposition to the plaintiffs' motion to certify a class against Amazon and the other corporate defendants. The U.S. Magistrate Judge in this case held that Amazon's request to seal the corporate policies and procedures were subject to a showing of "compelling reasons" to seal them. Trevino, 2020 WL 550702, at *2. Yet, I cannot find any "compelling reasons" beyond a conclusory statement that the records are "confidential" because they would hurt Amazon's "competitive" position. (Really? Amazon's competitive position?)

Further, the USMJ held that the showing that Amazon and the other defendants made to her for sealing these documents was "particularized" as required, Trevino, 2020 WL 550702, at *2, although the decision does not contain a further description of the showing beyond saying that it was "particularized" concerning unspecified corporate policies and procedures that now are sealed from public view.

This decision puts a spotlight on the need for judges to show the reasoning for their decisions particularly concerning what is and what is not "particularized." Declaring a showing to be "particularized" without necessarily disclosing why the showing is "particularized" is simply not enough disclosure.

This decision may provide some guidance on sealing corporate policies and procedures, at least in other cases involving Amazon perhaps, as Amazon and its lawyers undoubtedly know what was involved in this case.

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"THINK THE SUBPRIME CRISIS IN 2008 WAS BAD?" BUCKLE UP!

"Imagine a real estate crisis caused by rising sea levels and coastal flooding that renders thousands of square miles of land uninhabitable or useless for farming." Think the catastrophe will be insurable? Or is it a known risk? Will the resulting damages be covered, will they be payable under any insurance policy?

Bankers think it is a known risk. See Jack Ewing, World's Banks Racing to Prepare for Climate Risks, NEW YORK TIMES, Friday, Jan. 24, 2020, at B3 (online access at your own risk, The New York Times may put up a paywall, depending).

What do you think?

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