In Jenkins ex rel. CLJ Healthcare, LLC v. Prime Ins. Co., No. 23-4113, 2024 WL 4040386 (10th Cir. Sept. 4, 2024), the Tenth Circuit Court of Appeals applied the bad faith law of Utah which, in pertinent part, matches the majority view held by courts across the United States.
The Tenth Circuit panel dealt with bad faith claims that boiled down on appeal to two ultimate facts:
- Prime [the liability carrier] failed to tell CLJ [the policyholder] how much coverage was available.
- Mr. Jenkins [the injured plaintiff] demanded $100,000 in settlement, but Prime counter-offered for less without telling CLJ that it could contribute to the settlement.
Prime, 2024 WL 4040386, at *6. As interpreted by the panel, Utah law required the entry of an excess judgment in the underlying case:
The district court concluded that the bad-faith claim would be untimely under a theory involving either contract or tort. On appeal, CLJ characterizes its bad-faith claim as a tort based on Prime's duty as a fiduciary. So we address timeliness of the claim under a tort theory.
Prime, 2024 WL 4040386, at *6. The appellate panel concluded that the bad-faith claim was potentially timely under a tort theory, and accordingly reversed the trial court’s summary judgment for the carrier in this case.
It is worth noting before closing, that the Tenth Circuit panel in Prime was confronted with an underlying medical malpractice action against what it called “a physicians’ company,” CLJ. The policy at issue in the case was “a wasting policy, where the amount for indemnity is reduced by the amount spent on defense costs.” Prime, 2024 WL 4040386, at *1 (emphasis by the Court).
The statute of limitations defense in third-party cases involving alleged bad faith in settlement negotiations is addressed in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 5:20, Statutes of limitation (West Publishing Co. 3d Edition & 2024 Supplements).
Please read the disclaimer. ©2024 Dennis J. Wall. All rights reserved. Check out my Substack newsletter.
Comments