Claims and Bad Faith Law Blog

UNFAIR & DECEPTIVE PRACTICES ACTIONS AND IMPLIED COVENANT BREACH ACTION TOGETHER.

(Aurora From ISS Image Courtesy of Captain Kelly & NASA)

In a decision that has just been published, Precision Cranes, Inc. v. Tester Drilling Serv's, Inc., No. 4:18-cv-00019-JMK, 2020 WL 13538683 (D. Alaska Nov. 18, 2020), the plaintiff Precision was allowed to amend its complaint against two defendant insurance carriers that issued payment bonds on a project in the Arctic.  Precision had already sued on what is generically known as a UDAP (Unfair & Deceptive Practices) statutory claim, in this case, specifically under the Alaska Unfair Trade Practices and Consumer Protection Act (“UTPCPA”).  Now Precision requested leave to add a claim for breach of the implied covenant of good faith and fair dealing, apparently at common law.

The District Court granted Precision's motion for leave to amend its complaint even though the motion came late and over the objections of the defendant carriers.  Precision, 2020 WL 13538683, at *3.  This case involved Alaska substantive law, which the federal Court clearly read as allowing both a UDAP action and a bad faith action based on the same facts, even though the two causes of action are similar but distinct on the law.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

SOMETIMES PARTIAL PAYMENT MAY NOT BE ENOUGH GOOD FAITH.

 

(Black Hole Image Courtesy of NASA)

Sometimes even partial payment may not be enough to establish good faith as a matter of law.  In Rutledge Inv's L L C v. Scottsdale Ins. Co., No. 2:21-CV-00364, 2022 WL 3704212 (W.D. La. Aug. 26, 2022), the Court denied the property carrier's "motion for partial summary judgment to dismiss" a "bad faith claim related to Hurricane Laura."

This despite the fact that the record shows that the carrier made an advance payment one week after the Hurricane struck and, further, that the carrier agreed to "issue payment on the undisputed claim" five weeks after that.  Rutledge, 2022 WL 3704212, at *1.

Proof of loss:  advances are the subject of § 2:10 by Dennis J. Wall, in JOHN K. DiMUGNO, STEVEN PLITT, and DENNIS J. WALL, CATASTROPHE CLAIMS / INSURANCE COVERAGE FOR DISASTERS (Thomson Reuters May 2022 Edition).

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

TFG v. USA UPDATE: WHY IS THIS CASE HERE, JUDGE ASKS.

(C.D. Cal.)

 

On August 23, 2022 Judge Aileen Cannon entered the following paperless Order in Southern District of Florida Civil Case No. 22-cv-1894-AMC, which has been copied from the electronic docket on PACER:

08/23/2022

10

PAPERLESS ORDER: The Court is in receipt of 1 Plaintiff's Motion for Judicial Oversight and Additional Relief. To facilitate appropriate resolution, on or before August 26, 2022, Plaintiff shall file a supplement to the Motion further elaborating on the following: (1) the asserted basis for the exercise of this Court's jurisdiction, whether legal, equitable/anomalous, or both; (2) the framework applicable to the exercise of such jurisdiction; (3) the precise relief sought, including any request for injunctive relief pending resolution of the Motion; (4) the effect, if any, of the proceeding before Magistrate Judge Bruce E. Reinhart; and (5) the status of Plaintiff's efforts to perfect service on Defendant. Signed by Judge Aileen M. Cannon on 8/23/2022. (AMC) (Entered: 08/23/2022)

As we said in an article published yesterday, Judge Aileen M. Cannon was appointed by the alleged owner of the searched premises.

So it's on to Friday, August 26, 2022.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

TFG v. USA CIVIL COVER SHEET: "NO RELATED CASE"?

There is a Civil Cover Sheet in the new civil case addressed yesterday, which I write here for algorithm purposes to protect the innocent as they used to say on Dragnet, as:  TFG v. USA, Southern District of Florida Case No. 22-cv-81294, .  Here is the Civil Cover Sheet:

As we said yesterday, the signature appears to come from Evan Corcoran, Esquire, one of the attorneys of record for the alleged owner of the searched premises.  

Lawyers will immediately recognize the standard question in this form, which is question numbered VI, RELATED/RE-FILED CASES, in particular the standard question in every federal Civil Cover Sheet in the country:

b) RELATED CASES

___ YES  ___ NO  DOCKET NUMBER:

Although this question was left blank in this case, the answer of course is that there is a related case, and its Docket Number is Southern District of Florida Criminal Case No. 22-mj-8332-BER.  That of course is the search warrant case involving the alleged owner's searched premises.

The question is simple.  Why do you think it was not answered?

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

CLAIMS BARRED AGAINST "PAY TO PLAY," BRIBED AND APPROVED RATES.

(Image of Jupiter / NASA & AP)

In South Branch LLC v. Commonwealth Edison Co., Nos. 21-2861, 21-2872 & 21-2873, 2022 WL 3581782 (7th Cir. Aug. 22, 2022), two judges on a Seventh Circuit panel led by Judge Diane Sykes reached for an immunity that the trial court did not touch to bar claims against ComEd:  the filed rate doctrine.

Judge Sykes has reached out to the filed rate doctrine to bar claims in other cases; in this case the trial court dismissed the plaintiffs' RICO claims against ComEd on other grounds entirely.

The record left no doubt but that the rates in question were approved by the regulatory agency as a result of favorable legislation for higher rates.  "To secure passage of favorable legislation, ComEd engaged in a yearslong 'pay to play' scheme[.]"  The scheme in short involved bribes paid to Illinois State Government officials in order to secure the legislation.  ComEd, 2022 WL 3581782, at *1.

Because of the filed rate doctrine, the plaintiffs could not sue.  The two judges on the panel held that they were not "injured" under RICO as a result.  ComEd, 2022 WL 3581782, at *3.

The remaining judge on the panel concurred but expressly stated that she would not rule on the basis of the filed rate doctrine in this case.  Instead, she based her vote on an 1810 decision that in her eyes prohibits judges from inquiring into the motives of legislators.   ComEd, 2022 WL 3581782, at *6

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

VIRGINIA UNFAIR CLAIM SETTLEMENT PRACTICES STATUTE NOT ACTIONABLE IN 2022.

(Bridge Collapse / USA TODAY)

Virginia's Unfair Claim Settlement Practices Act is codified in VA. CODE ANN. § 38.2-510.  It parallels the National Association of Insurance Commissioners' Model Unfair Claim Settlement Practices Act in pertinent part.  See generally 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH, § 3:28 (addressing statutory bases of bad faith in third-party claims) (3d Edition West Publishing Co., 2022 Supplements in process); 2 id., §§ 9:14 & 9: 15 (Express and Implied Causes of Action, respectively, under bad faith statutes in first-party cases).

The Virginia Unfair Claim Settlement Practices Act does not convey a cause of action, however.  Sustainable Sea Prod's Int'l, LLC v. Am. Emp. Surplus Lines Ins. Co., No. 3:21cv697, 2022 WL 3573247, at *4 (E.D. Va. Aug. 19, 2022).

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

"IT AIN'T OVER TILL IT'S OVER": Constitutional PRESUMPTION, PUBLIC ACCESS?

(Photo by NASA)

All that the defendant had to do to keep declarations and exhibits sealed that the plaintiff filed, was to settle in exchange (at least in part) for a stipulation to dismiss with prejudice.

That is the perhaps unintended effect of the otherwise well-reasoned decision in the case of Lohnn ex rel. Lohnn v. Int'l Bus. Mach's Corp., No. 21-cv-6379 (LJL),  2022 WL 3359737 (S.D.N.Y. Aug. 15, 2022) (Liman, J.).

The case involved an estate's action against IBM.  The case settled with a joint stipulation for dismissal with prejudice.

The case settled before the Court could rule on Plaintiff's motion for summary judgment.  The Plaintiff had previously  filed "declarations and exhibits" under seal in support of its motion for summary judgment.  The issue now was whether the declarations and exhibits filed in the Court file should be kept sealed, or whether they were publicly accessible with redactions.  Lohnn, 2022 WL 3359737, at *1.

The defendant, IBM. argued that the declarations and exhibits filed in the Court file were not "judicial documents" entitled to public access because of its settlement before the Court could rule on the Plaintiff's summary judgment motion.    Lohnn, 2022 WL 3359737, at *2.

The Court rejected this argument and held that the declarations and exhibits are indeed "judicial documents" entitled to a presumption of public access, even though the defendant settled before the Court could rule on the plaintiff's motion for summary judgment.  Lohnn, 2022 WL 3359737, at *3.

However, that did not end the story in this case.  It might even be said that the story only began at this point.

In ruling that the fact that although the defendant settled the case before the Court could rule on the motion for summary judgment, the settlement and the joint stipulation for dismissal with prejudice did not affect the "judicial documents" status of declarations and exhibits filed in the Court file such that they are  clothed with a common law presumption of public access nonetheless, was a ruling directly contrary to the opposite ruling in Giuffre v. Maxwell, No. 15 Civ. 7433 (LAP), 2020 WL 133570 (S.D.N.Y. Jan. 13, 2020).

The Court further ruled in this case that the common law presumption of public access did not end the matter.  Rather, the Court applied a balancing test and held that the presumption of public access to the judicial documents at issue was outbalanced by the defendant's interest in secrecy here.  Lohnn, 2022 WL 3359737, at *5-*6.

In so ruling, the Court carefully pointed out that it was ruling on the only presumption of public access argued in the decision at bar, which was the common law presumption of public access and not the First Amendment right of public access.  Moreover, the Court invited the Constitutional issue in the future:  "However, the Court's decision to keep these declarations and exhibits sealed is without prejudice to a motion by an intervenor to unseal the documents on First Amendment grounds."  Lohnn, 2022 WL 3359737, at *6 n.4.

More remains to be done on the issue of whether there is a constitutional presumption of public access to testimonial and documentary evidence filed in a Court file, even if a defendant settles the case in exchange for a joint stipulation for dismissal with prejudice before the Court can rule on the motion supported by the evidence filed in the Court file.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

FIRST-FILED STAYS WHERE IT IS, OPIOID LAWSUITS OR NOT.

(Courthouse, Baltimore, Md./New York Public Library Digital Collections)

In an UNPUBLISHED opinion, with a caution on its face to CHECK COURT RULES BEFORE CITING, the Delaware Superior Court determined that a  coverage case with respect to Opioid Lawsuits against CVS will remain pending in Delaware, at least for now.  The decision is In Re:  CVS Opioid Ins. Litig., Consol. C.A. No. N22C-02-045, 2022 WL 3330427 (Del. Super. Ct. Aug. 12, 2022).

The Court was faced with two competing lawsuits and a motion to dismiss or stay based on forum non conveniens.  The first lawsuit was filed in Delaware by CVS's insurers for a declaration that the carriers do not provide insurance coverage for indemnity or defense of the Opioid Lawsuits against CVS.  The Opioid Lawsuits against CVS are pending in Multi-District Litigation centered in the Northern District of Ohio.  There are also some Opioid Lawsuits pending against CVS in State Courts.

The second lawsuit of concern was a lawsuit filed in Rhode Island by CVS against its insurers, after the insurers filed their lawsuit in Delaware.  CVS sued in Rhode Island for insurance coverage and also for alleged insurer bad faith.

The Delaware Court ruled that the Delaware case having been filed first, it is CVS's burden to establish forum non conveniens by showing that CVS faces an "overwhelming hardship" to litigate the Delaware case in Delaware.  In re:  CVS Opioid Insurance Litigation, 2022 WL 3330427, at *7.

The Court held that CVS did not meet its burden.  Under this decision, the Delaware lawsuit filed by CVS's carriers for declaratory relief relative to coverage for the Opioid Lawsuits against CVS, remains pending in Delaware accordingly.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

LITIGATION AND PREVENTION OF INSURER BAD FAITH MARICOPA & PA. HYPERLINKS.

 

 

Dennis J. Wall, No Good Cause, No Dispute, No Protective Order, Maricopa County Lawyer 11 (Maricopa County Bar Ass'n Oct. 2021), Download Article Published Maricopa Lawyer. Oct 2021.

Dennis J. Wall, Access by Nonparties to Discovery, Despite Stipulated Protective Orders:  Just the Beginning?, 24 Civ. Litig. Update 7 (Pa. Bar Ass'n Civ. Litig. Section Fall 2021), Download CivilLitFall2021.

Both articles ©Dennis J. Wall.  All rights reserved.

FLORIDA, STATUTORY BAD FAITH, AND FORCE-PLACED INSURANCE

The Florida Legislature may have added a force-placed insurance, statutory bad faith cause of action when it enacted the following Unfair Method of Competition and Unfair or Deceptive Act or Practice effective June 16, 2021:

(1) Unfair methods of competition and unfair or deceptive acts.--The following are defined as unfair methods of competition and unfair or deceptive acts or practices:

* * *

(z) Sliding.--Sliding is the act or practice of any of the following:

* * *

4. Initiating, effectuating, binding, or otherwise issuing a policy of insurance without the prior informed consent of the owner of the property to be insured.[1]

At least arguably, every homeowner with a mortgage owns the property to be insured.  Force-placing an insurance policy is also at least arguably "initiating, effectuating, binding or otherwise issuing a policy of insurance" on "the property to be insured."  By definition, force-placed insurance policies are placed by force without the prior informed consent of the homeowner.

            The argument that the Florida Legislature has intentionally or otherwise enacted a statutory provision which makes lender force-placed insurance an actionable unfair method of competition or unfair or deceptive act or practice, may be undercut by the Florida Legislature's adoption of the following provision at the same time in the same legislation:

5. Mailing, transmitting, or otherwise submitting by any means an invoice for premium payment to a mortgagee or escrow agent, for the purpose of effectuating an insurance policy, without the prior informed consent of the owner of the property to be insured. However, this subparagraph does not apply in cases in which the mortgagee or escrow agent is renewing insurance or issuing collateral protection insurance, as defined in s. 624.6085, pursuant to the mortgage or other pertinent loan documents or communications regarding the property.[2]

These two subparagraphs which have just been quoted, subparagraphs 4 and 5, respectively, of paragraph (z), subsection (1) of Florida's Unfair Methods of Competition and Unfair or Deceptive Acts or Practices Act or UCDPA,[3] have apparently not yet been reconciled by a court of competent jurisdiction as these words are written.  Their reconciliation remains in the arguments yet to come from practitioners, and others.  However it is worth pointing out that the Florida Legislature could have made subparagraph 4 subject to the same exception as it wrote in subparagraph 5 but it did not do so.

[1] Fla. Stat. § 626.9541(1)(z)4.

[2] Fla. Stat. § 626.9541(1)(z)5 (emphasis supplied).

[3] Fla. Stat. § 626.9541(1)(z)4&5.

There are all kinds of questions about statutory bad faith, including express causes of action, implied causes of action, preemption, civil remedy notices, and damages.  Many of the questions are asked and answered in statutes and interpreted in third-party bad faith cases, see generally 1 DENNIS J. WALL, §§ 3:28-3:30, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, 2022 Supplements in process), and in first-party cases too.  See generally 2 id. §§ 9:14-9:16.

Insurer bad faith ramifications of force-placed insurance are addressed in 2 id. §§ 9:33-9:35.  The whole field of force-placed insurance, also known as lender-placed insurance, and also known as lender force-placed insurance, is a book by itself.   There was no book on the subject so I wrote the first one that I know of.  Still very much in use today, it was published by American Bar Association Publishing in 2015, LENDER FORCE-PLACED INSURANCE PRACTICES.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

LIABILITY CARRIER RESERVED RIGHTS INCLUDING REIMBURSEMENT, RECOVERS INDEMNITY AND DEFENSE EXPENSES.

In a recent opinion, a U.S. District Judge in Massachusetts held that with respect to an underlying action, a liability carrier had no duty to defend or indemnify either of the two parties which the carrier subsequently sued in the carrier's action for declaratory relief and for reimbursement.  The two defendants sued by the carrier are its policyholder and an additional insured, both of whom it defended and for whom it entered into the settlement of the underlying action.

Besides holding that the liability carrier had no duty to defend or indemnify, the Court in this case further held that the carrier is entitled to reimbursement from the defendants.  Berkley Nat'l Ins. Co. v. Granite Telecomm's LLC, ___ F. Supp. 3d ___, No. 21-10626-RGS, 2022 WL 3021107, at *4-*6 (D. Mass. July 29, 2022).

The recent opinion mentions that Berkley, the liability carrier, defended and settled only after being threatened with a  lawsuit under "[Mass. Gen. Laws ch.] 176D," but it does not appear to repeat the significance of the liability carrier's reservation of rights, as the Court did in an earlier Order in this case.

The Court in this case cited its earlier Order as a short-hand reference for the background behind the parties' dispute.  In that earlier Order,  the Court denied the policyholder's and the additional insured's motion for judgment on the pleadings, pointing out that the liability carrier in this case reserved the right to reimbursement from them:

Berkley capitulated, but reserved its right to subsequently deny coverage under the Policy’s bacteria and pollutant exclusion provisions and seek reimbursement.

Berkley Nat'l Ins. Co. v. Granite Telecomm's LLC, Doc. No. 78, Order Denying Motion for Judgment on the Pleadings at 3, filed March 28, 2022 (D. Mass. No. 21-10626-RGS), 2022 WL 899423, at *1.

That made all the difference.  See generally 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:6, Informing the Insured:  Insurer Assertion of Rights to Reimbursement From the Insured of Clearly Noncovered Indemnity and Defense Expense (3d Edition Thomson Reuters West, 2022 Supplements in process).

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

BURDENS OF PROOF OF BAD FAITH--WHO HAS THE BURDENS?

Burdens of proof -- Who Has The Burdens is the title of § 3:95 in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, 2022 Supplements in process).  The burdens of proof in a bad-faith cause of action under Rhode Island law are recognized, although in apparent dicta, in Shannahan v. R.I. Interlocal Risk Mgmt. Trust, 269 A.3d 737, 740 (R.I. 2022).

In that case, the Supreme Court of Rhode Island emphasized that the plaintiff in a bad-faith action must demonstrate the absence of a reasonable basis for denying the claim, or an intentional, reckless failure to properly investigate the claim.   That particular case involved an otherwise unspecified claim "in which plaintiffs had asserted that defendant wrongfully and in bad faith denied plaintiffs' underlying third-party insurance claims[.]"

This apparently was dicta because the Supreme Court had already declared that the plaintiffs were not the defendant's "insureds" and that they were not assignees of any insureds, either, so that they had no standing to pursue a bad-faith cause of action against that carrier.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

THE FILED RATE DOCTRINE: MORE LESSONS FROM THE FIELD.

For good or ill, the filed rate doctrine has been introduced into the field of insurance.   Learning the lessons from the field in which the FRD began, which is the field of utility regulation, is important.  That might seem obvious, but perhaps because the FRD is so new to insurance, few insurance practitioners incorporate learning the lessons from the field of utility regulation into their insurance practice. 

In Wabash Valley Power Ass'n v. Fed. Energy Reg. Comm'n, Nos. 20-1286 & 20-1348, 2022 WL 3036393 (D.C. Cir. Aug. 2, 2022), a utility lost its attempt to bar users from challenging its rate.  The utility-rate-setter declared that a rate could not be challenged  because the charge was "filed" in contracts written by the utility and submitted to the utility by the users who had to sign the contracts.  The contracts contained a provision that the user agreed that the rates it paid to the utility under the contract were fair and reasonable.

The administrative agency, in this case the Federal Energy Regulatory Commission (FERC), rejected the utility's position, and the Circuit Court of Appeals for the District of Columbia affirmed.

The Court's summary was succinct.  The Court's opinion went directly to the point:

    This case presents a question of how to determine the reasonableness of rates  for the sale of electricity from an energy cooperative to its individual member utilities. The rates are fixed by majority vote of the utilities. Contracts between the cooperative and certain members purport to impose a presumption that the rates are just and reasonable. In rejecting these contracts, the Federal Energy Regulatory Commission concluded that the rates are not entitled to a presumption of reasonableness under [Supreme Court decisions].

Wabash Valley Power Association, 2022 WL 3036393, at *1.

A rate can be challenged even if the party setting the rate makes the other parties sign contracts that declare the rate "just and reasonable."  Those in the insurance field who have ears to hear, let them hear, to borrow a Biblical phrase.

Please read the disclaimer.  ©2022 Dennis J. Wall.  all rights reserved.

PLAINTIFF COULD NOT ESTABLISH SUMMARY JUDGMENT, BUT BOTH MOTIONS DENIED.

In Ventrice v. Lexington Ins. Co., No. 16-660, 2022 WL 3013078 (D.N.J. July 28, 2022) (stated NOT FOR PUBLICATION),  the District Judge summarized New Jersey law on insurer bad faith:

To establish a claim for bad faith, a plaintiff must demonstrate that “(1) the insurer lacked a fairly debatable reason for denying coverage, and (2) insurer knew of or recklessly disregarded the lack of a reasonable basis for denying coverage.” Stiso v. State Farm Fire & Cas. Co., No. 13-5741, 2015 WL 7296081, at *9 (D.N.J. Nov. 18, 2015). “A claim is fairly debatable if a plaintiff cannot establish as a matter of law a right to summary judgment on the substantive claim, i.e., the underlying contract claim.” Laing, 2014 WL 4953250, at *3 [Laing v. Am. Strategic Ins. Corp., No. 14-1103, 2014 WL 4953250, at *2 (D.N.J. Oct. 1, 2014)]  (internal citation and quotation marks omitted).

Ventrice, 2022 WL 3013078 (page numbers not available from Westlaw at the time of publication).

In this case, differences in the facts made entering summary judgment for either side impossible in the eyes of the District Judge.  Accordingly, the Court denied both parties' motions for summary judgment on the bad faith counts.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

PRESCRIBING TIMES, PLACES, MANNER HOLDING ELECTIONS ALWAYS SUBJECT, NEVER ABSOLUTE.

The Constitution of the United States provides, in part here pertinent:

The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.

U.S. Const. art. 1, § 4.  Much has been made of this "Elections Clause" by at least 4, maybe 5, Justices currently sitting on the Supreme Court.  See Supreme Power,  published here.

They have advanced a theory that this clause makes State legislatures "independent," meaning not subject to review by anyone or anything except the federal Supreme Court on which they now sit.  Not reviewable by other federal Courts.  Not reviewable by State Supreme Courts or any State Courts at all.  Not subject to State Constitutions.

This was the basis for accepting review in Moore v. Harper.  The North Carolina Supreme Court held that because the legislature's districting legislation violated provisions of the North Carolina State Constitution, the districting was invalid.  This group of federal Justices, confident of a majority vote, shares the collective aim of announcing that the North Carolina Supreme Court's invalidation of Republican-legislated Congressional districts in that case cannot withstand their gaze. 

Under their "independent state legislatures" theory, the districting prescribed by the North Carolina Legislature is not subject to anyone else's review even if, as in this case, the highest Court of the State held that the districting violated a provision of the North Carolina Constitution that guarantees fair and free elections, among other provisions of the North Carolina Constitution.

This theory suffers from many fatal infirmities, not the least of which is that the U.S. Supreme Court has already rejected it.  In fact, in Smiley v. Holm, 285 U.S. 355, 52 S. Ct. 397 (1932), the Court reversed the exact same view now advanced by some of the Justices currently sitting in Washington. 

Without getting too much into the weeds, as they say, in Smiley the Supreme Court of Wisconsin held that the State legislature was independent of review even if the Wisconsin Legislature's redistricting legislation was vetoed by the Governor of Wisconsin.  The U.S. Supreme Court detailed this history in Smiley, 285 U.S. at 364-65, 52 S. Ct. at 398-99.

The U.S. Supreme Court held that Article 1, Section 4 of the U.S. Constitution provides that the exercise of authority under that clause "must be in accordance with the method which the state has prescribed for legislative enactments."  Smiley, 285 U.S. at 367, 52 S. Ct. at 399.  Wisconsin's method of enacting legislation was and is the method followed in most if not all States today:  Legislative bills have to be presented to the governor for approval.   A legislative measure "redistricting the state for congressional elections" was  therefore subject to review by the Governor of Wisconsin, like any other legislative measure in Wisconsin.  Smiley, 285 U.S. at 363-64, 52 S. Ct. at 398.

Since in this case the Governor of Wisconsin had vetoed the redistricting bill enacted by the Legislature of Wisconsin when he "returned it without his approval," Smiley, 285 U.S. at 361, 52 S. Ct. at 397, the bill did not become law.  Instead, it was invalid because it did not pass review by the governor.

In Moore v. Harper, the same Elections Clause is raised because the North Carolina Legislature's gerrymandered districting did not pass review by the North Carolina Supreme Court under the North Carolina Constitution.  There really is no difference with past precedent concerning the  Elections Clause in the federal Constitution, and that's the point.

Helen White has pointed out at Justsecurity.org that as recently as 2019, a different makeup of the U.S. Supreme Court held unanimously that State Constitutions could trump State Legislatures' partisan gerrymandering in congressional elections despite the Elections Clause in the federal Constituiton.  Rucho v. Common Cause, ___ U.S. ___, 139 S. Ct. 2484 (2019).  

In 2015, a different majority of Justices rejected the idea that state legislatures are independent authorities by upholding the use of independent redistricting commissions in federal elections to prescribe the "times, places and manner of holding elections for senators and representatives," to again use the words of Article 1, Section 4 of the U.S. Constitution. Ariz. St. Legis. v. Ariz. Indep. Redistrict. Comm'n, 576 U.S. 787, 135 S. Ct. 2652 (2015).

The same four or five Justices who push their unique "independent state legislatures" theory in 2022 are the same Justices who have no use for precedents or for previously settled law.  Rather, they share the view that what they say is the law, rather like their view that State Legislatures are not reviewable except, perhaps, by them or by some other group of Justices who have enough votes.  Their unyielding view is obviously established already; it will not be changed by legal reasoning or resort to things previously decided.

What can be done?  What is a just response to judges making law by lining up votes rather than reasons?

To be continued soon on Claims and Issues Blog, where related issues have previously been addressed.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

THE LESSON OF LINGERING CORONAVIRUS AND OF COVERAGE IS PERSISTENCE.

This article is adapted in part from § 7:20 Virus Exclusions and the Coronavirus Pandemic of Covid-19 in the forthcoming CATASTROPHE CLAIMS:  INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS (Thomson Reuters November 2022 Edition) ©THOMSON REUTERS.

It is worth considering the facts behind the "disease contamination" claim that the policyholder made in Dental Experts, LLC v. Massachusetts Bay Insurance Co.[1]  Dental Experts, the policyholder, operates 73 dental offices along with its affiliates in 9 states and the District of Columbia.  All of them were covered by an insurance policy which contained the following "disease contamination provision":

We will pay the actual covered loss of “business income” or “extra expense” you sustain due to the necessary “suspension” or delay of your “operations” during the “period of Restoration”. The “suspension” must be caused by a disease contamination event declared by the National Center for Disease Control, or the applicable city, county or state Department of Health.[2]

The coronavirus pandemic spread to the states in which Dental Experts and its affiliates were located.  State and local authorities across the country issued orders "suspending the operations of nonessential businesses."[3]  The Dental Experts practices complied and lost business income.

            For present purposes, perhaps the most significant aspect of this case is that Dental Experts made a claim after reading their policy.  They did not rely on what someone told them about how hard it was and still is to claim Business Income coverage.  They did not rely on the headnotes attached to cases involving other kinds of insurance policies.  To say again, they read their policy and they made a claim.

            Their insurance carrier "concluded that Dental Experts was entitled to coverage under the disease contamination provision" and paid indemnity under the policy.[4]  If Dental Experts had not made a claim under the disease contamination provision we would never have seen this case in which Dental Experts and its carrier argued not whether the disease contamination coverage applied, but for how much.

            "Nothing has quite tested the principles of insurance law more in recent memory than the COVID-19 pandemic."[5] 

 

[1] Dental Experts, LLC v. Massachusetts Bay Ins. Co., No. 20 C 5887, 2022 WL 2528104 (N.D. Ill. July 7, 2022).

[2] Dental Experts, 2022 WL 2528104, at *1.

[3] Dental Experts, 2022 WL 2528104, at *1.

[4] Dental Experts, 2022 WL 2528104, at *1 (emphasis added).

[5] Sunstone Hotel Investors, Inc. v. Endurance Am. Spec. Ins. Co., No. SACV 20-02185-CJC(KESx), 2022 WL 2206900, at *1 (C.D. Cal. June 15, 2022).

Please read the disclaimer.  This blog article ©2022 Dennis J. Wall.  All rights reserved.

COURT BIFURCATES, STAYS COVID-19 BAD FAITH CLAIMS.

In Procaccianti Cos. v. Zurich Am. Ins. Co., No. 20-512WES, 2022 WL 2802357, at *4 (D.R.I. July 18, 2022) (USMJ), a Magistrate Judge in Rhode Island granted Zurich American's motions to bifurcate Procaccianti Companies' COVID-19 bad faith claims under Fed. R. Civ. P. 42.

The Magistrate Judge also granted Zurich American's motion to stay all discovery on the COVID-19 claims until coverage had been determined in Procaccianti Companies' favor.

Here is the brief but important background.  Procaccianti Companies operates hotels. Zurich American issued a commercial all-risks property insurance policy to Procaccianti. COVID-19 came.  Procaccianti Companies allegedly lost business and so was damaged as a result.

Procaccianti sued its all-risks property insurance carrier on several grounds including breach of contract and alleged bad faith.

The upshot of the Magistrate Judge's ruling in this case, which is consistent with similar rulings in many other jurisdictions, is that the policyholder will have to prevail on its coverage claims before it can proceed on its bad faith claims.  See generally 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:24, Other Defenses:  Defenses Potentially Available in All Claims and Cases of First-Party Insurance Bad Faith (Thomson Reuters West 3d Edition, 2022 Supplements in process).

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REASONABLENESS IS A QUESTION OF FACT IN BAD FAITH CASE.

In Robinson v. Charter Oak Fire Ins. Co., No. 20-cv-1534-RMR-MEH, 2022 WL 2753524 (D. Colo. May 26, 2022), the Court applied Colorado law to first-party bad faith claims.  So far as bad faith cases are concerned, the issues in this case under Colorado law are determined in the same way as most if not all other American jurisdictions:

Insurance bad faith claims by their nature present questions of fact unsuitable for resolution on summary judgment except in limited circumstances. Therefore, whether an insurer's conduct was reasonable under the circumstances is ordinarily a question of fact for the jury.

Robinson, 2022 WL 2753524, at *2.  And so it was in this case.

There were two claims for bad faith at issue here.  One was for alleged Colorado statutory bad faith, which put the reasonableness of the carrier's conduct at issue in this case.  Robinson, 2022 WL 2753524, at *2.  The other bad faith claim was for alleged Colorado common law bad faith, which also put reasonableness at issue so far as the carrier's conduct is concerned here.  Robinson, 2022 WL 2753524, at *3.

Accordingly, the Court in this case denied the carrier's motion for summary judgment on both counts of first-party bad faith.

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SANCTIONING BAD FAITH CONDUCT OF ATTORNEYS, PARTIES: INHERENT v. STATUTORY AUTHORITY.

Federal courts, it has been held, have at least two kinds of authority to sanction bad faith conduct of attorneys and parties.

One source of their authority is inherent.  A federal court can sanction a lawyer or a party for acting in bad faith, vexatiously, wantonly or for oppressive reasons.  The standard for imposing inherent sanctions is subjective.  JQ Adams & Sons, Inc. v. Scottsdale Ins. Co., NO. 3:21-cv-492-TJC-PDB, 2022 WL 2643587, at *6 (M.D. Fla. July 8, 2022) (Barksdale, USMJ).

A second source of their authority is under 28 U.S.C.A. § 1927.  The statute authorizes sanctions for unreasonable and vexatious conduct,  which has been held to mean virtually the same thing as bad faith.  The standard is objective.  When the standard is applied to lawyers, the standard measures the conduct of the particular lawyer at bar, against how a reasonable lawyer would have acted.  JQ Adams & Sons, Inc. v. Scottsdale Ins. Co., NO. 3:21-cv-492-TJC-PDB, 2022 WL 2643587, at *6 (M.D. Fla. July 8, 2022) (Barksdale, USMJ).

Whatever the source of sanctions authority, sanctions for bad faith conduct is definitely not good faith.

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ACTIONABLE BAD FAITH DURING LITIGATION MORE THAN COMMON DEFENSIVE TACTICS.

In the course of an insurance coverage case, a federal Magistrate Judge in Pennsylvania was confronted with a motion for leave to amend.  The plaintiffs sought leave to amend their complaint to allege counts for insurer bad faith based on the litigation conduct of the defendant insurer.  The Court's resolution of this issue is instructive:

          Plaintiffs Daniel and Susan Katz's Motion for Leave to File an Amended Complaint (doc. 46) is DENIED. The Katzes argue Defendant USAA Casualty Insurance  Company improperly denied allegations in their Complaint and seek to add allegations and claims of bad faith and breach of contract based on USAA's alleged misconduct. Although an insurer's actions during litigation may support a bad faith claim, such actions must involve more than defensive litigation tactics. [Citations omitted.]  The insurer generally must have taken intentional steps to evade its obligations under the insurance contract or undermine the truth-finding process. [Citations omitted.]  Even if USAA could have been more forthcoming in its Answer and/or produced a more appropriate corporate designee, its responses in the Answer fall within the category of defensive litigation tactics rather than an intentional evasion of its obligations as an insurer. See Answer (doc. 3). The Katzes also may pursue other remedies under the Federal Rules of Civil Procedure to the extent they believe the corporate designee was improper or contradicted USAA's Answer. [Citation omitted.] Because the Katzes' proposed amendments do not support their claims of bad faith or breach of contract, I deny their motion to amend as futile.

Katz v. USAA Cas. Ins. Co.,  No. 19-4488, 2021 WL 9031163, at *1 (E.D. Pa. July 19, 2021) (Rice, USMJ).

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THE QUESTION OF FIRST-PARTY BAD FAITH--INVESTIGATION AND EVALUATION.

The question of bad faith involves insurance carriers' timely investigation and evaluation of claims against policyholders.  In many jurisdictions, the question of bad faith also involves the carrier's conduct before and after the bad faith lawsuit is filed.  See generally 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:6, The Question of Bad Faith -- Timely Investigation and Evaluation Before And After The First-Party Insurer is Sued for Bad Faith (West Publishing Co. 3d Edition, 2022 Supplements in process).

An opportunity for extracontractual exposure based on investigation and evaluation came in Nikfard v. State Farm Fire & Casualty Co.,[1] a first-party case involving loss from a fire.  The fire in that case damaged a rental house owned by the plaintiff policyholder, who made a claim for the damage caused by the fire.  His "first-party property insurance" carrier accepted coverage.  The carrier recommended that the policyholder contact a certain general contractor who doubled as an insurance restoration specialist, which he did.

The g.c. prepared a preliminary estimate of the cost of restoration of the policyholder's house, using a computerized program called Xactimate.  The Xactimate program is familiar both to insurance companies and to coverage practitioners. 

In this case, the evaluation was only intended to be preliminary.  It was never intended to be the basis for the g.c. performing the restoration work.  The preliminary evaluation was $149,900.86.[2]    The carrier seized upon this figure and this computer report and never let go.  However, the evidence showed that the repairs would realistically take at least $100,000.00 more than that before restoration was finished on this particular house.

In fact, the restoration project ultimately cost $334,470.00.  Before the project ended, the carrier paid $174,071.94.

Before the case was over, the carrier would pay $429,702.32.

The policyholder sued, alleging several claims.  One was for breach of contract.  He prevailed on this claim and received $160,398.06, which was the difference between what the project ultimately cost and what the carrier paid.[3] 

The policyholder's final claim among several claims he alleged, was brought under the Consumer Protection Act in Washington.  This claim was successful in generating an award of the policyholder's attorney's fees.  He recovered attorney's fees in the amount of $261,964.00 and costs in the amount of $7,339.36.  He proved his CPA claim in part by proof of a violation of an Unfair Claim Settlement Practices Regulation which has the force of law in Washington, and generally if not identically follows the Uniform Unfair Claim Settlement Practices Acts promulgated by the National Association of Insurance Commissioners and in force across the country.[4] 

In the end, the carrier's reliance on its original investigation and evaluation until the bad faith trial came to an end, cost it another quarter of a million dollars.

 

[1] Nikfard v. State Farm Fire & Cas. Co., No. C19-6001RSL 2021 WL 3620277 (W.D. Wash. August 16, 2021).

[2] Nikfard, 2021 WL 3620277, at *1.

[3] Nikfard, 2021 WL 3620277, at *4.

[4] See WALL, supra, §§ 9:14 (Express statutory causes of action) and 9:15 (Implied statutory causes of action), infra.  The effects of the UCSP Acts in third-party or liability insurance cases are discussed in § 3:28, supra.)

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DECLARE YOUR INDEPENDENCE! MAKE EVERY DAY HOPEFUL.

DO WHAT YOU CAN DO.

I am only one, but I am one.

I can do something.

That which I can do, I ought to do.

And that which I ought to do,

By the Grace of God,

I shall do.

I do not know where I first came across this saying.  It seems to me that it applies today every bit as much as it has applied throughout my life, always.

There are people who despair of many things in this country right now.   They could do far worse than putting this saying into effect.  At the moment, nothing attracts more despair than the recent decision of a majority of the U.S. Supreme Court in Dobbs v. Jackson Women's Health Organization.  This is the decision which overruled Roe v. Wade and Casey, rejecting privacy rights over reproductive decisions, with more decisions to come apparently.

Many people say there is nothing to be done.

They are wrong.  They probably mean to say that it will take a long time to overrule Dobbs and to restore privacy rights over reproductive decisions.  But there is definitely something that can be done right now.

Introduce legislation which will enact the law of privacy rights over reproductive decisions.  Base the legislation on Roe v. Wade and Casey as much as those judicial decisions will translate to legislative bills, sure.  But introduce legislation which will enact privacy rights over reproductive decisions.

In the U.S. Congress, we can only be certain that there will be an outcome in the House of Representatives.  We also can be certain what that outcome will be in this case:  The legislation will pass and it will be sent to the U.S. Senate for action there.  Perhaps legislation like this has already passed the House and has been sent to the Senate already.

Leave to the Senate what the Senate will do.

If the measure has passed the House already, pass it again.  Send it again to the Senate. 

Then do it again.

In the Senate, call for a vote.  Filibusters may prevent votes on the substance of the bills, meaning filibusters prevent votes on the bills themselves.  That's fine also.  Regardless, there must always be votes on what the Senators call cloture motions, which are motions to end a filibuster.  Let the cloture votes be recorded, again and again, of all those people in the Senate who deny votes on privacy rights for reproductive decisions.

Record those votes.  There is nothing that politicians fear and dislike more than having their unpopular votes recorded and made public.

Over and over again.

If one of the bills passes both the Senate and the House, perhaps some will say that the process is fruitless because the Supreme Court will strike it down just as a present majority overruled Roe and Casey.  Well, then, if that is the case pass it again.

If the bill passes in 2022, for example, and the Supreme Court strikes it down, when another bill passes – with identical language – say in 2023, the Court did not strike that Act down yet, just the one that passed in 2022.  The current majority think they have the final word?  Let them write the final word, endlessly.  In the meantime, there is more to be done, including in the States.

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

BAD FAITH IS TYPICALLY IN THE FACTS.

"Typically, the question of whether an insurer acted in good faith toward its insured in resolving a claim is an issue of fact for the jury."  Firtell v. USAA Cas. Ins. Co., 332 So. 3d 537, 538-39 (Fla. 4th DCA 2022).

See generally 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:5, The Question of Bad Faith--Presence or Absence of Fault (West 3d Edition, 2022 Supplements in process). 

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

"EMBARRASSED" PORN VIEWERS, PSEUDONYMOUS PARTIES, & SEALING COURT RECORDS: WHAT'S REQUIRED.

The question of sealing the identity of defendants sued by Strike 3 Holdings, LLC is now a thing.  Strike 3 has settled with anonymous defendants in several recent cases in which the defendants are known only by their IP addresses.  The issue in all of these cases is whether the defendant can remain pseudonymous, that is, known only by the pseudonym such as "John Doe subscriber assigned IP address [fill in the blank]."

Two cases decided one day apart will illustrate the issue.  The question was presented "by way of a joint motion to seal" pursuant to Local Civil Rule 5.3 in the case of Strike 3 Holdings, LLC v. John Doe subscriber assigned IP address 108.11.13.20, No. 1:21-cv-17860-NLH-MJS, 2022 WL 2274473 (D.N.J. June 23, 2022) [hereinafter "Strike 3 v. IP address 108.11.13.20"]. (Local Rule 5.3 in the District of New Jersey merits further comment in another article, to be posted here.)   Strike 3 is described in that case as  "the purported owner of copyrights in 'adult motion pictures'[.]"  Strike 3 v. IP address 108.11.13.20, 2022 WL 2274473, at *1.

 In a case decided the day before in the Eastern District of Pennsylvania, the District Judge wrote that the same  "Strike 3 Holdings, LLC produces and distributes pornographic films."  Strike 3 Holdings, LLC v. John Doe subscriber assigned IP address 108.52.236.56, No. 21-5178, 2022 WL 2276352, at *1 (E.D. Pa. June 22, 2022) [hereinafter "Strike 3 v. IP address 108.52.236.56"].

To say again, these two cases illustrate the issue of pseudonymous defendants sued by Strike 3 for their "embarrassing" use of porn such that they settled with Strike 3 and sought to seal their identities because they would be embarrassed if they were identified to the public.

The District Court in New Jersey stated and applied the same Third Circuit law that governed the decisions and led to  the same result  in both cases.  In the New Jersey case, the parties jointly moved to seal the defendant's identity after they settled the plaintiff's claim, whereas in the Pennsylvania case the plaintiff filed the motion to seal after the parties settled.

 The reasons the parties gave for sealing court records  in the New Jersey case are typical:  The parties alleged that "present and prospective  employers" might potentially discover the defendant's involvement in the case "resulting in adverse employment consequences," irreparably tarnishing the defendant's reputation, "and financial losses."  The parties did not identify what "consequences," reputational hits, or  "financial losses" they had in mind in requesting that the defendant's identity be sealed from public view in the amended complaint, the civil cover sheet, a return of summons, and "a declaration of John Doe," the defendant.  The parties' supports were simply not enough to  make the required showing to seal even these documents.  Strike 3 v. IP address 108.11.13.20, 2022 WL 2274473, at *2.

What is required to seal any document in a  court file is specificity.  Mere recitations of embarrassment are not ordinarily enough under Third Circuit case law.  In the New Jersey case, therefore, "[t]he generality of this harm is not sufficient to overcome the presumption of access to court records."  Strike 3 v. IP address 108.11.13.20, 2022 WL 2274473, at *2.

The result in the Pennsylvania case was the same under Third Circuit case law and a similar record.  See Strike 3 v. IP address 108.52.236.56, 2022 WL 2276352, at *2 ("Potential embarrassment is not enough.").

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

Dobbs v. Jackson Women's Health Org.

 I always thought that the job of judges was to protect rights.

Until Sam Alito and his gang, I never thought that judges would take established rights away.

There is more to come, I am afraid.  See SUPREME POWER published here on May 25, 2022.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

WHEN PROPERTY CARRIERS RECOUP FROM INSUREDS WHAT THEY PAY TO MORTGAGEES.

In some cases, property carriers can recoup the amounts they paid to mortgagees from their own insureds, the mortgagors.  “Stated another way, ‘[W]hen an insurer pays a mortgagee for loss from an insured’s  arson, the property insurer is entitled to recoupment and restitution of that amount from the insured.’”  Allstate Indem. Co. v. Dixon, No. 6:14-cv-03489-MDH, 2018 WL 11427943, at *7 (W.D. Mo. March 30, 2018), aff’d with opinion, 932 F.3d 696 (8 th Cir. 2019).

When one insured’s act destructive of coverage binds its co-insureds, there is simply no insurance coverage available for damage or loss that results from the destructive act.  This principle appears broad enough to apply even in cases involving destructive acts besides setting fires.  “Where an insurer makes mortgage payments to a mortgagee on the insured’s  behalf because it is required to do so by the policy, and a determination is later made that the insured was not entitled to coverage under the policy, the insured has no right to benefit from the payment.”  Allstate v. Dixon, 2018 WL 11427943, at *8.

In this case, a jury previously found that a destructive fire was set by or at the direction of a husband.  The Court ruled under Missouri law that this act of the husband bound his co-insured wife under their Allstate property insurance policy.  Accordingly, the Court granted the carrier’s “motion to recoup the mortgage payment made to the [mortgagees by the mortgagors-insureds] in the amount of $107,526.29,” among other things.  Allstate v. Dixon, 2018 WL 11427943, at *9, aff’d, 932 F.3d at 703.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.     

DO YOU KNOW THE DIFFERENCE BETWEEN "INDEMNITY RESERVES" & "CLAIM RESERVES"?

In Luxottica of Am. Inc. v. Allianz Global Risks US Ins. Co., No. 1:20-cv-698, 2022 WL 1204870 (S.D. Ohio April 22, 2022),  what the Court identified as "indemnity reserves," the Court held to be protected work product under federal civil procedure in a third-party bad faith case.  Confused yet?  The Court itself was unsure of the exact distinction between "indemnity reserves" and "claim reserves."   Nonetheless, the Court thought itself clear enough on the concepts at issue in this case to rule that indemnity reserves such as in the case at bar designate reserves that are directly related to the carrier's exposure to its insured given the claims involved.  It was such reserves that the Court addressed when it ruled that they are protected work product under federal civil procedural rules in this third-party bad faith case.   Luxottica, 2022 WL 1204870, at *1-*2.

See also 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 8:6 Home Office Claims Files and Setting of Reserves (3d Edition West Publishing Co., 2022 Supplements forthcoming).

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Ocasio v. C.R. Bard: READING THE LOCAL RULES ONE YEAR LATER.

Ocasio v. C.R. Bard, Inc., No. 8:13-cv-1962-CEH-AEP, 2021 WL 2477259 (M.D. Fla. June 17, 2021) was decided on June 17, 2021.

Three were 7 lawyers of record by my count.  Four were from outside Florida.  These 4 were obviously the lead counsel and the remaining lawyers apparently served as local counsel.

The decision in this case by Judge Honeywell was to deny unopposed motions of the plaintiffs and of the defendants to seal certain deposition transcripts.  The parties jointly requested the Court to seal “53 deposition transcripts that the parties intend to play at trial.”  Ocasio, 2021 WL 2477259, at *1.

The Court denied this unopposed joint request to seal testimony for several reasons.

First, the defendants represented to the Court that sealing the entire set of 53 deposition transcripts was the narrowest method they knew of keeping proprietary information confidential.  Judge Honeywell’s answer was that “the Court finds this blanket statement to be unsupported and improbable.”  Ocasio, 2021 WL 2477259, at *2.

Next, the parties proposed to read or play the depositions “in open court and thus the matter will not be kept confidential from any member of the general public attending the trial.”    Ocasio, 2021 WL 2477259, at *2.

Third, the fact that the parties declared these transcripts to be confidential did not by itself make them confidential.  Ocasio, 2021 WL 2477259, at *2.

In short, for all these reasons the parties did not jointly show “good cause” and they did not in their unopposed motions overcome the presumption of public access to these documents.  Ocasio, 2021 WL 2477259, at *2.  But none of these reasons was the main reason for decision here.

The most important reason for denying the parties’ joint unopposed motions to seal was that they apparently did not read Middle District of Florida Local Rule 1.11(a).  Whether they read it or not, they obviously did not follow it.  If they had, they might have succeeded.  Local Rule 1.11(a), relied on by the Court as a basis for its Order, provides in full as follows:

Rule 1.11 - Filing Under Seal in a Civil Action

• PUBLIC RIGHT OF ACCESS. Because constitutional law and common law afford the public a qualified right of access to an item filed in connection with the adjudication of a claim or defense, sealing is unavailable absent a compelling justification. Sealing is not authorized by a confidentiality agreement, a protective order, a designation of confidentiality, or a stipulation.

M.D. Fla. Local Rule 1.11(a) (emphasis added).

The lesson for practitioners is pretty well summarized (if I do say so myself) in the title of my Letter to the Editor about the Ocasio v. C.R. Bard decision, published in the August 1, 2021 edition of The Florida Bar News:  Read The Local Rules.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

A COURT EXPLAINS WHY REINSURANCE WORLD IS A SPECIAL PLACE.

A federal Court applying Illinois law recently held that there is no statutory bad-faith claim against a reinsurer's agents under 215 Ill. Comp. Stat. (ILCS) 5/155 because that statute does not apply to reinsurance contracts or to reinsurers' agents.  The federal Court followed a legion of State Court decisions.  Stonegate Ins. Co. v. Fletcher Reins. Co., No. 21 CV 3523, 2021 WL 5769528, at *7-*8 (N.D. Ill. December 6, 2021).  As the Court wrote:  "Given this precedent, it is clear that Section 155 does not permit a bad faith claim to be brought against a reinsurer’s agents, such as the Defendants. In other words, Stonegate cannot bring a claim against Defendants under Section 155, because Section 155 pertains only to insurance contracts – not reinsurance contracts."  Stonegate, 2021 WL 5769528, at *8 (emphases by the Court).

See generally 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 6:11, Primary And Excess Insurers And Reinsurers:  A Working Definition of Reinsurance--The Effect of Reinsuring Agreements or Treaties (3d Edition Thomson Reuters West, 2022 Supplements in process).

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

EXCESS CARRIERS AND PRIMARY CARRIERS IN NEW JERSEY, AND BEYOND.

When a court describes the importance of excess vs. primary coverage, it is a beautiful thing to excess carriers and their coverage counsel.  In CNA Ins. Co. v. Selective Ins. Co., 354 N.J. Super. 369, 383, 807 A.2d 247, 255 (N.J. Super. Ct. App. Div. 2002), the court stated it this way:

    Whether a carrier provides true excess coverage or primary coverage with an excess “other insurance” clause is meaningful. In a true primary-excess relationship between insurance companies, the excess carrier has a reduced risk of exposure and an increased reliance on the primary carrier.  [Citation omitted.] The true excess carrier may rely on the primary carrier to act reasonably in (1) discharging its claims-handling obligations; (2) discharging its defense obligations; (3) properly disclosing and apprising the excess carrier of events which are likely to effect that carrier's coverage; and (4) safeguarding the rights and interests of the excess carrier by not placing the primary carrier's own interests above that of the excess insurer. 

CNA Insurance v. Selective Insurance, 354 N.J. Super. at 383, 807 A.2d at 255.

Please read the disclaimer.  This blog article ©2022 Dennis J. Wall.  All rights reserved.