Claims and Bad Faith Law Blog

"GENERAL BUSINESS PRACTICE" IN THE COURTS: FLORIDA SPEAKS HERE.

This article is the concluding part of a series begun here and continued here on what the Courts hold about "General Business Practice" claims and proof in cases involving alleged statutory violations.    

    Similar holdings have been reached under similar statutory "general business practice" requirements for claiming and proving statutory violations in bad-faith cases,  and for assessment of punitive damages in most cases.  In Cook v. Florida Peninsula Insurance Co.,[1] the Court was confronted with a "general business practice" or GBP  dilemma.  Proof of a general business practice is required in order to assess punitive damages under Florida law; proof of a GBP is also a central tenet of Florida Insurer Bad Faith Law under Florida's Bad Faith Statute, Section 624.155.

          The Court resolved the issue of the proof required in order to prove a general business practice in the context of a claim for punitive damages, with these words which are very similar to the holdings in the Connecticut federal cases decided under the Connecticut Unfair Insurance Practices Act, discussed in articles published here earlier:

          There is no magic number for other evidence required to show frequency of a general business practice in order to assert a claim for punitive damages—at a minimum it is the plaintiff’s own claim and at least one more. What is required is “a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages.” § 768.72(1), Fla. Stat. (2022); Fla. R. Civ. P. 1.190(1)(f).[2]

Statutory bases of liability in settlement are discussed in § 3:28 (third-party bad faith claims and cases) and § 9:14 (first-party bad faith claims and cases), in DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co., 2024 Supplements in process).

Please read the disclaimer.  This article ©2024 Dennis J. Wall.  All rights reserved.

 

[1] Cook v. Fla. Peninsula Ins. Co., 371 So. 3d 958 (Fla. 5th DCA 2023).

[2] Cook, 371 So. 3d at 962.

WELLS FARGO WON THE PUNITIVE DAMAGES BATTLE, BUT LOST THE WAR.

In Dollen v. Wells Fargo Bank, N.A., ___ P.3d ___, No. A-1-CA-37194, 2020 WL 1699021 (N.M. Ct. App. April 6, 2020), the New Mexico Court of Appeals considered the standards for assessing punitive damages against Wells Fargo, a mortgage servicer in this case. The suit was also filed against an insurance carrier which had issued the deceased homeowner what the appellate court called a mortgage accidental death insurance policy, but the carrier was out of the suit by the time of this decision.

    The Court of Appeals set out the relevant factors, in pertinent part as follows:

    {19} The Due Process Clause of the Fourteenth Amendment entitles litigants to fair notice of conduct that may be punished by a state’s punitive damages system, and fair notice of severity of the penalty that a state may impose.

Dollen v. Wells Fargo, 2020 WL 1699021, ¶ 19, at *4.

    Accordingly, the Due Process Clause imposes certain constraints upon any assessment of punitive damages, according to the case law and to Standard Jury Instructions which are based on the case law:

    {20} One such constraint is the requirement of a reasonable relationship between the punitive damages award and the harm that was or could have been caused to the plaintiff(s). [Citations omitted.] Thus, New Mexico’s jury instructions with respect to punitive damages provide, in part, as follows:

Punitive damages are awarded for the limited purposes of punishment and to deter others from the commission of like offenses. The amount of punitive damages must be based on reason and justice taking into account all the circumstances, including the nature and enormity of the wrong and such aggravating and mitigating circumstances as may be shown. The property or wealth of the defendant is a legitimate factor for your consideration. The amount awarded, if any, must be reasonably related to the injury and to any damages given as compensation and not disproportionate to the circumstances.

UJI 13-1827 NMRA (emphasis added).

Dollen v. Wells Fargo, 2020 WL 1699021, ¶ 20, at *5.

    At that point, the punitive damages ball seemed to be rolling in Wells Fargo's direction in this case. And then it stopped. Wells argued too much by half, as it were, judging by the results. The New Mexico appellate court held that the punitive damages assessment against Wells should be remanded in spite of the evidence in the record that clearly established Wells' wrongdoing in servicing mortgages across the United States, according to the New Mexican judges in this case:

    {23} In arriving at its punitive damages figure, the district court in this case appears to have considered only avoiding an amount of punitive damages that might bankrupt Wells Fargo, rather than considering the amount that would accomplish but not exceed New Mexico’s goals of punishment and deterrence. [Citation omitted.] Because Wells Fargo raised no argument about its wealth, the district court assumed that “any amount it awards will not threaten Wells Fargo’s very existence.” This, coupled with the district court’s reference to findings that Wells Fargo services eight to nine million home loans in the United States, and systemically, remorselessly mishandles mortgage accounts for its own profit, indicates that the district court’s punitive damages award was aimed at deterring a national company with virtually unlimited assets from nationwide wrongdoing. This, again, violated Wells Fargo’s right to a process constrained by fair and permissible considerations, namely: punishment for harm to these Plaintiffs, and deterring only conduct in this state.

    {24} Accordingly, we reverse and remand the district court’s judgment on punitive damages, so that the court may reconsider its award within the constraints described hereinabove.

Dolan v. Wells Fargo, 2020 WL 1699021, ¶¶ 23-24, at *6 (italics in original; boldface added).

Constitutional, statutory, and common law standards for the assessment of Punitive Damages against insurance carriers in bad faith cases are analyzed at length in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 13:15 (3d ed. Thomson Reuters West, 2020 Supplements in process).

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

WIND 2020, EXTRACONTRACTUAL CLAIMS AND "THE BIBLE OF BAD FAITH."

Attorneys and adjusters representing policyholders outnumbered the show of hands from attorneys and adjusters representing insurance companies at the WIND Conference 2020 yesterday.

 

Copyright 2020 Dennis J. Wall.

At a class on Extracontractual issues, many issues were discussed.  For openers, the two main reasons for insurance bad faith claims were identified as Delay and Undervalued.  Insurance bad faith claims tend to be made in the greatest numbers, by far, when claims are delayed and when they are undervalued.

In Florida terms, a "CRN" or "Civil Remedy Notice" under Florida's Bad Faith Statute, Section 624.155, was discussed a lot.  Good advice for those writing CRN's:  Provide enough information in this statutory condition precedent to a bad faith claim to allow the carrier the opportunity to resolve the damages claim under the policy, and so resolve the alleged bad faith behavior beforehand.  That is clearly the statutory purpose of the 60-day period under the Florida Statute.

"Peer review" may be the next shorthand reference in claims handling.  This is admittedly anecdotal evidence, but anecdotal evidence in this context may simply be evidence that has not yet found its way into a court file.  Hopefully it never will.  The term has been used so far by a property insurance carrier in Pennsylvania to deny loss mitigation claims on the ground that after a "peer review" the policyholder essentially did not follow the prevailing standard of care by paying for a certain way to clean up the mess after a property loss such as a fire or flood.  "Peer review" can be extended of course to many other things such as asserted lack of cooperation or claimed failure to protect the property after loss.  "Peer review" may go down in the annals of claims handling along with such phrases as "round tabling," which was established long ago to identify a process in which many people go around a table to express their views about whether a claim is covered in essence.  Time will tell.

Returning to Florida Insurance Bad Faith Law, the Florida Bad Faith Statute incorporates other statutes that in turn were written based on a Uniform Claim Settlement Procedures Act.  Neither the Florida statutes nor the Uniform Act clearly identify or define what is a "General Business Practice."  In Florida, proof of a GBP is a required element of a punitive damages claim.  It was not mentioned yesterday but apparently the people that wrote the Uniform Act had case law and statutes in other areas of the law in mind, particularly Labor Law where it is a defined term, when they wrote about a "General Business Practice" in the context of Insurance Bad Faith.

All told, a very knowledgeable group attended the Extracontractual class at WIND 2020 yesterday.  There was universal agreement with the spoken recognition of LITIGATION AND PREVENTION OF INSURER BAD FAITH as "The Bible of Bad Faith."  As far as I am concerned, these were clearly people of good taste!

Copyright 2020 Dennis J. Wall.

Dennis Wall is the author of LITIGATION AND PREVENTION OF INSURER BAD FAITH, now in Two Volumes in its Third Edition with 2020 Supplements in process published by Thomson Reuters West.

Please Read The Disclaimer. ©2020 Dennis J. Wall.  All Rights Reserved.

"BAD FAITH BREACH OF INSURANCE CONTRACT": $1 MILLION PUNITIVE DAMAGES ...

... IN CALIFORNIA, NOT IN FLORIDA.

"As reduced by the trial court, the $ 1 million in punitive damages (approximately three times the amount of compensatory damages) is within the constitutionally permitted range in view of the degree of reprehensibility of GEICO’s conduct."  This holding is published in the Court's opinion immediately before the Court began to discuss the Background of the case.  Mazik v. GEICO General Ins. Co., 35 Cal. App. 5th 455, (Cal. 2d DCA, Division 2, 2019) (page numbers not available from Westlaw at the time of this writing).  When Mazik first appeared in publication unofficially in Westlaw, it was the subject of an earlier article here on May 21, 2019.

A jury originally assessed punitive damages on GEICO in the amount of $4 Million, but the trial judge reduced the punitive damages assessment to the amount of $1 Million affirmed by the appellate court.

In many ways, this case mirrors the Manor House decision of Florida's Fifth DCA that was profiled here in an earlier article on Tuesday of this week.  Both Mazik and Manor House were decided in May, but Mazik involved a cause of action for "bad faith breach of insurance contract" of an underinsured motorist policy, presumably meaning a breach of the implied covenant of good faith in California, while Manor House involved a cause of action for breach of a property insurance contract in Florida.

The differences can be determinative of the outcomes.  While punitive damages does not seem to have been an issue in Manor House unlike Mazik, it is unlikely that Florida courts would countenance an award of $1 Million in punitive damages for a breach of contract without a showing of bad faith which, it will be recalled, could not be made even if the plaintiffs in Manor House had attempted to allege a cause of action beyond breach of contract because Citizens Property Insurance, the defendant in Manor House, is statutorily immune from "bad faith" lawsuits in Florida.

There was clearly no such immunity against a cause of action for breach of the implied covenant of good faith in the Mazik case in California.

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

Download IBF 06.20.19.

$1 MILLION PUNITIVE DAMAGES FOR BAD FAITH BREACH OF INSURANCE CONTRACT.

 

In Mazik v. GEICO General Ins. Co., No. B281372, 2019 WL 2150799 (Cal. 2d DCA, Div. 2, May 17, 2019), a California jury awarded $313,508.00 in damages for delayed payment in bad faith of an Uninsured Motorist (UIM) claim.  The jury also assessed $4Million in Punitive Damages.

A California trial judge reduced the punitive damages assessment to $1 Million.  GEICO appealed only the judgment for punitive damages.

A California appellate court affirmed.  In simple and basic terms, the California appellate panel held that the evidence of insurer bad faith conduct in the record of that case was sufficient to support the judgment of bad faith including punitive damages, and the assessment fell within the constitutionally permissible range of punitive damages assessments:

          We reject GEICO’s arguments and affirm. There is sufficient evidence in the record to show that GEICO’s managing agent ratified conduct warranting punitive damages. In concluding that Mazik’s claim was worth far less than the policy limits, GEICO disregarded information provided by Mazik showing that he had a permanent, painful injury, and instead selectively relied on portions of medical records that supported GEICO’s position that Mazik had fully recovered. As reduced by the trial court, the $ 1 million in punitive damages (approximately three times the amount of compensatory damages) is within the constitutionally permitted range in view of the degree of reprehensibility of GEICO’s conduct.

Mazik v. GEICO General Ins. Co., No. B281372, 2019 WL 2150799, at *1 (Cal. 2d DCA, Div. 2, May 17, 2019).

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

MISSISSIPPI PROPERTY POLICY CANCELLATION VOID, $1,693,035 "REPAIR OR REPLACE" DAMAGES, ...

AND AFTER OTHER INSURANCE WAS FORCE-PLACED BY THE LENDER. 

In what might be termed a 'comedy of damages' except for the great harm that was done, Mount Carmel Ministries purchased a property policy from GuideOne to cover a school which Mount Carmel ran.  After a time, GuideOne attempted to cancel the policy, but a district court in Mississippi later held that the cancellation was void and that the policy was in place at the time of a tornado loss.

The district court awarded "$1,693,035 in damages, representing what would have been the cost to repair or replace the property roughly six weeks after the tornado, less depreciation."  GuideOne Elite Ins. Co. v. Mount Carmel Ministries, ___ F. App'x ___, No. 15-60915, 2017 WL 344278, at * (5th Cir. January 23, 2017) (precedential value in at least some federal courts apparently limited by Fed. R. App. P. 32.1 and 5th Cir. Rules 28.7 and 47.5).

Parenthetically, Mount Carmel's lender, Seaway, placed insurance premiums on Mount Carmel by force for a replacement policy after Seaway learned of GuideOne's supposed "cancellation."  In what we are definitely not going to call a 'comedy of damages' here, Seaway apparently forgot to keep the force-placed insurance policy in place.

That left the issue squarely presented of whether GuideOne had an arguable basis for denying coverage due to the assumed cancellation here; if it did not have an arguable basis for denying coverage in this case, then under Mississippi law, it would face the assessment of punitive damages for "bad faith" conduct.  The district court held that GuideOne did not have to face a punitive damages assessment in this case, because here the district court found an arguable reason for GuideOne's coverage denial.

A three-judge panel of the Fifth Circuit affirmed the district court's holding that cancellation did not comply with the GuideOne policy requirements, and the district court's holding that GuideOne had an arguable basis for denying all coverage based on cancellation even though the cancellation was void.

Judge Owen concurred in affirming both invalid cancellation under the policy, and no punitive damages, but would have also reached the district court's holding that cancellation was invalid under a Mississippi statute as well as under the policy.

Coverage denied under a property policy that was not legally cancelled.  Bad faith, punitive damages bullet dodged.  Twin takeaways from this case.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.   

 

BAD FAITH CASES: WHY COMMON LAW CLAIMS & STATUTORY CLAIMS ALLEGED TOGETHER.

I have written before about the insightful opinion by a District Judge in the case of Wahlert v. American Standard Ins. Co. of Wis., No. 14-cv-02744-RBJ, 2016 WL 1222944 (D. Colo. March 29, 2016).  In that case, the District Judge dismissed a Colorado common law claim of insurer bad faith, and dismissed in part but retained in part a statutory claim for double damages plus policy benefits, attorney's fees, and costs.

That was the result.  The District Judge produced more than an outcome, however.  She reported the reasons that common law and statutory claims are frequently alleged together in insurance bad faith cases, reasons seldom mentioned in the case law it seems:

The common law claim requires proof not only that insurer's conduct was unreasonable but also that the insurer knew or recklessly disregarded the fact that its conduct was unreasonable.  [Citation omitted.] The statutory claim requires proof that a benefit to which the insured was entitled under the policy was unreasonably delayed or denied. If that is established, the plaintiff is entitled to receive a penalty payment of two times the benefit (in addition to the benefit itself) plus reasonable attorney's fees and costs.  C.R.S. § 10-3-1116(1).

    Because of the lesser liability burden and the onerous penalty provision, the statutory claim is “ ‘arguably ...more financially threatening’ ” to the insurer. [Citations omitted.] Nevertheless plaintiffs frequently assert both claims. Perhaps the motivator for including the common claim is that punitive damages can be recovered if the plaintiff establishes that the insurer's actions were accompanied by circumstances of fraud, malice, or willful and wanton conduct. 

Wahlert v. American Standard Ins. Co. of Wis., No. 14-cv-02744-RBJ, 2016 WL 1222944, at *3-*4 (D. Colo. March 29, 2016).

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with  Supplements).  All rights reserved.

Related articles

PUNITIVE DAMAGES FOR BREACH OF DUTY TO DEFEND.

PUNITIVE DAMAGES FOR BREACH OF DUTY TO DEFEND.

Punitive damages are not awarded for a breach of the duty to defend unless an insurance company acts in bad faith.  Burgraff v. Menard, Inc., 367 Wis.2d 50, 875 N.W.2d 596, 608 ¶63 (2016).

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with Supplements).  See in particular 2 id § 13:15, "Punitive Damages." The Wisconsin Supreme Court's holding in Burgraff is not necessarily the universal view.  All rights reserved.

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When The "No Settlement Without Consent" Provision is NOT Waived.

PENNSYLVANIA SUPREME COURT: “YES” TO ASSIGNING STATUTORY BAD FAITH CLAIM.

               In another ground-breaking decision this week, the Pennsylvania Supreme Court addressed a certified question from the Third Circuit Court of Appeals about assigning bad faith claims in Pennsylvania.  In another decision, the Pennsylvania Supreme Court affirmed a judgment based on a verdict against Walmart for $188 Million.  Of greater importance to other participants in the judicial system if not to the litigants in that particular case, the Court approved the proofs of both liability and damages employed in that class action case.  The Pennsylvania Supreme Court’s stunning new class action decision was addressed yesterday on Insurance Claims and Issues Blog.

               In Allstate Prop. & Cas. Ins. Co. v. Wolfe, ___ A.3d ___, 2014 WL 7088147 *1 (Pa. December 15, 2014), in another decision this week the Supreme Court of Pennsylvania also addressed a certified question from the Federal Third Circuit Court of Appeals.  The Third Circuit certified a question “to clarify whether, under Pennsylvania law, an insured may assign the right to recover damages from his insurance company deriving from the insurer’s bad faith toward the insured.”

               The bad faith claim in the certified question case involves liability insurance and an alleged bad faith failure to settle.  Karl Zierle was insured under an auto liability policy issued by Allstate Property and Casualty.  Mr. Zierle was at the wheel of a vehicle which rear-ended Jared Wolfe’s vehicle.  Mr. Wolfe sued Mr. Zierle for damages.

               Allstate failed to settle the claims alleged by Mr. Wolfe against its insured, Mr. Zierle.  A judgment was ultimately entered against Mr. Zierle which was broken out into a $15,000.00 award for compensatory damages and a $50,000.00 assessment of punitive damages.  Allstate satisfied only the compensatory damages component and Zierle assigned any bad-faith rights he might have against Allstate to Wolfe in exchange for Wolfe’s forbearance on execution of the punitive damages component.

               Mr. Zierle’s potential bad-faith claims in Pennsylvania apparently included rights under Pennsylvania’s bad-faith statute.  In turn, Pennsylvania’s bad-faith statute allows for the assessment of punitive damages against an insurance carrier for its alleged bad faith.

After obtaining the assignment of Mr. Zierle’s bad-faith rights, Mr. Wolfe filed a claim against Allstate in Federal Court based on the Zierle-Wolfe assignment for alleged bad faith failure to settle.  Wolfe alleged “that Allstate’s refusal to settle reflected bad faith on the carrier’s part” under both a “common-law contract theory” and under Pennsylvania’s bad-faith statute, Section 8371 of the Judicial Code, 42 Pa. Cons. Stat. § 8371.  Allstate Prop. & Cas. Ins. Co. v. Wolfe, ___ A.3d ___, 2014 WL 7088147 *1 (Pa. December 15, 2014).  “The matter proceeded to trial, and a jury discerned bad-faith conduct on the part of Allstate.  As relevant here, the jury awarded $50,000 in punitive damages, as authorized under Section 8371.”  Allstate Prop. & Cas. Ins. Co. v. Wolfe, ___ A.3d ___, 2014 WL 7088147 *2 (Pa. December 15, 2014).

               Parenthetically, the jury in the later bad-faith case awarded the same amount of damage that was assessed against Mr. Zierle, Allstate’s insured, in the earlier liability case.

               On appeal to the Third Circuit Court of Appeals in the Federal Court bad-faith case, Allstate argued that the Zierle-Wolfe assignment of bad-faith-failure-to-settle claim presented an open question of whether rights are assignable under Section 8371.  Allstate contended that such a claim was not assignable and was invalid as a matter of Pennsylvania State law.

             The Third Circuit certified the question to the Supreme Court of Pennsylvania whether this assignment is valid in Pennsylvania, and as noted, the Pennsylvania Supreme Court answered “Yes”:

               We conclude that the entitlement to assert damages under Section 8371 may be assigned by an insured to the injured plaintiff and judgment creditor such as Wolfe.  Having answered the certified question, we return the matter to the Third Circuit.

Allstate Prop. & Cas. Ins. Co. v. Wolfe, ___ A.3d ___, 2014 WL 7088147 *5 (Pa. December 15, 2014).

               Insurability of punitive damages by another name, perhaps, as things turned out.

Please Read The Disclaimer.  ©2014 by Dennis J. Wall.  All rights reserved.

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PUNITIVE DAMAGES IN INSURANCE BAD FAITH CASES?

          The arguments for and against assessing punitive damages in insurance bad faith cases are explored in "Punitive Damages for Failure to Pay on an Insurance Policy?" posted on February 16, 2014 on Tennessee Insurance Litigation Blog.  It is a pretty comprehensive article.  Check it out if you have any interest in how and when punitive damages are assessed in IBF cases, even IBF cases litigated outside of Tennessee.

          Tennessee Insurance Litigation Blog in general is a worthwhile visit for insurance practitioners of all kinds.  Alternating articles are written on the Blog by an insurance company attorney and a policyholder attorney, and their collaboration inspires everyone who practices insurance law.

 © 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

Please Read The Disclaimer.

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Affirmative Defenses in First-party Bad Faith Case in Florida.

 

No Documents, No Complete EUOs? No Bad Faith Tort.

   An Insurance Company's Motion for Summary Judgment was granted in Download Foster v. State Farm Fire and Casualty Co. (N.D. Ind. Case No. 1.10CV20, Order and Opinion Filed August 17, 2011) PUBLIC ACCESS, also published as 2011 WL 3610425 (N.D. Ind. August 17, 2011)(authorized password required to access Westlaw).  In considering a Claim for alleged First-Party Bad Faith and Punitive Damages in connection with Claims under a Homeowners Policy, the Federal Court in that case very usefully and concisely summarized the applicable law.

   The Court's holding in this case is echoed in many respects in the decisions of Courts in many other jurisdictions which also recognize the Tort of First-Party Bad Faith.  The Court's holding, as follows and as discussed below, is authority on First-Party Bad Faith Claims which can and likely will be cited in Courts beyond the borders of one State or jurisdiction:

While there is no exhaustive or exclusive list of bad faith actions that an insurer can take, the obligation of good faith and fair dealing includes the obligation to refrain from (1) making an unfounded refusal to pay policy proceeds; (2) causing an unfounded delay in making payment; (3) deceiving the insured; and (4) exercising any unfair advantage to pressure an insured into a settlement of his claim.  [Citations omitted.] For example, an insurer that denies liability “knowing that there is no rational, principled basis for doing so had breached its duty.”  [Citations omitted.]   “As a general proposition, ‘[a] finding of bad faith requires evidence of a state of mind reflecting dishonest purpose, moral obliquity, furtive design, or ill will.’ “

 Foster v. State Farm Fire & Casualty Insurance Co., 2011 WL 3610425 at *17.

    Further, "[t]o prove that an insurance company committed the tort of bad faith in Indiana, a plaintiff must establish that his claim was underpaid or wrongfully denied in the first place."  Id. at *18. 

    However, the Insurance Company in that case had not denied the Policyholders' Claim.  Id.  The Defendant contended that the Policyholders filed their lawsuit first, before the Insurance Company completed its investigation.  Id. at *2.

    Further, the fire at the base of the Policyholders' Claims was unexplained.  Ignition took place when no-one was present, or at least no-one who was available to testify about it.  Even if the Insurance Company is determined to Breach its Insurance Contract by not paying a First-Party Claim, the Insurance Company may in Good Faith dispute that Claim under the prevailing substantive law, the Court held.   "A good faith dispute about the amount of a valid claim or about whether the insured has a valid claim does not supply the grounds for a bad faith cause of action."  Id.  at *18.

    Accordingly, the Defendant Insurance Company in that case was held entitled to Judgment as a matter of law, there being no genuine issues of material fact.  Since the standard of Bad Faith liability is even higher than the standard for assessing Punitive Damages in Indiana, the Federal Court also granted Summary Judgment with respect to the Policyholders' Claim for Punitive Damages in this case.  Id. at *19.

   The decision in this case is also noteworthy for other holdings.  Besides pursuing a First-Party Bad Faith Claim, the Plaintiffs-Policyholders alleged a Claim for Breach of Contract.  Their alleged basis for this Claim was that the Defendant failed to "pay the Plaintiffs' $2,888,432 claim for the loss of their dwelling and personal property caused by a fire."  Id. at *1.  The Defendant Insurance Company countered that the Plaintiffs-Policyholders failed to provide requested documentation to the Defendant and further that they failed to complete Mrs. Foster's Examination Under Oath as required by their Policy.  Although the Federal Court mentioned Mrs. Foster's incomplete EUO several times, the Court actually concentrated on the Fosters' contention that they had produced all the documents they had.

   The Plaintiffs-Policyholders thus replied to State Farm's requests for documentation, that they had no more documents to give and that they told the Defendant that they were prepared to complete the uncompleted EUO anyway.  Then the Plaintiffs filed their lawsuit against the Defendant, in fairly short order.  Id. at *2.  Over nearly half-a-dozen full pages, the Federal Judge set out a "timeline" of the events concerning investigation of the Plaintiffs' Claim in the year following the fire, id. at *4-*10.

   The Federal Judge in this case also summarized the applicable Policy Conditions concerning production of documents and sitting for EUOs.  The provisions are standard Conditions setting forth what the Insured must do after loss.  They are in use in many Policies across the country.  "The duties at issue in this case are, 'as often as [the insurer] reasonably require[s]' that the insured provide records and documents the insurer requests, and submit to statements and examinations under oath."  Id. a *11.

   In this case, the issue raised by the Defendant Insurance Company concerning the Policyholders' compliance with these provisions was whether they substantially complied with, or materially breached these provisions.  As noted above, the Policyholders maintained that there came a point when they had no more documents to give.  The Federal Court examined this contention in the course of reviewing the "timeline" summarized in some 6 pages of the Court's Opinion as published on Westlaw.  "However, this Court's review of the designated evidence, even when viewed most favorably to the Plaintiffs, does not support their claim that they fully complied with the Defendant's document requests."  Id. at *13.

   On first blush, this judicial statement almost seems like the Court is saying that it weighed credibility issues.  It apparently did no such thing.  The Policyholders did not apparently submit much beyond their assertion that they had no more to produce:  "The evidence in support of the Plaintiffs' claims that they produced all documents are their own sworn statements and a letter their attorney sent to the Defendant."  Id. at *13.  The Court contrasted these items with the materials of record and concluded differently from what the Plaintiffs asserted to be the case here.  "The Court does not doubt that in some cases an insured will have substantially complied with document requests despite a failure to meet every demand.  This is not such a case....  The Plaintiffs' unsupported claim that they fully complied with all document requests could not convince a reasonable jury that the Defendant was the first to breach its contractual obligations."  Id. at *17.

   The Court in this case granted the Defendant's Summary Judgment on the Breach of Contract Claim as well.

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Undisputed Covered U.M. Amounts: Extracontractual Exposure, Punitive Damages Exposure Also.

   There are important holdings on Bad Faith Claims filed against an Uninsured Motorist/Uninsured Motorist ("U.M.") Insurance Company in Nevada.  Two of them are posted here.

1.  Failure to Pay Undisputed Covered Parts of the Insured's Coverage Claim. 

   A growing number of Courts is holding that failure or refusal to pay undisputed covered amounts under First-Party Insurance Policies can be the basis of a Claim for Bad Faith.  The Bad Faith Claims may come at Common Law or under Statutes.  See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 9:26 "Insurer's Payment of Undisputed Covered Amounts:  Introducing the Concept -- Part Payment of Non-Property, First-Party Claims, And of Claims Generally" (West Publishing Company 2010 Supplement).  A Federal District Court in Nevada has now held that Bad Faith Claims in such cases can be based on a U.M. Insurer's failure to follow its own Claims Manual.

   In Download Storlie v. State Farm Mutual Auto. Insurance Co. (D. Nev. Case No. 2.09cv02205, Order Filed January 13, 2011) PUBLIC ACCESS, also published as 2011 WL 116881 (D. Nev. Order Filed January 13, 2011)(authorized password required to access Westlaw), a Federal Court held in effect that the complete absence of case law in Nevada "indicating that an insurer must advance the undisputed portion of an UM policy," id. at *6, did not prevent a Bad Faith Claim from accruing.  First, provisions of the Defendant's "Auto Claim Manual" suggested to the Court that at least in some cases, the Defendant U.M. Carrier "does instruct its employees to advance the undisputed portions of an insured's UM policy benefits prior to the final settlement of an insured's claim."  Id.

   Further, refusal or other failure to pay undisputed covered partial amounts of Uninsured/Underinsured Motorist Claims could violate a statutory duty in Nevada "to effectuate prompt, fair, and equitable settlements of claims in which liability of the insurer had become reasonably clear."  Id. at *8.  The Federal Court wrote:

   In this case, a reasonable trier of fact could conclude that Defendant's failure to tender any offer during the ten month span of time between when Defendant initially received notice that Plaintiff might be pursuing an UM cause of action and the time at which Plaintiff filed this lawsuit -- January to October -- demonstrated a failure on Defendant's part to effectuate the sort of prompt, fair, and equitable settlement contemplated in [Nevada's] Unfair Claims Practices Act [Nev. Rev. Stat. § 686A.310(1)(e)], particularly when coupled with Defendant's failure to pay the undisputed portion of Plaintiff's medical bills even after receiving notification that they had been sold to a collections agency.

Storlie v. State Farm Mutual Auto. Insurance Co., 2010 WL 116881 *8 (D. Nev. Order Filed January 13, 2011).  (Link here to Chapter 686A of the Nevada Statutes.)  Although the Federal District Court's decision does not refer to them, other States' Statutes have similar Unfair Claims Practices provisions.

2.  Punitive Damages.

   "Under Nevada law, in order to recover punitive damages a plaintiff must show by clear and convincing evidence that the defendant acted with oppression, fraud, or malice.  [Citation omitted.] Oppression is a conscious disregard for the rights of others constituting cruel and unjust hardship.  [Citation omitted.]  Malice is present in conduct that is intended to injure a person or despicable conduct that is engaged in with a conscious disregard of the rights and safety of others."  Storlie v. State Farm Mutual Auto. Insurance Co., 2010 WL 116881 *9 (D. Nev. Order Filed January 13, 2011).

   In Storlie, the Plaintiff raised a genuine and material issue of fact in the eyes of the Federal Judge "particularly because over $9,000 of the policy was not in dispute and Plaintiff's medical bills had been submitted to collections."  Put on notice that part of Plaintiff's medical bills were being submitted to a collections agency, "Defendant's actions look particularly arbitrary and callous," wrote the District Court.  Id.  The Plaintiff's Punitive Damages Claim survived the Defendant's Motion for Summary Judgment in that case accordingly.  "Thus, summary judgment will be denied as to Plaintiff's request for punitive damages."  Id.

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More On Foreclosure Fraud, Modification Madness Lawsuits.

   In the same week as the Nevada Attorney General (and the Arizona Attorney General) filed suit over Foreclosure Fraud and Modification Madness, posted here on Sunday, December 19, 2010, a Jury in U.S. District Court in Nevada awarded $79,000.00 in Compensatory Damages and assessed $5,100,000.00 ($5.1 Million) in Punitive Damages in a Foreclosure and Modification Fraud case.  The Nevada Jury award is reported by Gretchen Morgenson, "Fair Game/Opening the Bag of Mortgage Tricks" p. 1, col. 1 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, December 19, 2010).

   The Jury reportedly returned a Verdict on all Counts.  The Complaint contained causes of actions or Claims for Conspiracy, Breach of Contract, Breach of Fiduciary Duty, and Breach of Good Faith and Fair Dealing.  Id.

   The suit was filed against loan servicers by a group of 50 Plaintiff investors in commercial loans.  "Loan servicers act as intermediaries between borrowers and their lenders, collecting monthly payments and real estate taxes and forwarding them to the appropriate parties."  Id.  In that case, the Defendant loan servicers allegedly:

1.  Took money rightfully owed to the Plaintiff investors holding the loans, by "improperly charging" various items, including:

   a.  "default interest,"

   b.  "late fees and"

   c.  "loan origination fees".

 2.  Constructed obstacles to loan repayments and hid them from the Plaintiffs when Borrowers "tried to pay off or otherwise resolve disputed loans," including:

   a.  They refused to negotiate, or

   b.  They counseled Borrowers to seek loan modifications for which the Defendant loan servicers allegedly "reaped undisclosed fees".

Id.

   More and other investors are expected to grow the list of lawsuits over Foreclosure Fraud and Modification Madness.  Id.  The results of the past week are certainly no inhibition to that happening.

The harmful effects of Foreclosure Fraud and Modification Madness on Mortgage Insurance Claims are explored by Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 3:106, "Mortgage Insurance" (West Publishing Co. 2010 Supplement).

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Remember the Neediest!

  

  

A One-Case Career for Insurance Companies and Their Lawyers: ...

... The Continuing Travails of American International Group, Inc., et al. v. ACE INA Holdings, Inc., Advantage Workers Compensation Insurance Co., Alaska National Insurance Co., .... Wausau Business Insurance Co., Wausau General Insurance Co., and Wausau Underwriters Insurance Co., et al. (Plenty of Travails.  No Trials Yet).

   In the case of American Int'l Grp., Inc., et al. v. ACE INA Holdings, Inc., et al, Download American International Group, Inc., at al v. ACE INA Holdings, Inc., et al (N.D. Ill. Case Nos. 07CV2898, 09CV2026 Opinion Filed June 30, 2010) also published as 2010 WL 2674656 (N.D. Ill. June 30, 2010)(Westlaw subscription required to access Westlaw), one holding was reaffirmed and one holding was reached on June 30, 2010 in this massive case  -- really, three cases in one -- that draw comment here.

   Before we take notice of the two holdings that compel our particular attention here, it will be important to understand a little about this massive mixture of consolidated cases.  "The original complaint in this matter was filed by NCCI acting solely as attorney-in-fact for the participating companies of the NWCRP ("Participating Companies") against plaintiffs.  All of the counts of that complaint were based on alleged intentional fraudulent conduct by plaintiffs in underreporting workers compensation premiums to the Pool."  AIG v. ACE, 2010 WL 2674656 at *2.

   By the time of the decision in this case on June 30, 2010, AIG and what must be all of its many subsidiaries were also Plaintiffs and they filed a First Amended Complaint which had Ten Counts.  The Defendants were and are 19 Insurance Companies ("the 'Pool Board Members'"), apparently 3 "RICO Defendants" and another company which together with the RICO Defendants were collectively known as "the 'Underreporting Participating Companies.'"  Id. at *1.  Here in brief summary are the Ten Counts:

   The amended complaint alleges violations of the Racketeer Influenced and Corrupt Organizations, Act, 18 U.S.C. §§ 1962(c) and (d) ("RICO"), against the RICO Defendants (Counts One and Two), civil conspiracy against the RICO Defendants (Count Three),  breach of fiduciary duty against the Pool Board Members (Count Four), two counts of fraud against the Underreporting Participating Companies (Counts Five and Six), breach of contract against the Underreporting Participating Companies (Count Seven), unjust enrichment against the Underreporting Participating Companies (Count Eight), equitable accounting against the Underreporting Participating Companies, the Pool, and NCCI (Count Nine), and an action on an open, mutual, and current account against the Underreporting Participating Companies, the Pool, and NCCI (Count Ten).

Id.  [Emphasis added.]  Addressing Motions to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted, under Fed. R. Civ. P. 12(b)(6), in pertinent part the first holding of remark at this time, was a reaffirmation of one of the Court's many previous rulings in this same case, in which the Court denied previous Motions to Dismiss a Claim for breach of fiduciary duties based upon similar allegations in the original Complaint.  Id. at *8, *13.  The Court denied the Motions to Dismiss Count Four of the First Amended Complaint, id. at *8 and *13, the Count containing allegations of breach of fiduciary duty "by failing to investigate and assert claims for fraudulent conduct of the Underreporting Participating Companies and assisting in the concealment of that conduct."  Id. at *8. 

   The other holding which draws interest at this time, concerns not a Count for alleged Liability but a Claim for alleged grounds to assess Punitive Damages.  This holding came in a Class Action which was Consolidated with the AIG v. ACE lawsuit.  The Class Action was, surprisingly enough, filed on behalf of two ardent opponents of class action lawsuits filed on behalf of others, namely,  Safeco and Ohio Casualty, and their alleged class.  Applying New York substantive law to make this determination, the Federal Court denied the Motions to Dismiss the "Class Plaintiffs' [Safeco's and Ohio Casualty's and their putative class] claims for punitive damages" against the "Class Defendants [ AIG and the AIG Companies]".

   Count Three of the Class Action Complaint, the Court held, states a claim for an independent tort "that does not arise out of a breach of contract as to either AIG or the AIG Companies.  Therefore, punitive damages are available if Class Plaintiffs can plead and prove that Class Defendants engaged in 'gross, wanton, or willful fraud or other morally culpable conduct.'"  Id. at *22.

   For similar reasons, the AIG Motion to Dismiss "the Liberty Parties' [Liberty Mutual, Liberty Mutual Fire, Liberty Insurance, and The First Liberty] claim for punitive damages on this basis is denied."  Id. at *17. 

   A class action and Punitive Damages Allegations and alleged Breaches of Fiduciary Duties, plus dozens of Insurance Companies and what looks like a list of all the attorneys in the Western World.  Whew.  What a case.

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Jury Instructions Committee Alterations to "Insurer Bad Faith" Standard Instructions.

  **Author's Note:  If you have reached this blog through a list that carries advertising, your computer may or may not be put at risk either through the list or through the advertising.  I do not accept or authorize any commercial advertising of any kind on any list or post.  Placing commercial advertisements with or near any of my web log posts is prohibited.  Further, I do not recommend any products or services advertised with or near any of my posts or any list of my posts.**   

   The Florida Bar Standard Jury Instructions Committee has recommended a complete new wardrobe for the Standard Instructions in Florida Civil Cases.  On March 4, 2010 the Florida Supreme Court authorized the publication of these new clothes, and some new proposed "Standard Instructions," in an enormously long opinion which you can download here:  Download In re Standard Jury Instructions in Civil Cases (Fla. Case No. SC09-284, Opinion Filed March 4, 2010).  This opinion and its appendix of proposed new Standard Jury Instructions is also published as In re Standard Jury Instructions in Civil Cases, 2010 WL 727521 (Fla. March 4, 2010)(subscription required to access Westlaw).

     The Standard Instructions are all renumbered and regrouped.  "Insurer's Bad Faith" is now addressed in several proposed Standard Jury Instructions, numbered 404.1 through 404.13, inclusive.  Several of the proposed changes do not appear to be substantive changes concerning Insurer Bad Faith Claims, but some may have the effect of changing the outcome of Jury Trials in Bad Faith Cases.

   Newly proposed SJI 404.2 provides that "(Claimant)[Defendant] must prove [his][her][their] claim(s) [and defenses] by the greater weight of the evidence."  Whatever the substantive accuracy or inaccuracy of this assertion, it is a change from the current opening Instruction, MI 3.1 b, which does not advise the Jury of who has what burden of proof, but instead instructs the Jury on what they should determine from all that they have seen and heard during the Trial:  "If the greater weight of the evidence does not support the claim of (claimant), your verdict should be for (defendant).  However, if the greater weight of the evidence does support the claim of (claimant), your verdict should be for (claimant)."

   The Jury in an Insurer Bad Faith Case is likely to be confused by this unnecessary change in language from SJI MI 3.1 b, to proposed SJI 404.2, above.  It is not the Jury's job to determine whether one party or another has met her, his or its  burden of proof.  That is the Judge's job.  Rather, the Jury's job is to review all the evidence, regardless of who introduced it, and then determine on the full record whether or not the "greater weight of the evidence" supports the claim.

   The proposed SJI 404.2 evidences an effort to be fair by eliminating that part of the current  Instruction that the Jury's "verdict should be for (claimant)" if the Jury determines that the manifest weight of the evidence supports the claim in the given case.  There are Defenses based on alleged Facts to consider, too, which the proposed change would include and the current SJI MI 3.1 b does not address.  Inherently, SJI MI 3.1 b is premised on an idea that all Defenses that may be available in Insurer Bad Faith Cases must always be based on Law rather than on Fact, so this is a good change to recommend to that extent, but not in the proposed language.

   Proposed SJI 404.5 is totally new.  It would address "only" Cases involving "Medical Malpractice Insurer's Bad Faith Failure to Settle," according to the new Committee Comment.  This is ostensibly premised on a Florida Statute, Section 766.1185 (2009).  This Statute purports to apply to "all actions for bad faith against a medical malpractice insurer relating to professional liability insurance coverage for medical negligence".  To begin with, the continuing validity of this Statute is highly questionable on Equal Protection grounds advanced by various parties.  See Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 3:2 (2009 Supplement West Publishing Company).

   Moreover, proposed SJI 404.5 is not complete.  Proposed SJI 404.5 totally ignores each and all of the provisions of Section 766.1185 which the Legislature placed ahead of the limited language selected for the proposed Instruction:

(1)(a)  An insurer shall not be held in bad faith for failure to pay its policy limits if it tenders its policy limits and meets other reasonable conditions of settlement by the earlier of either:

1.  The 210th day after service of the complaint in the medical negligence action upon the insured. The time period specified in this subparagraph shall be extended by an additional 60 days if the court in the bad faith action finds that, at any time during such period and after the 150th day after service of the complaint, the claimant provided new information previously unavailable to the insurer relating to the identity or testimony of any material witnesses or the identity of any additional claimants or defendants, if such disclosure materially alters the risk to the insured of an excess judgment; or

2.  The 60th day after the conclusion of all of the following:

a.  Deposition of all claimants named in the complaint or amended complaint.

b.  Deposition of all defendants named in the complaint or amended complaint, including, in the case of a corporate defendant, deposition of a designated representative.

c.  Deposition of all of the claimants' expert witnesses.

d.  The initial disclosure of witnesses and production of documents.

e.  Mediation as provided in s. 766.108.

(b)  Either party may request that the court enter an order finding that the other party has unnecessarily or inappropriately delayed any of the events specified in subparagraph (a)2. If the court finds that the claimant was responsible for such unnecessary or inappropriate delay, subparagraph (a)1. shall not apply to the insurer's tendering of policy limits. If the court finds that the defendant or insurer was responsible for such unnecessary or inappropriate delay, subparagraph (a)2. shall not apply to the insurer's tendering of policy limits.

(c)  If any party to an action alleging medical negligence amends its witness list after service of the complaint in such action, that party shall provide a copy of the amended witness list to the insurer of the defendant health care provider.

(d)  The fact that the insurer did not tender policy limits during the time periods specified in this paragraph is not presumptive evidence that the insurer acted in bad faith.

Fla. Stat. § 766.1185(1)(a)-(d) (2009).  The Statute expressly provides in Subsection (2) that certain factors -- which appear in somewhat altered form in the newly proposed Instruction 404.5 -- apply "[w]hen subsection (1) does not apply".  Fla. Stat. § 766.1185(2) (2009).  Since the Legislature expressly intended for the events it enumerated in subsection (1) to be determined first, before any of the events which the Legislature thereafter enumerated in subsection (2) are determined, it is certainly incongruous if not misleading to blow past the subsection (1) events entirely as if they did not exist and as if they are not worth mentioning even in passing, and go directly to (2).

   One last change remains for discussion this day.  Proposed SJI 404.9 breaks out the language of current SJI MI 3.1 c, which is simply that in cases without claims for mental distress, the Jury should be instructed:  "If your verdict is for (claimant), the court will award damages in an amount allowable under Florida law."  Proposed SJI 404.9 would add a new title to hang down over this language like a banner, that it is the "Concluding Instruction When Court to Award Damages".  Maybe, maybe not.  But the change is not necessary and the consequences of the change are not known, and may not be intended.

   As it has done in the past when authorizing publication of the Jury Instruction Committee's recommendations, the Florida Supreme Court has carefully also stated that "we express no opinion on their correctness and remind all interested parties that this authorization forecloses neither requesting additional or alternative instructions nor contesting the legal correctness of the instructions."  In re Standard Jury Instructions in Civil Cases, 2010 WL 727521 *5 (Fla. March 4, 2010).

   Moreover, even then, "[t]he instructions as set forth in the appendix, fully engrossed, shall be effective when this opinion becomes final."  The opinion was issued on March 4, 2010.  In re Standard Jury Instructions in Civil Cases, 2010 WL 727521 *5 (Fla. March 4, 2010).   

Please Read The Disclaimer.

 

Expert Witnesses on Bad Faith, Punitive Damages.

   Expert Witnesses on Bad Faith were part of the Policyholder's Proof that did not convince the Court in Download WMS Industries, Inc. v. Federal Insurance Co. (S.D. Miss. Opinion Filed August 4, 2009).

   The Court found in that First-Party Bad Faith Case brought under Mississippi substantive law, that the Policyholder "failed to establish that Federal, or its agents acted willfully, maliciously, or with reckless disregard" for the Policyholder's rights.  Accordingly, the Court did not assess Bad Faith Punitive Damages under Mississippi Insurance Law.  Download WMS Industries, Inc. v. Federal Insurance Co. (S.D. Miss. Opinion Filed August 4, 2009), attached Official Slipsheet Opinion at 20-21.

    With regard to the Policyholder's "two bad faith experts" in particular, the Federal Judge in that case wrote that "[t]he Court ruled on the motion to exclude [one of them] on the record."  A review of the entire online Docket of this case failed to reveal any ruling on the motion to exclude that Expert Witness.  Perhaps the ruling was made "on the record" at Trial and is thus contained instead in the Trial Transcript.  Presumably, the "motion to exclude" was granted, because the Court did not refer to any testimony given by that Expert.

    As to the other of the "two bad faith experts," the Court ruled on "the outstanding motion to exclude [that Expert, holding that] the Court's conclusion regarding bad faith renders that motion moot.  The Court as the finder of fact was not persuaded by his testimony."  Download WMS Industries, Inc. v. Federal Insurance Co. (S.D. Miss. Opinion Filed August 4, 2009), at 20-21 n.15.

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UPDATE: California Arbitrator Awards Attorney's Fees Too.

    A previous post in this space addressed an Arbitration Award in a California Arbitration.  The Arbitration of the Insurance issues apparently including Good Faith and Fair Dealing or not, was demanded by the Health Insurance Company, Health Net Inc.  The agreed Arbitrator is a retired California Judge.  The California Arbitration resulted in an Award of over $9.4 Million, $8.4 Million of which was a Punitive Damages assessment against Health Net.  See the post here, on February 23, 2008.

    On February 28, 2008, a follow up newspaper report published in the Los Angeles Times Online seems to call into question what remedies or options, if any, Health Net and its Attorneys may have to appeal or even question the Arbitration Award:  Lisa Girion, "Penalty Cuts Insurer Profit/Health Net Lowers Its Earnings After a Judge Awards $9.4 Million to a Cancer Patient Whose Policy Was Canceled" (Los Angeles Times Online, Thursday, Feb. 28, 2008).

    As the linked newspaper report's headline reflects, Health Net is filing documents with the Securities and Exchange Commission reflecting that the Arbitration Award has lowered its reportable net income for 4Q 2007, from $123.4 Million to $116.9 Million.

    The newspaper also reports that the California Arbitrator has awarded the Policyholder her Attorney's Fees, in an amount to be determined.

Please Read The Disclaimer.

 

California Arbitrator Assesses $8.4 Million in Punitive Damages Against Health Insurer.

    The Health Insurance Company in question is Health Net Inc.  The entire Arbitration Award is reportedly over $9 Million.  $8.4 Million of the award is an assessment for Punitive Damages.  The Health Insurer insisted on resolving the dispute only by Arbitration.   Here is a brief but totally accurate outline of the case.

    The Health Insurance Company canceled a Policyholder while she was receiving expensive chemotherapy treatments.  The evidence reflected that the expense of chemotherapy was the motivation for cancellation.

    Documents generated by Health Net itself were made available to the Arbitrator.  The documents showed that Health Net paid bonuses to employees who met "a cancellation quota and for the amount of money saved."

    This practice did not sit well with the Arbitrator, a retired California State Court Judge, who wrote:  "'It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that keeps the public well and alive.'"  Quoted in "Health Net Ordered to Pay $9 Million After Canceling Cancer Patient's Policy/The Punitive Damage Award is the First of its Kind and has Prompted the Giant Medical Insurer to Scrap Practices That Have Recently Come Under Fire" by Lisa Girion (Los Angeles Times Online, Saturday, February 23, 2008).

    The purpose of Punitive Damages assessments may be furthered by this award, for in the same newspaper article it is reported that other Health Insurers are about to change their own practices in this regard.

Please Read The Disclaimer.

Bad Faith and Punitive Damages.

     The most recent reported decision on the assessment of Punitive Damages in a case of Insurer Bad Faith was reported yesterday, as this is posted: 
Merrick v. Paul Revere Life Insurance Co. (9th Cir. Case Nos. 05-16380, 05-17059, Opinion Filed Friday, August 31, 2007).  There was a major assessment of Punitive Damages in that case, which the Ninth Circuit totally vacated, remanding "for a new trial on punitive liability."   Slipsheet Opinion above at 11129-30.

     The Merrick case involved a jury verdict and a judgment awarding $1,650,000.00 in compensatory damages, and assessing two separate amounts of punitive damages totaling $10,000,000.00 against Paul Revere ($2,000,000.00) and against Unum Provident ($8,000,000.00) which merged with Paul Revere.  Id. at 11113.   The Federal District Judge thereafter denied the Defendant Insurance Companies' post-Trial motions and awarded the Plaintiff attorney's fees in the amount of $500,000.00.  Id. at 11119.

     The Plaintiff was the Policyholder of a disability policy purchased from Paul Revere.  Paul Revere initially made disability payments under the  insurance policy.  After Unum Provident merged with Paul Revere, the disability payments ceased and the Policyholder's disability claim was denied.  The Policyholder filed suit in Nevada for breach of contract and of the duty of Good Faith and Fair Dealing.  Id.  at 11113-11116.

     The proof of Coverage Denial, Bad Faith, and Punitive Damages all rested on a theory of the case that the Insurance Company Defendants pursued a scheme to "scrub" themselves and their liability for expensive disability policies like the one at issue in this case.  "Merrick [the Policyholder] relied largely upon the testimony of ... an insurance industry expert, who testified regarding Unum Provident's allegedly aggressive and unethical claim-closing practices."   Id. at p. 11117.    Under Nevada law regarding Punitive Damages in particular, the standard of proof is clear and convincing evidence.  The burden of proof is to show that Punitive Damages should be assessed because the Defendant engaged in oppression, fraud, or malice.  Id. at 11120.  The Ninth Circuit wrote:  "Here, the jury could have concluded that by subjecting Merrick's claim to improper claim-scrubbing procedures, the insurers 'undertook an intentional course of conduct designed to ensure the denial' of the claim."  Id. at 11120.

     The Plaintiff's-Policyholder's proof in the Merrick case was based upon "a decade of allegedly improper claims handling practices at Provident."  Id. at 11123.  In essence, that was enough to prove Bad Faith and to sustain an award of compensatory damages in the District of Nevada and in the Ninth Circuit.  It was not enough in the eyes of the Ninth Circuit to sustain the assessment of Punitive Damages in the Merrick case, however.

     The assessment of Punitive Damages in the Merrick case ran afoul of the recent United States Supreme Court decision in Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007).  One of the holdings in the Williams case was that Punitive Damages are unconstitutionally assessed if there is no proof and no limitation on jury consideration of harm to parties.  Williams, 127 S. Ct. at 1063.  The claim in Merrick was based upon the alleged bad conduct of bad people or at any rate of bad companies, and the Ninth Circuit was not able to hold that there was sufficient proof or a limitation on jury consideration of harm to Merrick, the Plaintiff and the Policyholder in that particular case.  "We therefore conclude that the district court erred in failing to instruct the jury that it could not punish the defendants for conduct that harmed only nonparties."  Id. at 11128.

     In sum, the Williams decision of the Supreme Court has the effect of separating the proof of Bad Faith from the proof that is required by the United States Constitution for the assessment of Punitive Damages.  They are governed by separate standards, and clear and convincing proof is not enough to support an assessment of Punitive Damages after Williams and Merrick, even where a violation of Good Faith and Fair Dealing may be proven.
                                                       Please Read The Disclaimer.   

Katrina CatClaims Revisited: State Farm Settles, Is Sued Again.

    It appears that State Farm may have been sued again for Bad Faith as a result of Hurricane Katrina Catastrophe Claims -- indirectly, this time.

    There was once a settlement agreement, among many policyholders and State Farm, in Mississippi.  The proposed settlement agreement was subject to Federal Court approval.  The Federal Judge was confronted with more questions than answers when he was presented with the proposed settlement for his approval.  The Federal Judge refused to approve it, at least until the many questions were answered.

     State Farm then reportedly reached a settlement agreement of many of the same claims with the Mississippi Insurance Commissioner's Office.  This lengthy previous history was summarized in "Update to the Update:  New Settlement in Mississippi," posted on March 20, 2007 on "Insurance Claims And Issues".   

    It is now reported that the State of Mississippi, through the Mississippi Attorney General, filed a new Complaint on Monday, June 11, 2007 in Mississippi State Court.  The new Complaint contains allegations, it is reported, that State Farm breached the (first) settlement agreement and thus breached a contract.  The new Complaint contains demands for compensatory and punitive damages.  More will be posted as the Complaint becomes available.  As of the night of June 11, 2007, there was a momentary silence on the subject on the web sites of both the Mississippi Attorney General and the Mississippi Insurance Commissioner.

     Here is a link to State Farm's Press Release of June 11, 2007,which State Farm entitled "Mississippi Attorney General's Lawsuit Threatens to Disrupt Hurricane Katrina Settlement Process with MIssissippi Insurance Department". 

     Here is a link to the whole available story on "Insurance Claims And Issues".
   
                                                Please Read The Disclaimer.

Partial Payment of Claims ... UPDATED!

     This post updates the post here on January 12, 2007 regarding:

Punitive Damages, Katrina and the Insurance Contract:  Lessons Revisited and a Tale Told in Pieces or in Parts.

   

     On January 31, 2007 Federal Judge L.T. Senter, Jr. entered an Order reducing the Punitive Damages Assessment in the Broussard case.  The Federal Judge reduced the Punitive Damages assessment in that case to 40% of what the Jury assessed, reducing the assessment from $2,500,000.00 to $1,000,000.00.  Here is a link to the Order:  Norman J. Broussard & Genevieve Broussard v. State Farm Fire & Cas. Co. (S.D. Miss. Case No. 1.06CV6, Order entered January 31, 2007) .  For another report on this same decision, go to the February 1, 2007 post on Insurance Claims And Issues.     

     The Federal Court's ruling on January 31, 2007 adds to the facts coming in about the bases for this lawsuit, about the Bad Faith allegations in it, and about the reasons behind the Jury's finding of entitlement to Punitive Damages under Mississippi law.

     The Homeowner's Policy involved in the Broussard case was "an 'all perils' policy in the case of the dwelling and a 'named peril' policy as to contents, i.e., windstorm."

     Second, the initial investigation by the Homeowner's Insurance Company showed clearly that the Policyholders' home "was reduced to a slab by Hurricane Katrina" and that the damage was caused more by flood than by wind, the Federal Judge wrote.

     The Insurance Company "did not obtain any expert opinion on this particular loss."

     Rather than obtaining any expert opinion, as the Federal Court noted, the Insurance Company instead established a procedure for homes reduced to nothing remaining except the slab, a procedure which it applied in the Broussard case.  The subject procedure was to use "the debris line" and declare that in the instance of only a slab remaining, all damage would be presumed to be caused by FLOOD which was NOT a covered loss, thereby leaving it to the Policyholders to bear the burden of proving damages caused by a covered loss such as WIND.

     Although not repeated at any length in the January 31, 2007 Order, the Federal Court had PREVIOUSLY RULED in that same case that the burden of proof was INSTEAD on the Insurance Company to prove at Trial in Court that all or part of the damages claimed by the Policyholders were EXCLUDED.

     The Homeowner's Insurance Company "relied on its flood exclusion to totally deny the claim."

     The Federal Judge held that there was clear and convincing evidence in the Broussard case supporting a finding by the Jury of entitlement to Punitive Damages.  There was in other words clear and convincing evidence, the Federal Judge wrote, "that Defendant acted in such a grossly negligent way as to evince willful, wanton, or reckless disregard for the rights of the Plaintiffs."

     That ruling affirmed the issue of Mr. and Mrs. Broussards' entitlement to Punitive Damages under the facts of this case.  As to the amount of Punitive Damages, to $1,000,000.00, the Mississippi Federal Court reduced them as noted, doing so both under Mississippi State law and under "due process considerations under the United States Constitution."

                                Please read the Disclaimer.

      

Jury Pools in the Wake of Katrina in Mississippi.

    Bad Faith Cases receive careful attention.  Part of the focus in every Bad Faith Case is the potential Jury Pool, or the Venire.  They are the people deciding issues of fact and who they are is clearly important.

    Before Katrina struck Mississippi, most Mississippians were like most residents of the rest of the Gulf Coast.  Few people carried Flood Insurance.  However, the focus on Insurance Coverage for Katrina Damages Claims can divert attention from the fact that many people did not have Property Insurance Coverage or  Homeowner's Insurance  either.

     They are the people who make up the Venire for Mississippi Bad Faith Cases like the recent case reported in newspaper articles and in a post here on January 15, 2007.

    Briefly, the recent case in Mississippi involved First-Party Bad Faith Claims including Punitive Damages Claims.  A Federal Judge directed a verdict for the full Policy Limits available under a Homeowner's Policy.  The case went to the Jury on the question of Punitive Damages under Mississippi law, which is fully discussed in the January 15, 2007 post.  Without repeating all of that post here, in general terms Mississippi law allows the assessment of Punitive Damages for Bad Faith Breach of Contract and it can be Bad Faith not to pay any part of Damages which are covered.

    It is reported that the Homeowner's Insurance Company in that case never made an offer.

    The Jury assessed $2,500,000.00 in Punitive Damages.

     See the detailed discussion of the situation in which these potential Jury members live today, Peter Whoriskey, "As Aid Lags, Volunteers Shoulder Rebuilding on Gulf Coast/Local Gratitude Mixes With Frustration Over Government's Failures" (Washington Post, Sunday, January 28, 2007, p. A03), and the discussion generally of Venires available for Katrina Cases across the Gulf Coast, in Insurance Claims and Issues.

                                                        Please Read The Disclaimer.

Partial Payment of Claims ....

                Punitive Damages, Katrina and the Insurance Contract:                           Lessons Revisited and a Tale Told in Pieces or in Parts.   

    An Insurance Company has been assessed $2,500,000.00 in Punitive Damages by a Jury in Federal Court in Mississippi.  Here is the Punitive Damages Verdict that was filed on Thursday, January 11, 2007:  Download Broussard_v. State Farm Fire & Casualty Co. Verdict January 11, 2007 (S.D. Miss. Case No. 1.06.cv6).pdf.

    The Federal case involves Claims for Damages following Hurricane Katrina.  News outlets began broadcasting the report on the evening of the day this Punitive Damages Verdict was filed, and news outlets continued to report on this Verdict the next day, as expected.  An insightful article is published online at Bloomberg.com.  Here is a link to it:  Lawrence Viele Davidson & Erik Holm, "State Farm Must Pay Couple $2.7 Million for Katrina (Update4)" (www.bloomberg.com/apps/news, dateline Jan. 11, 2007 (Bloomberg)).  The Punitive Damages Verdict was also blogged.  See for example Insurance Claims and Issues Blog.  This post will suggest some missing information that may be needed in order to understand how this Verdict was rendered and to explain something of what it means.

    As was noted at the beginning,  the  Broussard case is one of many Hurricane Katrina-related lawsuits.  It involves Insurance Coverage Claims for Damages to a Home.  It clearly also involves a claim for Punitive Damages under Mississippi law since that Punitive Damages Claim went to a jury.  Although the Complaint does not appear to be accessible in the Federal Court's online docket as the case was removed to Federal Court from Mississippi State Court, piecing together various reports about this particular case with established Mississippi case law yields the following possible scenario.

    "At its core, Plaintiffs' cause of action is based on an alleged breach of contract.  The Complaint does not even contain separate counts."  Download Broussard_v. State Farm Fire & Casualty Co., Order on Motion for Partial Summary Judgment entered November 6, 2006 (S.D. Miss.  Case No. 1.06cv6).pdf.  The Federal Court's November 6, 2006 Order also provides the information that the Court itself did not have a lot of allegations and exhibits to go on.  Although the Complaint attached a specimen Homeowner's Policy, it was not the policy issued to Mr. and Mrs. Broussard.  "This attachment does not disclose the policy limits.  The Plaintiffs' residence apparently was reduced to a slab by the storm, although it takes a lot of reading to reach that conclusion.  The tension in the record is between the damages sustained by Plaintiffs and the manner in which their claim was handled by Defendant."  Id.

 In a later Order, the Federal Court repeated that "Plaintiffs' cause of action at its core is based on an alleged breach of contract."  The Federal Judge also acknowledged a very important Claim:  "Plaintiffs also assert that they are entitled to punitive damages and/or extra-contractual damages due to the Defendant's alleged bad faith conduct in handling and denying their claim."  Download Broussard_v. State Farm Fire & Casualty Order on Motions In Limine entered on December 28, 2006 (S.D. Miss. Case No. 1.06cv6).pdf.

    The Policyholders' Insurance Company never made an offer for any part of the  Claim.  A spokesperson for the Insurance Company is reported as stating that it was sued by the Policyholders after it had refused to pay anything on their Claim.  See the news report by Joseph B. Treaster, "State Farm Told to Pay Gulf Claim" (New York Times, Friday, January 12, 2007).

   However, according to the Federal Judge's Law Clerk and reported in the same article in The New York Times, Experts for the Insurance Company stated in unspecified documents filed in the Court File, that some damage to Mr. and Mrs. Broussard's home was caused by Wind, a Covered Peril.

    Further, before Trial of the Broussard case, the same Federal Judge ruled in other cases pending before him, that (1) presumably similar Flood or Water Exclusions will exclude Coverage for all damage caused by Flood or Water, in part here pertinent, but that (2) the Policy does not exclude all Coverage if part of the Damages are caused by Flood.  These rulings were certainly generally known, as previously noticed by a Federal Judge in the Eastern District of Louisiana, for example, and in a post on  December 5, 2006 here and in Insurance Claims and Issues Blog.

    Thereafter, the Insurance Company could defend against Punitive Damages only by (1) paying or perhaps at least making an offer to pay the clearly covered part of the Claim or (2) successfully arguing the total applicability of the Flood or Water Exclusion to exclude all damages.

    Mississippi standards for assessing Punitive Damages in First-Party Bad Faith cases have been pretty clear for a very long time.  Mississippi  requires more than proof of First-Party Bad Faith and certainly requires more than proof of carelessness, for example.  "Carelessness, however, does not rise to the level of bad faith required for plaintiff to prevail on her [Punitive Damages] claim."  Mixon v. Provident Life & Accident Insurance Co., 616 F. Supp. 139, 142 (S.D. Miss. 1985), aff'd mem., 783 F.2d 1061 (5th Cir. 1985).   Mississippi Punitive Damages law requires more than a finding that a credit life insurer, for example, in another First-Party Bad Faith case "lacked an arguable reasonable basis for denying the claim....  A further finding is required showing malice or gross negligence or disregard of the insured's rights."  Barber v. Balboa Life Insurance Co., 747 So. 2d 863, 868 (Miss. Ct. App. 1999).  These and similar rulings are further addressed at much greater length in, for example, Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (2nd Ed. 1994), published by West Publishing Company online and in print.

    Further, as early as 1979 the Mississippi Supreme  Court held that a  Punitive Damages instruction is properly given to a Jury, and a First-Party Insurance Company is properly assessed Punitive Damages, where the First-Party Insurance Company declines to pay all of its Policy Coverage where some of its Coverage applies.  See Travelers Indemnity Co. v. Wetherbee, 368 So. 2d 829, 833-35 (Miss. 1979) and the cases discussed by the Supreme Court of Mississippi in that decision.  These Mississippi rules of law were visited by the same Federal Judge assigned to the Broussard lawsuit, in an earlier case in which he also cited to Travelers Indemnity Co. v. Wetherbee (Miss. 1979), for example.

    The same Federal Judge who submitted a Punitive Damages Claim to a Jury in Broussard similarly submitted a Punitive Damages Claim to a Jury several months earlier in another First-Party Bad Faith case -- which also involved a similar Claim that "Hurricane Katrina completely destroyed Plaintiffs' home" and unresolved "issues related to claim handling", particularly handling the Claim after "a report in November, 2005, indicated that damage was due in part to something other than water."  In that earlier decision, the Homeowner's Insurance Company did tender payment "in August 2006" -- and the Policyholders' Punitive Damages Claim still went to a Jury:  Download Odom_v. Armed Forces Insurance Co. (S.D. Miss. Case No. 1.05cv669, Order entered on August 31, 2006 on Defendant's Motion for Partial Summary Judgment).pdf.

    The Policyholders' lawyers in the Odom case are also the Policyholders' lawyers in the Broussard case.

    Back to the Broussard case and January 11, 2007.  At Trial, there was reportedly evidence that, at the least, the Flood or Water Exclusion did not exclude all damages. 

    The Federal Trial Judge directed a verdict on Compensatory Damages, awarding Mr. and Mrs. Broussard $233,292 under their Insurance Policy, it is reported in both of the news articles linked above.  The Federal Judge also thereby directed a verdict on entitlement to Punitive Damages.  The Jury in that case then unanimously returned its Punitive Damages Verdict less than three hours later.

    Mississippi is not, of course, the only State that requires payment of clearly covered Claims in Good Faith under First-Party Insurance Policies.  Almost all do, and recent examples always seem to be at hand, such as in Florida.  See the post entitled,  "CatClaims, Coverage, Part Disclaimer With Part Payment .... And Florida Statutory Bad Faith" on November 17, 2006, for example, in Insurance Claims and Issues Blog.  The same lessons apply in one State as in another, and in one reported case as in another with the same result.  The law applied by the  Mississippi Federal Court in the  Broussard case is not new law, and neither is the result, it appears.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

New Cases, Old Lesson.

 Happy New Year! 

    New cases illustrate the differences in applying the "Reasonable Expectations Doctrine".  This important doctrine is not applied in all jurisdictions, and there is a split among the courts which apply it.   In a decision so new that it is not yet accessible (to me, anyway) and is not listed on the District Court's public web site, the Federal Court in the District of Arizona explained one view of this important doctrine:  "Under Arizona law, even unambiguous policy language will not be enforced against the insured if the insured had a reasonable expectation of coverage."   Madsen v. Fortis Benefits Ins. Co., 2006 WL 3771803 *8 (D. Ariz. Case No. CV 04-1959-PHX-JAT, Opinion Filed December 21, 2006)(subscription required to access Westlaw version).  [Emphasis added.]

    Before passing on to other recent cases involving a Reasonable Expectations Doctrine, several other rulings under Arizona law were made in this important new decision.  The Madsen case involved claims involving alleged First Party Bad Faith and Coverage.  The Plaintiff in that case, Ms. Jacqueline Madsen, "claims she was an additional insured under a nonrenewable Short Term Medical Policy" issued by Fortis.  (Id. at *1.)   The Federal Judge reiterated Arizona law (id. at *9), and entered Summary Judgment for the First Party Insurance Company in that case because of the Court's ruling that the Arizona Reasonable Expectations Doctrine required a jury determination of fact which, in the Federal Judge's view, clearly supported a determination that the Defendant acted reasonably and not in Bad Faith.  Further, something more was required to support Ms. Madsen's claim for Punitive Damages than even a showing of First Party Bad Faith.  "The something more that must be shown is evidence that Fortis was aware of and consciously disregarded a substantial and unjustified risk that significant harm would occur."  (Id. at *10.)  "Accordingly," said the Federal Judge, the ruling that the Plaintiff's First Party Bad Faith Claim in that case "fails as a matter of law" means that Summary Judgment is also granted in favor of Fortis in that case "on the punitive damages claim."

    In other jurisdictions that recognize a Reasonable Expectations of the Policyholder Doctrine, the doctrine is a rule of Insurance Contract Interpretation that applies only when there is an ambiguity.  The Supreme Court of Kentucky reviewed this doctrine in a famous Third Party or Liability Insurance Case involving a claim to Coverage under "a commercial automobile liability insurance policy, for example, in Brown v. Indiana Insurance Co., 184 S.W.3d 528, 531 (Supreme Court of Kentucky Case No. 2004-SC-0065-DG, et al., Opinion Filed December 22, 2005)(subscription required to access via Westlaw, Supreme Court of Kentucky public web site too difficult to access in time for this post).  The Doctrine of Reasonable Expectations, held the Supreme Court of Kentucky in that case, is a "principle [that] pertains to alleged ambiguities within the policy."   The Supreme Court held that there is no ambiguity in the Worker's Compensation Exclusions in the Commercial Auto Liability Insurance Policy before it  in that case.  "Accordingly, the opinion of the Court of Appeals [reversing the Trial Court with directions to enter Judgment in favor of the Insurance Company] is affirmed."  Id. at 540.  Recently, an alternative way of expressing the Reasonable Expectations Doctrine was addressed by a Federal Judge in another Liability Insurance Case in Download Travelers_Indem. Co. v. Bowling Green Professional Assoc's, PLC (W.D. Ky. Case No. 1.05CV171, Opinion Filed July 21, 2006).pdf.  This case is also reported at 440 F. Supp. 2d 652.  As applied in that case to "a Professional Liability Insurance for Specified Medical Professions Policy" (Slipsheet Opinion at 10), the Reasonable Expectations Doctrine will be defeated only where the Insurance Policy at issue unequivocally, conspicuously, plainly, and clearly manifests an Exclusion.  (Slipsheet at 12.)  In that Federal Case, "[t]he Court finds that there is no ambiguity in the ... Policy."  As a result, "the Court finds that [the Liability Insurance Company] owes no duty to defend or indemnify" its Policyholder in an underlying liability case and enters Summary Judgment in favor of the Liability Insurance Company which issued the Policy.  (Slipsheet Opinion at 13.)

    The clear lesson of these new decisions is an old lesson of caution:  Care must be taken to understand the Insurance Law of the place where the Insurance Policy is at issue and will be interpreted.

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

 

Malice and Punitive Damages

    In most First Party Bad Faith cases in the United States, even though perhaps enough "malice" is shown to support a First Party Bad Faith Claim, that proof is not always enough to also support a Claim for Punitive Damages.  Generally, there must also be shown an even more egregious or worse kind of "malice" in order to assess Punitive Damages, even in most First Party Bad Faith Cases in America.  Under the law in some jurisdictions, however, proof of malice for a First Party Bad Faith Claim can also be, and is, the same proof that will legally entitle the Plaintiffs to Claim Punitive Damages in that case.

    This was the recent holding by the Federal Judge in Download Moss_v. American Alternative Insurance Corp. (E.D. Ark. Case No. 05.06cv00010, Opinion Filed November 1, 2006).pdf.  In  Moss, the Court denied a First Party Insurance Company's Motion for Summary Judgment as to both the Policyholders' alleged Claims of First Party Bad Faith under Arkansas law, and the Claims they also alleged for Punitive Damages under Arkansas law.  In Arkansas, the Federal Judge ruled,  First Party Bad Faith is a tort and one of the requirements of proving it is to prove "'dishonest, malicious, or oppressive conduct'" under a test established by the Arkansas Supreme Court.  (Slipsheet op. at page 9.)  In the opinion of the Federal Court in that case, the Policyholders' First Party Bad Faith Claims  should proceed.  (Id.  at 13.)

    The Federal Court reached the holding that the Insurance Company's Motion for Summary Judgment will be denied as against the First Party Bad Faith tort and also with respect to the Punitive Damages Claim in that case, even though Arkansas law requires "clear and convincing evidence" of malice in order to assess Punitive Damages.  The Court held in that case:  "Proof of the elements of the tort of bad faith supports a claim for punitive damages."  (Slipsheet op. at page 13.)  Since the Policyholders in that case prevail on alleging the First Party Bad Faith tort, their Claims for Punitive Damages will also proceed.

REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR LEGAL ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.