Claims and Bad Faith Law Blog

"DON'T LET THE DOOR HIT YOU ON THE WAY OUT":

 SUA SPONTE REMAND OF UM BAD FAITH CASE.

GEICO General Insurance Company removed a case from Florida State Circuit Court to U.S. District Court on February 5, 2021.

           On February 9, the District Judge issued basically a "show cause" Order (unwritten, known in the Middle District of Florida as an "Endorsed Order") why the case should not be remanded, the requisite jurisdictional amount not appearing from the file.  The Federal Judge acted on her own motion.

           GEICO General responded on the last day given by the Federal Judge to show a jurisdictional basis for the case being in Federal Court.  That was February 16, one week to the day as it turns out, from the date that the District Judge issued the "show cause" Order.

           Seventeen days after GEICO General Insurance Company filed the removal papers, this case was remanded.  Rocha v. GEICO Gen. Ins. Co., No 8:21-cv-291-VMC-AEP, 2021 WL 672701 (M.D. Fla. February 22, 2021).

           The Federal Judge did not say so, but a review of PACER (Public Access to [Federal] Court Electronic Records) reveals that this was an Uninsured Motorist case in two counts, one count for insurance coverage and the other count for alleged insurer bad faith.  Rocha v. GEICO General Insurance Co., Complaint, Doc. No. 1-1 (Exhibit 1 to GEICO's Notice of Removal), filed Feb. 5, 2021 (M.D. Fla. Case No. 8:21-cv-291-VMC-AEP).

           The complaint did not allege a sum certain for the plaintiff's alleged damages.  Not surprisingly, the plaintiff alleged only the jurisdictional amount in Florida Circuit Court where he filed his lawsuit in the first place, $30,000.00.  GEICO argued this deficiency was made up by the plaintiff's demand for $100,000.00 policy limits, by his Civil Remedy Notice of Insurer Violation that the case "was clearly worth" more than the $100,000.00 policy limits, and by his allegation of a "permanent injury."

           The demand was legally insufficient to support federal jurisdiction in an amount in excess of $75,000.00 exclusive of interest and costs because "demand letters do not automatically establish the amount in controversy."  Rocha, 2021 WL 672701, at *2.

           The Court looked for "additional factual support."  It did not find additional factual support in the plaintiff's Civil Remedy Notice required by Florida's bad faith statute.  In Florida, the CRN is merely a condition precedent to suing for bad faith later.   Rocha, 2021 WL 672701, at *2.

           That left the possibility that there was additional factual support in this record that the plaintiff's damages established an amount in controversy in excess of $75,000.00.  The District Judge did not find additional factual support in what the record showed about the plaintiff's damages, either.  "The only concrete damages incurred fall below $37,000, and no information has been provided to reasonably calculate other categories of damages."  Rocha, 2021 WL 672701, at *2.

           The amount in controversy not having been established in this case, the Federal Court found that it lacked subject-matter jurisdiction and remanded the case back to Florida State Court.

           The Federal judge did not mention the insurer bad faith claim one time.  The only time that the Court mentioned "bad faith" at all was in a parenthetical quoted from another case that CRN's "'are precursors to bad-faith-failure-to-settle claims that may be brought against an insurer in the future.'"  Rocha, 2021 WL 672701, at *2 (citation omitted).  That was all.

           Clearly, claims of insurer bad faith do not command the attention of judges regardless of everything else.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

NO SECRETS ON GEORGE WASHINGTON'S BIRTHDAY & NEVER IN SIXTH CIRCUIT.

George Washington Statue (University of Washington)

In Sweeney v. Nationwide Mut. Ins. Co., No. 2:20-cv-1569, 2020 WL 8265654 (S.D. Ohio Oct. 6, 2020), a United States Magistrate Judge applied settled Sixth Circuit case law and denied permission to file an Amended Class Action Complaint in secret and under seal.

    The excuse offered by the parties in that case was that they had agreed to keep things a secret that showed up in the amended complaint.  "The parties’ agreement to maintain confidentiality, standing alone, does not constitute a compelling reason for filing under seal."  Sweeney, 2020 WL 8265654, at *1.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

NO COVERAGE CLAIM, NO BAD FAITH CLAIM.

EMPTY JURY BOX (Brennan Linsley / Associated Press)

In many cases in many Courts across the nation, the argument has taken hold that if there is no coverage claim, there is no bad faith claim.  The main exception has been statutory unfair claims handling practices claims which can exist independent of the common law.

    "Similarly, Pennsylvania courts have held that if the insurer properly denied a claim, the policyholder is unable to state a bad faith claim."  Kahn v. Pa. Nat'l Mut. Cas. Ins. Co., No. 1:20-cv-781, 2021 U.S. Dist. LEXIS 23090, at *11 n.5, 2021 WL 422607, at *5 n.5 (M.D. Pa. February 8, 2021).

The issues of "no coverage claim, no bad faith claim" and statutory exceptions, are discussed at length in Volume 1, DENNIS J. WALL, LITIGATION IN PREVENTION OF INSURER BAD FAITH § 3:28 (Third-Party Cases) and in Volume 2, id. §§ 9:1, 9:14 (First-Party Cases) (Thomson Reuters West 3d ed. & 2021 Supplements in process).

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

CLAIMING GOOD FAITH TO AMEND NO GOOD IN THIS CASE.

(Gridview_imagefull / Florida Department of Agriculture & Consumer Services)

The plaintiff in an insurance bad-faith case sought "to add an additional breach of fiduciary duty theory under her existing Count I, a common law claim for intentional infliction of emotional distress (“IIED”), and a prayer for punitive damages."  Bertels v. Farm Bureau Prop. & Cas. Ins. Co., No. 20-2298-JWB-ADM, 2021 WL 533827, at *1 (D. Kan. February 12, 2021) (USMJ).

           Writing that she proposed her amendment  in "good faith," the plaintiff based her proposed amendment on deposition testimony.   The Case Management Scheduling Order set a deadline for amendments on October 9 but set a discovery cutoff months later on February 5, 2021.   Federal Rule of Civil Procedure 11 provides a basis for amendment if there is evidence to support it or it is likely that the evidence will support amendment after a reasonable opportunity in the future.  But as the Magistrate Judge pointed out in this case, the depositions were already taken two months earlier, in November.  Bertels, 2021 WL 533827, at *4.

           Another crucial date was set by the plaintiff herself:  She did not file a motion for leave to amend based on the November depositions until January 29, 2021.  This did not meet the Court's definition of "good cause" for seeking amendment at this late date under Federal Rule of Civil Procedure 16.  Bertels, 2021 WL 533827, at *1.

            Further, said the Court, the plaintiff "has not shown diligence by waiting two months to move to amend after she learned of the information she says gives rise to the amendments."  Bertels, 2021 WL 533827, at *4.

           Moreover, it is noteworthy that the plaintiff already pleaded claims in this case of breach of fiduciary duty, along with her claims of bad faith, negligence, and breach of contract.  Bertels, 2021 WL 533827, at *2.  Her existing alleged claims were more than noteworthy; their existence was determinative of the outcome along with the passage of deadlines in the eyes of the Court in this particular case.

           The Court ruled that the plaintiff sought to allege some new legal theories based on the same facts.  The facts were already known.  That is why the plaintiff alleged her claims in the first place.  The Magistrate Judge accordingly denied the plaintiff's January 29 motion for leave to amend her insurer bad-faith complaint in this case.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

THIS FEDERAL JUDGE GAVE A DAMN.

 

(Thomson Reuters West via LinkedIn)

PUBLIC ALLOWED TO ACCESS TESTIMONY ABOUT MEDICAL IMPLANTS THAT ALLEGEDLY MAIM AND KILL.

"This multidistrict litigation proceeding ('MDL') involves personal injury cases brought against Defendants C. R. Bard, Inc. and Bard Peripheral Vascular, Inc. (collectively, “Bard”). Bard manufactures and markets medical devices, including inferior vena cava ('IVC') filters. The MDL Plaintiffs have received implants of Bard IVC filters and claim they are defective and have caused Plaintiffs to suffer serious injury or death."  In re:  Bard IVC Filters Prod's Liab. Litig., No. MDL 15-02641-PHX-DGC, 2021 WL 462592, at *1  (D. Ariz. MDL Case No. 15-02641-PHX-DGC Feb. 9, 2021).

           The Court explained what an IVC filter is made to do:  "The IVC is a large vein that returns blood to the heart from the lower body. An IVC filter is a small device implanted in the IVC to catch blood clots before they reach the heart and lungs."  Bard IVC Filters, 2021 WL 462592, at *2.

           The Court also summarized the plaintiffs' claims as a result of allegedly suffering "serious injury or death" from their use of the defendants' IVC filters:

           The MDL Plaintiffs allege that Bard filters are more dangerous than other IVC filters because they have higher risks of tilting, perforating the IVC, or fracturing and migrating to vital organs. Plaintiffs further allege that Bard failed to warn patients and physicians about these higher risks.

Bard IVC Filters, 2021 WL 462592, at *3. 

           The defendants defended on many grounds not pertinent to this particular article.  What is pertinent are the defendants' claims that voluminous deposition testimony should not be made available to the public, nor should the public see reams of documents, all introduced at trial.

           In this case, the Court disagreed.  The Court attached an Exhibit to the Order cited above listing the testimony and exhibits that were introduced into evidence at a bellwether trial in this Multi-District Litigation, and that the Court held accessible by the public despite the parties' Stipulated Protective Order and despite the defendants' claims of confidentiality.

           This Court's landmark ruling and detailed list of dozens of depositions and multiple Trial Exhibits can be found here:  In re:  Bard IVC Filters Prod's Liab. Litig., Doc. No. 21727-2, Court's List of Publicly Accessible Trial Testimony and Exhibits, Filed Nov. 13, 2020 (D. Ariz. MDL Case No. 15-02641-PHX-DGC), Download In re Bard IVC Filters Prods Liab. Litig. Doc. No. 21727-2 Court's List of Publicly Accessible Trial Testimony and Exhibits at a Bellwether Trial Not Confidential Filed Nov. 13 2020 (D. Ariz. MDL Case No. 15.02641.PHX.DGC).

           The Court's treatment of these arguments is noteworthy for several reasons, among them that an ancillary purpose of an MDL, not the main purpose certainly but nonetheless in the reported cases a side-effect if you will, is to shield from public view allegedly harmful behavior on a massive scale.

Another reason is the time it must have taken and the resources that were required to address these issues and compile this list in massive litigation like this.

           This federal judge clearly gave a damn.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

ASKING LIFE INSURANCE COMPANIES FOR GOOD FAITH IN A PANDEMIC.

(Image via Consumer Federation of America)

There is a reported contagion spreading throughout Europe.  It is not the coronavirus itself, but it is a phenomenon directly related to Covid.  It is the reported behavior of some life insurance companies delaying or denying people life insurance coverage based on their having contracted Covid or on being suspected in some way of having contracted Covid.

    In the United States, more than 25 million people have tested positive for the coronavirus as of this writing.   In the face of these developments, the Consumer Federation of America has not waited for the disease of denials to spread to the United States.

    The CFA has issued a letter to the National Association of Insurance Commissioners calling for a new model rule.  Faced with the contagion spreading from Europe in which life insurance companies have denied claims and applications from people with Covid-related issues, the CFA is urging reasonable behavior from life insurers in the United States.

    “We understand reasonable precautions are needed, but to harm COVID patients and their families again is unacceptable. State regulators need to step in and issue a rule to protect consumers from arbitrary insurance company practices. Transparency and reasonableness in underwriting must be the standard,” said J. Robert Hunter, CFA’s Director of Insurance and former Texas Insurance Commissioner, who is quoted by the CFA in its press release.   Press release, Recovered COVID-19 Patients Facing New Life Insurance Hurdles in Europe, Protections Needed for American Consumers /

CFA Urges the National Association of Insurance Commissioners to Adopt Model Rule for Life Underwriters Denying Coverage to Applicants Who Had COVID-19; Group Calls on Insurers to Take Voluntary Action (February 1, 2021), https://consumerfed.org/press_release/recovered-covid-19-patients-facing-new-life-insurance-hurdles-in-europe-protections-needed-for-american-consumers/.

     In issuing its request for a rule of reasonableness, the Consumer Federation of America is essentially asking that life insurance companies in the United States act in good faith.  Dealing fairly with applicants and policyholders is the essence of good faith -- and the surest way to avoid the dreaded extracontractual risk of lawsuits for "bad faith."

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

"MATCHING" REQUIREMENTS FOR REPLACEMENT PARTS: FLORIDA STATUTE, INSURANCE POLICY.

 

(Image courtesy of NASA)

In SFR Serv's, LLC v. Lexington Ins. Co., No: 2:19-cv-229-FtM-29NPM, 2021 WL 322367 (M.D. Fla. February 1, 2021), the Court addressed many motions in limine.  The Court's rulings on one of them is addressed here:  the insurance carrier's motion in limine to prevent evidence and argument on the issue of matching replacement roof tiles on damaged property.

    The Court's opinion was written for the benefit of the lawyers and the parties in that particular case because so many details come clear only from reading the parties' filings on the electronic docket known as PACER or "Public Access to [Federal] Court Electronic Records," and not from reading the decision alone. 

    The plaintiff in this case is a roofing company.  It contracted with a condominium association to repair roofs that were damaged during Hurricane Irma.  The association gave the roofer an Assignment of Insurance Benefits.

    The roofing company asked the carrier to pay for the cost of replacing roof tiles, in pertinent part.  In pertinent part, the carrier refused to pay.  The roofer sued the carrier.  Its complaint was originally filed in Florida Circuit Court, and was then removed to U.S. District Court by the carrier.

    The complaint may seem to be bare-bones upon review on PACER, but it was good enough to withstand the carrier's motion to dismiss in federal court.  Obviously, the complaint in this case contained all the allegations for claims upon which relief can be granted.  However, the controversy over replacement roof tiles is not alleged in the complaint.  To understand that controversy, we need to turn to the Federal Judge's February 1, 2021 opinion.

    The carrier "seeks to preclude," first, "any evidence, testimony and comment regarding the Florida 'matching' statute, Florida Statutes § 626.9744."  SFR Services, 2021 WL 322367, at *1.  Section 626.9744, as quoted by the Court in this case, provides in part pertinent to the Court's holding:

Unless otherwise provided by the policy, when a homeowner's insurance policy provides for the adjustment and settlement of first-party losses based on repair or replacement cost, the following requirements apply:

...

(2) When a loss requires replacement of items and the replaced items do not match in quality, color, or size, the insurer shall make reasonable repairs or replacement of items in adjoining areas. In determining the extent of the repairs or replacement of items in adjoining areas, the insurer may consider the cost of repairing or replacing the undamaged portions of the property, the degree of uniformity that can be achieved without such cost, the remaining useful life of the undamaged portion, and other relevant factors.

 

SFR Services, 2021 WL 322367, at *1.  To summarize what has just been quoted, the features of the Florida statute that the Court saw as pertinent to this case by quoting this language from the statute, were:

• The statute applies by its terms to "a homeowner's insurance policy."
• The statute applies to the "adjustment and settlement of first-party losses based on repair or replacement cost."
• When "the replaced items do not match" in important respects, then the carrier must take certain actions specified in the statute.

The Court quickly held that Section 626.9744 simply did not apply to the carrier in this case:  "The Policy at issue is a commercial policy, not a homeowner's policy....  Therefore, this statute does not apply to Lexington in this case, and this portion of the motion in limine is GRANTED."  SFR Services,  2021 WL 322367, at *1 (boldface by the Court).

    The question of excluding "evidence or argument concerning an alleged requirement to 'match' under the insurance policy at issue" was a different story, however.  The Court denied the carrier's motion and allowed the plaintiff "to present evidence and argument that the Policy requires 'like kind and quality,' which includes matching tiles."  SFR Services,  2021 WL 322367, at *2.

    The insurance policy at issue in the SFR Services case provided the carrier "with the option of repairing, rebuilding or replacing the damaged property 'with other property of like kind and quality....'"  On the basis of this policy language, then, the carrier's motion to exclude all evidence and argument that the policy requires "matching tiles," was quite simply denied.  "It is up to a jury to decide" whether the carrier's argument that the "non-matching tiles" it proposed to use to repair the condominium roofs damaged by Hurricane Irma constituted property "'of like kind and quality'."   SFR Services,  2021 WL 322367, at *2.

    There you have the twin rulings of the SFR Services Court.  They do not match, but they addressed two different things.  One was a statute.  The other was an insurance policy.  In this case, the insurance statute did not govern the insurance policy;  it didn't even apply to it.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

DEPOSING THE CORPORATE REP IN 2021.

(Free Photos)

A new article explores the ways and means of deposing corporate representatives in 2021, by Tiffany Ward and Jessica Kennedy, titled A REVIEW OF THE 2020 AMENDMENT TO RULE 30(B)(6): A GUIDE FOR PRACTITIONERS ON HOW TO APPROACH THE NEW CORPORATE DEPOSITION PROCESS, 95 Fla. Bar. J. 42 (Jan/Feb 2021).

This is a useful and informative review of the new Federal Rule.  States can be expected to follow the Federal lead soon so this article is also timely on the subject of deposing representatives of a corporate party in litigation filed potentially anywhere in the U.S.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.