Claims and Bad Faith Law Blog

EXPERT TESTIMONY TO ROUND OUT THE MONTH:   NEUROSURGEON & BAD FAITH.

(Photo courtesy of NASA)

In Jarman v. American Family Ins. Co., No. CV-18-00526-PHX-SMB, 2020 WL 7013957 (D. Ariz. July 10, 2020), the Court held that a neurosurgeon could still testify to facts observed as a fact witness even though the plaintiff-policyholder did not designate the neurosurgeon as an Expert Witness.  Under Arizona law, this included testimony about delay and denial in an insurance carrier's authorization and thus in the policyholder's treatment that were perceived in the eyes of the neurosurgeon.  Jarman, 2020 WL 7013957, at *1.

    However, the Court did not permit the neurosurgeon to testify in this bad-faith case that the insurance carrier's allegedly unreasonable delays and denials were part of a habit or pattern that the carrier followed "routinely in other cases."  That calls for the opinion testimony of an Expert, and this witness was not designated as such so that such testimony from this witness was excluded.  Jarman, 2020 WL 7013957, at *1.

    That takes care of the bad-faith portion of the Court's rulings.  Another ruling is of interest, parenthetically.  The Court declined to allow the neurosurgeon who had not been designated as an Expert Witness to testify to an Expert opinion that the carrier caused post-traumatic stress in its handling of the plaintiff's claim.  Jarman, 2020 WL 7013957, at *2.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

HAPPY THANKSGIVING, BUT POLICY'S PRIMARY BENEFICIARY RECEIVES LIFE INSURANCE PROCEEDS.

(Desiree Rios / New York Times)

TODAY IS THANKSGIVING DAY.  REMEMBER THE NEEDIEST!

 

In D.S.S. v. Prudential Ins. Co. of Am. & Time Warner Cable, No. 3:20-CV-248-CRS, 2020 WL 6877738 (W.D. Ky. Nov. 23, 2020), a federal court turned the defendant corporations' motion to dismiss into a motion for summary judgment, and then granted them summary judgment on the claims of life insurance policy survivors.

Survivors brought suit to allege claims of breaches of contract and of fiduciary duty, bad faith, and violations of ERISA for the life insurance company's refusal to pay the survivors the proceeds of a life insurance policy taken out by the cable company on the deceased, a cable company employee.

The deceased was their mother.

There was evidence in the record, however, that the deceased had changed her beneficiary to a person who was not one of the suing survivors, in accordance with the plan and the policy.

So, in accordance with the plan and the policy, the life insurance company paid the proceeds of the policy to the primary beneficiary named on the policy.  Among other things, there was no bad faith on the part of the insurance company on this record, the judge ruled.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

CHALLENGING THE FILED RATE: THE ADMINISTRATIVE REMEDIAL APPROACH.

When a filed rate is challenged in a proceeding made available by statute to challenge the rate, it is possible to allege and even to prevail on a complaint that the filed rate is excessive and should not be charged.  There is just no filed rate doctrine in such administrative proceedings, it appears.

Even when the persons challenging the rate as excessive file their own complaint "incorrectly" but they allege enough claims to merit the attention of the agency.  See Malott v. Summerland Sanitary Dist., 55 Cal. App. 5th 1102, ___ Cal. Rptr. 3d ___ (Cal. 2d DCA, Div. 6, October 19, 2020).

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

SECRET SETTLEMENT TALKS IN FACE OF KENTUCKY BAD FAITH ALLEGATIONS.

In Rebennack v. Westchester Fire Ins. Co., ___ S.W.3d ___, Nos. 2018-CA-1494-MR &  2019-CA-0078-MR, 2020 WL 6811652, at *1-*2 (Ky. Ct. App. Nov. 20, 2020) (stated NOT FINAL), Kentucky's Court of Appeals kept any mention of settlement talks in the appellate briefs a secret.

Despite the fact that there were allegations of underlying bad faith failure to settle.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

"GOOD FAITH BELIEF" IN A STIPULATED PROTECTIVE ORDER: WHOSE BELIEF?

Stipulated protective orders pretty universally require a "good faith belief" that the materials being marked "Confidential" are, in fact, worthy of being marked Confidential.  But whose good faith belief are we talking about?

(Photo by Peter Dejong/AP)

In some cases, this apparently means a good faith belief by the lawyers who marked the thing "confidential" in the first place.  See, e.g., Davey's Locker Sportfishing, Inc. v. Amco Ins. Co., No. 8:20-cv-01424 JVS (JDEx), 2020 WL 6681858, at *1, GOOD CAUSE STATEMENT (C.D. Cal. Nov. 12, 2020) (Stipulated Protective Order signed by USMJ; boldface in original).

In other cases, this expressly constitutes "a representation by the party or nonparty and its counsel that they believe in good faith" that the material designated "confidential" is, in fact, confidential.  See, e.g., Mullins v. Humana Health Plan, Inc., No. 4:20-cv-00192-CDL, 2020 WL 6706364, at *1, ¶ 3 (M.D. Ga. Nov. 13, 2020) (Definition of Confidential Material in Stipulated Protective Order signed by U.S. District Judge; italics in original).

In still other cases, the last remaining alternative is written in the Stipulated Protective Order and the requisite "good faith" belief comes from "the producing party[.]"  Multicare Health Sys. v. National Fire & Marine Ins. Co., No. C20-5559 TSZ, 2020 WL 6700924, at *1, ¶ 2 (W.D. Wash. Nov. 13, 2020) ("'CONFIDENTIAL' MATERIAL" paragraph in Stipulated Protective Order signed by U.S. District Judge; all caps in original).

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

WHEN A COVERAGE DEFENSE 'RESIDENCE' IS FAIRLY DEBATABLE.

The short answer is:  when it is a complicated endeavor.

(Image courtesy of NASA)

In Bloxham v. Allstate Ins. Co., No. 3:19-CV-004812020, WL 6710427 (M.D. Pa. Nov. 16, 2020) (Mehalchick, USMJ), a homeowner's insurance carrier denied coverage for a fire loss.  The carrier's coverage denial was premised on two related grounds:  that the claimant did not "reside" on the covered property and that there were "material misrepresentations" that he did.

The carrier's motion for summary judgment was denied including on a statutory claim of insurer bad faith.  The Court's announced reason after reviewing all the evidence on the question of the insured's "residence" in that particular case was this:  "Defining and determining the term 'reside' is a complicated endeavor."  Bloxham, 2020 WL 6710427, at *8.

The Court did not say so in this case but clearly it came to the conclusion after reviewing all the evidence that this coverage question was fairly or reasonably debatable.

That is the real reason that the carrier's motion for summary judgment based on that coverage question was denied.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

Business Interruption (BI) and COVID-19.

Like the people of the United States, not every virus exclusion looks alike.

        (Image courtesy New York Public Library Digital Collections)    

    Read your clients' policies before you decide whether and how to argue for or against insurance coverage for the pandemic.  See, e.g., Covid Coverage Litigation Tracker Blog News posted October 27, 2020,

"Not All Virus Exclusions Are Equal."

   

 

 

(Brennan Linsley /Associated Press)

    On a related note, read the cases to find the law, not just the headnotes.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

COMMENTS ON FEDERAL INFORMATION COLLECTION NOTICE DUE TOMORROW.

The organization that is still in control of the federal government proposes to collect information on "Federal and Non-Federal Financial Assistance Instruments" through the Forest Service.  The deadline for Comments on this proposal is tomorrow, Friday, November 13, 2020.  Now is the time to make your voice heard once again.

Feel free to use all or part of the Comments I left today, which are published below for your ease of reference.  Thank you for being a citizen.

Agency: FOREST SERVICE (FS)
Document Type: Notice
Title: Agency Information Collection Activities; Proposals, Submissions, and Approvals:: Federal and Non-Federal Financial Assistance Instruments
Document ID: FS_FRDOC_0001-3384

Document No.:  2020-20195.

Comment:

BECAUSE THE NOTICE IS UNSUPPORTED BY FACTS, IT IS IN VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT AND CANNOT BE IMPLEMENTED IN ACCORDANCE WITH LAW.

The Notice contains unsupported statements that the actions described in it are authorized by Congress because they are exempted by Congress from statutes that would otherwise govern these actions: "The Forest Service issues partnership agreements under specific authorities exempt from the Federal Grants and Cooperative Agreements Act (FGCAA). This collection is for a new form that will be used to enter into [certain] agreement[s.]"

   The Notice further contains this advisory: "In addition to Federal Financial Assistance (FFA), Congress created specific authorizations for acts outside the scope of the FGCAA. Appropriations language was developed to convey authority for the Forest Service to enter into relationships that are outside the scope of the FGCAA. The Forest Service implements these authorizations using instruments such as collection agreements, FGCAA exempted agreements, memorandums of understanding, and other agreements which mutually benefit participating parties. These instruments fall outside the scope of the Federal Acquisition Regulations (FAR) and often require financial plans and statements of work."

THE NOTICE FAILS TO SUFFICIENTLY IDENTIFY THE AUTHORITY OR LEGAL BASIS FOR IT. FOR THAT ADDITIONAL REASON, IT IS CONTRARY TO LAW AND CANNOT LAWFULLY BE IMPLEMENTED.

The exemptions are unidentified in this Notice except by reference generally to " the Federal Grants and Cooperative Agreements Act" and to "Federal Financial Assistance." "Authorization" to expend federal funds and enter into agreements is not specified. For these reasons, this Notice merits further attention.

    Background Information: This particular Notice is unusual in that it does not identify the specific statutory provisions on which it is based. The Federal Grants and Cooperative Agreements Act is codified at 31 USCA § 6301 et seq. The federal government has provided a description of its operation at https://www.grants.gov/learn-grants/grant-policies/federal-grant-cooperative-agreement-act-1977.html.

CONCLUSION

For all of the above reasons, whether taken separately or together, the proposed Notice is unauthorized and contrary to law. Therefore it cannot lawfully be implemented. Thank you for your consideration of these Comments.

Please read the disclaimer.  This blog article ©2020 Dennis J. Wall; permission is freely given to leave Comments in response to this proposed federal Notice on regulations.gov, that may contain material from this article.  All other rights reserved.

MICHIGAN PENALTY INTEREST BEGINS WITH "SATISFACTORY PROOF OF LOSS."

Michigan provides for statutory "penalty interest" on delayed payment of claims.  However, the Michigan penalty-interest statute requires "satisfactory proof of loss," or penalty interest is not available.

    "This case cannot be resolved on summary judgment. Resolution of the case depends on when defendant received 'satisfactory proof of loss,' Mich. Comp. Laws § 500.2006(4), and this issue is disputed. Notably, the statute requires 'satisfactory proof,' not any proof, some proof, or partial proof."  Johnson Law, PLC v. Sentinel Ins. Co., No. 19-CV-11786, 2020 WL 6585540, at *2 (E.D. Mich. Nov. 10, 2020).

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

VOLUNTARY PAYMENT NO DEFENSE TO EXCESS CARRIER'S BAD-FAITH CLAIM.

(Image by Thomson Reuters West)

In Metropolitan Prop. & Cas. Ins. Co. v. GEICO Gen. Ins. Co., 186 A.D.3d 1513, 130 N.Y.S.3d 847 (N.Y. App. Div., 2d Dep't, N.Y. 2020), it was held that "voluntary payment" was not a defense available to a primary carrier against an excess carrier's claim of insurer bad faith.

    As explained by the court in this case, the voluntary payment defense at common law is an affirmative defense in an action for the recovery of money which was voluntarily paid with full knowledge of the facts, in basic terms.

    In this case, the appellate court carefully explained that the voluntary payment doctrine has no place:

   Applying the common-law voluntary payment doctrine so as to bar actions alleging bad faith would allow primary insurance companies to benefit from their own bad conduct. Here, MetLife alleged that GEICO acted in bad faith by failing to timely notify MetLife of the underlying personal injury action commenced against their mutual insured, Colvin, by failing to timely apprise MetLife of developments in the underlying personal injury action, by failing to apprise MetLife that GEICO's tender of its policy limit to Gomez in the underlying personal injury action had been rejected, and by failing to adequately and properly defend Colvin in the underlying personal injury action. Moreover, in support of its motion, GEICO submitted copies of numerous emails and letters from MetLife's counsel and claims representative to GEICO requesting documents in order for MetLife to adequately assess Gomez's claim after being informed of the underlying personal injury action by Gomez's counsel and receiving a request from Gomez's counsel that MetLife tender its policy, as well as a copy of MetLife's reservation of rights letter issued to GEICO with respect to the settlement of the underlying personal injury action. As a result, we conclude that the voluntary payment doctrine does not apply in this action alleging bad faith.

Metropolitan Property & Casualty, 186 A.D.3d at ___, 130 N.Y.S.3d at ___ (page numbers not available at time of publication).

The voluntary payment doctrine is explored in the context of lender force-placed insurance practices in § 11:25, 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d ed. and 2020 Supps. Thomson Reuters West).  Actions by Excess Carriers and Defenses of Primary Carriers are the specific focus of §§ 7:7 - 7:18, inclusive, in Volume 1, id.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved. 

"REASONABLY DEBATABLE" COVERAGE QUESTION DECIDED IN FAVOR OF GOOD FAITH.

(Gridview_imagefull / Florida Department of Agriculture and Consumer Services)

Chicago Title issued a title insurance policy to the appellants in the case of Jericho State Capital Corp. of Fla. v. Chicago Title Ins. Co., ___ S.C. ___, 848 S.E.2d 572 (S.C. Ct. App. 2020).  The policyholders-appellants contended that the title insurance policy should have provided coverage to a claim based on an ordinance that the appellate panel described as "unusual."

    Although the underlying claim based on the ordinance was not clearly excluded from coverage under the title insurance policy at bar, the South Carolina Court of Appeals had little trouble holding that the claim was not excluded but covered. 

    After the South Carolina appellate court held that the coverage question was a close one, the appellate panel affirmed the entry of summary judgment in favor of the carrier on the policyholders'-appellants' bad-faith claim.  The latter holding was in line with the majority view of courts in the United States that the closeness of the coverage question prevented the viability of a bad faith claim against the title insurance carrier:

    Appellants’  bad faith cause of action fails because they did not demonstrate Chicago Title acted unreasonably in denying Appellants’ claims.  [Citation omitted.]  The unusual nature of the Ordinance presented close policy interpretation issues. Chicago Title had a reasonable basis for denying the claims, and we affirm summary judgment to them as to this issue.

Jericho State Capital, ___ S.C. at ___, 848 S.E.2d at ___ (at headnote 20; page numbers not available at the time of publication of this article).

      The appellate panel mentioned at the end of its opinion that it took no position on the policyholders'-appellants' apparently separate claim based on alleged breach of the implied covenant of good faith and fair dealing.  This was the first time that the panel mentioned the existence of such a claim, but the panel did not treat it except to say that the entry of summary judgment in favor of the carrier on that claim, too, had not been appealed and so was not before the court on appeal.

Fairly or Reasonably Debatable Claims are discussed collectively as a defense of Good Faith to claims of Insurer Bad Faith in 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 11:17 (3d ed. and 2020 Supps. Thomson Reuters West).

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved. 

POSTSCRIPT TO JURISDICTION.

(Sun Sentinel photograph)

In a postscript to yesterday's article on Jurisdiction, we now have further reports that clarify some of the earlier confusing reporting.  Apparently three lawsuits have been filed by the losing candidate's campaign so far, as previously reported.

           Two of those lawsuits were filed in State Court, not Federal Court, however.  One was filed in Georgia and the other was filed in Michigan.  Both have already been rejected by State Court Judges.

           The third and remaining lawsuit at this time was filed in Federal Court in Pennsylvania.  The announced purpose was to stop the counting of votes already cast.  The Federal Judge presiding over that case rejected that one, as well.  No word yet on the Federal Court's claim to jurisdiction, if any, over State Election Law.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

ARE PLAINTIFFS IN ELECTION CASES DEMANDING FEDERAL ACTIVISM, PREEMPTIVE JURISDICTION?

This article arises from the same common nucleus of operative facts, so to speak, out of which an earlier article published today also arises.

Recently filed elections cases have also caused me to wonder about Federal jurisdiction.

Are the plaintiffs in these elections cases asking Federal Judges to be activists and preempt the jurisdiction of State Courts over State Election Laws?  That seems to be the gist of the lawsuits I have seen reported to date.

There was a lawsuit filed in U.S. District Court in Texas, in which the same person or group of people reportedly filed the same lawsuit they had already lost in the Texas Supreme Court.  Each time the lawsuit challenged the legality of drive-through voting in Harris County (Houston).

Isn't the issue of legality of drive-through voting a matter for the Texas State Courts to decide?

Parenthetically, I understand that the same person or group of people who lost their case in the Texas Supreme Court also lost their case in the U.S. District Court and then they lost again in the Federal Appellate Court.

Different people have filed their own lawsuits which are basically one lawsuit as well, but these people have filed in different States, all in Federal Court.  They have so far filed their lawsuit in Georgia, Pennsylvania, and Wisconsin.

The same losing candidate's campaign organization has reportedly filed three times, once in each of three Federal Courts.  It is confusing.  Apparently two of these same lawsuits were filed to stop counting votes and the third was filed for a re-count.

Isn't the issue of applying State Election Law an issue for State Court Judges to decide? 

I am going to look into the jurisdictional basis if any for asking Federal Courts to preemptively and actively exercise jurisdiction so as to impose their own views of local Election Law in these States.  As I wrote today in the earlier article also arising out of these developments, let's all of us keep an eye on the lawsuits being filed, and on who files them and who pays for them.

Assessing "bad faith" attorney's fees and sanctions, along with many situations requiring good faith and fair dealing, are discussed in § 2:7 in 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d ed. and 2020 Supps. Thomson Reuters West).  Attorney's fees awarded in a variety of cases are the subject of §§ 13:12 -13:14 in Volume 2, id.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

"BAD FAITH" ATTORNEY'S FEES EXPOSURE: LITIGIOUS PLAINTIFFS IN ELECTION CASES?

(Photograph Brennan Linsley / Associated Press)

Recently filed litigation has caused me to wonder about "bad faith" attorney's fees liability.  First, let me describe the lawsuits that have caused the wondering.

In Texas, the same person or group of people reportedly filed the same lawsuit more than once challenging the legality of drive-through voting in Harris County (Houston).  They filed in Texas State Court to begin with, ultimately losing at every level all the way to the Supreme Court of Texas, according to the confusing reporting.  Then they filed in a U.S. District Court in Texas and they lost there.  Then they filed an appeal to the Fifth Circuit Court of Appeals.  My understanding is that they lost again there.

Other people have also filed their own "one-note" lawsuit but in different States, all in Federal Court.  In Georgia, Pennsylvania, and Wisconsin there is a lawsuit filed in a Federal District Court in each state by the losing candidate.   The same losing candidate filed in each.  It is confusing, at least before looking more closely at each of these lawsuits, but apparently two are to stop counting votes and the third is for a re-count.  Presumably the votes have already been counted once before the recount litigation was filed, or else there could not be a "recount" yet, but as I say, the reports are confusing.

I want to temporarily put aside the question of Federal jurisdiction to adjudicate State election matters, and concentrate here on the issue of exposure to "bad faith" attorney's fees in Federal Court.

Having laid out the facts for the moment, here now is the law.  My understanding has long been that there can be exposure under Federal Rule of Civil Procedure 11, under Federal Appellate Rules and under State Court equivalents for parties and their lawyers for bad faith in litigation.

Did the defendants and their lawyers even request attorney's fees in any of these cases for having to go through a "Groundhog Day" kind of litigation?

Parenthetically, if they did not request attorney's fees, did they request some kind of sanctions for this conduct?  I am not asking why the Courts did not assess attorney's fees or sanctions; I wonder if the defendants and their lawyers even asked for them.  Why should the defendants have to bear the full burden of their attorney's fees for repeatedly having to defend the same losing propositions?

I am going to look into this exposure in more detail.  In the interim, let's all of us keep an eye on the lawsuits being filed, and on who files them and who pays for them.

Assessing "bad faith" attorney's fees and sanctions, along with many situations requiring good faith and fair dealing, are discussed in § 2:7 in 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d ed. and 2020 Supps. Thomson Reuters West).  Attorney's fees awarded in a variety of cases are the subject of §§ 13:12 -13:14 in Volume 2, id.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

THANK YOU FOR VOTING!

Many people never got the chance we have to vote.  But without them, our votes would not be possible.  We remember them and honor them every time we vote.

Thank you for being a voter.

 

Photo courtesy of Common Ground.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

 

THANK YOU FOR BEING A VOTER TOMORROW.

(Orlando 2020.  Photo ©Dennis J. Wall.  All rights reserved.)

Tomorrow we get to exercise what many people have lived and died to protect for years in this country:  Our votes!

Thank you for being a voter.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.