text:
This is one of a series of articles under the by line "Butler on Bad Faith" originally published in Mealey's Litigation Report: Bad Faith, Vol. 12, #6, p. 22 (July 21, 1998). Copyright Butler 1998.
Emotional distress damages may be the most significant aspect of any bad faith action in jurisdictions that allow them. This article outlines the several theories that justify the recovery of such damages. It discusses also the impact of a recent Florida Supreme Court decision which authorized recovery for emotional distress under that state's bad faith statute.
Any examination of theories for recovery of emotional distress damages in a bad faith case necessarily must consider the historical development of such damages in other kinds of cases. At common law, there was no tort of "bad faith" actionable by an insured against an insurer. The insurance contract governed the obligations of the parties and the consequences of a breach. Traditional contract principles defined the ambit of recoverable damages.(1)
Hadley v. Baxendale, 156 Eng. Rep. 145 (Ex. 1854), established that contract damages are those contemplated by the parties when the contract was made, or which flowed naturally from the breach. Traditionally, such damages were limited to the monetary value of the contract, had it been performed.(2) Emotional distress damages were recoverable only in cases involving contracts of a"personal" rather than commercial nature. Such personal contracts are "so coupled with matters of mental concern or solicitude ... that a breach will necessarily or reasonably result in mental anguish," and the parties should know that such suffering will result from breach.(3) Personal contracts included those between carriers and passengers, innkeepers and guests, as well as contracts to provide care, room and board, etc.(4)
The emergence of liability insurance created novel problems for application of these principles. They formed a new kind of relationship between insured and insurer. Early indemnity policies had reimbursed insureds only for actual payments made by an insured pursuant to a judgment or as defense costs, up to policy limits. Insurers were not involved directly in the defense of the action.(5) Under liability policies, however, insurers became directly involved in the defense of the action. This gave rise to conflicts of interest when claims reached or exceeded policy limits. Under no contractual duty to settle, an insurer might reject a demand for policy limits and "gamble" at the insured's risk by proceeding to trial. The insured, on the other hand, faced possible liability for an excess judgment.(6)
In response to this problem, courts began to impose a duty on insurers to actin good faith (or at least not in bad faith) in handling liability claims.(7) If an insured suffered a judgment in excess of policy limits due to an insurer's wrongful refusal to settle, the insurer would be liable for the excess regardless of policy limits. However, courts reached this result in diverse ways. Some rested on contract, some on tort, and others on fiduciary theories.(8)
Regardless of the theory, the outcomes arguably were consistent with Hadley v. Baxendale. Parties to the insurance contract could well have contemplated economic extra-contractual damages at the time the contract was made. Courts began to move away from this apparent consistency with traditional principles as they allowed damages for emotional distress.(9)
Crisci v. Security Ins. Co.(10) held that emotional distress damages were recoverable in third party bad faith claims for wrongful failure to settle.(11) In that case, there was an excess judgment against the insured. As a result, she experienced mental suffering. The trial court found that the insurer had refused wrongfully to settle. The court awarded the insured $25,000 in damages for emotional distress, as well as the amount of the excess judgment.
In affirming the emotional distress award, the California Supreme Court recalled a previous holding, in another case, that a bad faith action sounds both in contract and tort.(12) The tort aspect might justify tort damages. Furthermore, California law allowed emotional distress damages for tortious interference with property rights. Thus, the Crisci court found no reason to disallow such damages in a case of bad faith refusal to settle.(13)
Six years later, the California Supreme Court imported this tort duty into cases of first party bad faith. In Gruenberg v. Aetna Ins. Co.,(14) the court found the same duty to the insured in both third and first party bad faith claims. The insurer's duty to settle fairly the claims of third parties, and the insurer's duty to act fairly on an insured's direct claim, were "merely two different aspects of the same duty."(15) Therefore, tort damages, including emotional distress, may flow from a breach of either.
Since this landmark decision, at least twenty five states have recognized the tort of bad faith in first party insurance claims.(16) Because these actions sound in tort, recovery of emotional distress damages is possible in each of those states. Other "bad faith" states base the cause of action either on contract principles or statutory enactments.
Emotional distress damages are relatively easy to recover in tort. Traditionally, the common law required physical injury or that the tortfeasor's conduct be outrageous.(17) These high standards were justified by the need to ensure the legitimacy of the claim. In bad faith tort actions, however, there are no such stringent requirements.
The Gruenberg court, for instance, approved recovery for emotional distress when an insured loses even his property due to the tortious conduct of a insurer. The court believed that the danger of fictitious claims would be minimized by a "substantial property loss" requirement.(18)
The Nevada Supreme Court adopted a standard only slightly more strict. In Anderson v. Continental Insurance Co.,(19) Nevada embraced Gruenberg's "substantial damages" test, but required also that the emotional distress be severe.(20) Now, several states have applied some form of the Gruenberg or Anderson standard of recovery in tort actions for bad faith.(21)
In states which follow traditional contract principles of bad faith, recovery of emotional distress damages is practically impossible. For instance, the Michigan Supreme Court, in Kewin v Massachusetts Mutual Life Ins Co.,(22) declined to recognize a tort for bad faith breach of an insurance contract. In Kewin, an insured had sued and won damages for mental distress from an insurer that denied disability benefits. The Michigan Court of Appeals reversed the award on technical pleading grounds.
The Michigan Supreme Court held that damages for mental distress were not recoverable in any case. The court restated the Hadley v. Baxendale requirement that damages for breach of contract must arise "naturally from the breach" or be "contemplated by the parties at the time the contract was made." Therefore, mental distress damages generally are not recoverable.(23) The court, compared Kewin's case to an earlier Michigan case, Stewart v. Rudner.(24)
In Stewart, a patient had sued her doctor in contract for failure to perform a promised Caesarean section. The appellate court there upheld an award for mental distress for breach of the contract because such damages were contemplated by the parties. The contract was "personal" it said, not commercial. "When we have a contract concerned not with trade or commerce but with life and death, not with profit but with elements of personality, not with pecuniary aggrandizement but with matters of mental concern and solicitude, then a breach of duty with respect to such contracts will inevitably and necessarily result in mental anguish, pain and suffering."(25)
The Michigan Supreme Court, in Kewin, concluded, over a strong dissent, that disability contracts are commercial. Such contracts are agreements to pay money upon the occurrence of a specified event. Mental distress damages do not flow from the breach of such contracts. They are not "personal."
Among states that have bad faith statutes, there are various standards of recovery for emotional distress. For example, the Pennsylvania Supreme Court in D'Ambrosio v. Pennsylvania National Mutual Casualty Ins. Co.(26) ruled that the state's unfair insurance practices act did not allow emotional distress damages. The court was unwilling to supplement or interfere with the Act by recognizing a tort bad faith action.(27) The year after D'Ambrosio, the Act was amended to authorize recovery for punitive damages but not for emotional distress.(28)
On the other hand, in Rhode Island, the tort remedy is engrafted on the statute. There, the bad faith statute has been interpreted as codifying existing case law recognizing tort actions for bad faith.(29) Therefore, awards for emotional distress are proper.
In Florida, a recent decision goes another way. The Florida Supreme Court, in Time Ins. Co., Inc. v. Burger,(30) held that emotional distress damages are recoverable under the bad faith statute, but only in actions based on health insurance.
Time Insurance Company ("Time") provided health insurance to Harvey Burger ("Burger"). Burger had a $500 medical bill. He submitted the bill to Time. However, because the bill contained a "stray mark" it looked like $1500 instead of$500.
In August 1991, Time informed Burger that it was investigating whether he had tried to defraud the company. Time also did not pay Burger's other outstanding medical bills. Allegedly, Burger forewent medical treatment from August, 1991, through November, 1992, because he was unsure if Time would pay.
Around April, 1992, Burger filed suit for statutory "bad faith" under section624.155 Florida Statutes. The suit either was filed in or removed to Federal Court. In November, 1992, Time paid all the outstanding medical bills.
At trial, Burger claimed that, because Time did not pay his outstanding medical bills until November, 1992, he did not get medical treatment. He alleged this caused him to be depressed and unable to communicate with his family. The jury found that Time had violated Florida's bad faith statute for failing to settle claims in good faith. It awarded Burger $50,000.00 in compensatory damages and$1 in punitive damages. Time appealed to the United States Court of Appeals for the Eleventh Circuit. Time argued that, under Florida law, emotional distress damages are available only in actions for the tort of intentional infliction of emotional distress absent physical "impact."(31) Time had paid all of Burger's outstanding medical bills in November of 1992. Thus, his only unpaid damages were for alleged emotional distress. Time claimed, therefore, that the award of$50,000 was unsupportable.(32)
Burger argued: (1) Florida law should allow damages for emotional distress in a bad faith action; and (2) even if it does not, the facts of this case justified the award.(33)
The Eleventh Circuit certified two questions to the Florida Supreme Court: whether emotional distress damages qualify as compensatory damages under the bad faith statute or, alternatively, whether the type of emotional distress suffered by Burger is a "reasonably foreseeable result" of a violation of the statute.(34)
Burger held that emotional distress damages do qualify as compensatory damages under the bad faith statute. The court noted that, prior to the enactment of the bad faith statute, breach of a health insurance contract gave rise already to contract damages and attorney's fees. The court concluded that by passing the bad faith statute, the legislature "may have contemplated more than the recovery of the same damages already available in a breach of contract action."(35)
Burger then articulated the following elements of a bad faith claim for emotional distress: (1) the bad faith conduct must have resulted in the insured's failure to receive necessary or timely health care; (2) based on a reasonable medical probability, this failure cause or aggravated the insured's medical or psychiatric condition; and (3) the insured suffered mental distress related to the condition or the aggravation of the condition. Furthermore, these requirements must be substantiated by testimony of a qualified medical examiner.(36)
In essence, the Burger decision follows traditional contract principles. As mentioned, "personal" contracts long have been a branch of (or an exception to)the rule in Hadley v. Baxendale. "Whenever the terms of a contract relate to matters which concern directly the comfort, happiness, or personal welfare of one of the parties . . . he may recover damages for physical suffering or illness proximately caused by its breach."(37)
Health insurance contracts concern matters of "comfort, happiness and personal welfare." Surely, people buy health insurance policies for physical well-being as well as to avoid the financial burden of medical treatment.
Burger clearly considered the compelling problems faced by an insured when health benefits are denied. "In view of the possibility that an unjustified refusal to pay an insured's medical or hospital bills could result in the inability to obtain healthcare," the court ruled that Florida's bad faith statute authorizes recovery for emotional distress damages against a health insurance company.(38)
Practitioners and insurance companies in Florida now are considering what effect the Burger decision will have on other kinds of bad faith cases. Will the trial and appellate courts allow damages for emotional distress in bad faith actions based on property, liability, or other insurance coverages? The answer to this question is suggested by the apparent basis for the Burger decision. Because a health insurance contract is a kind of "personal" contract, the Burger decision can be squared with the traditional analysis of damages which evolved from Hadley v.Baxendale. Thus, there is an argument to be made that Burger be applied narrowly. Accordingly, the future of emotional distress damages in Florida bad faith actions appears limited to health insurance cases.
1. Roger C. Henderson, The Tort of Bad Faith in First Party Insurance Transactions:Refining the Standard of Culpability and Reformulating the Remedies by Statute, 26 U.Mich. J.L. Ref. 1 (1992).
2. Kewin v. Massachusetts Mutual Life Ins. Co., 409 Mich. 401, 414-15 (1980).
3. Id. at 434-35 (Williams, J. dissenting).
4. Id. at 435.
5. Henderson, supra n. 1, at 16.
6. Id. at 20.
7. Id. at 22.
8. See Radcliffe v. Frankin National Ins. Co., 298 P.2d 1002, 1020-24 (Or. 1956).
9. Henderson, supra n. 1, at 22.
10. 426 P.2d 173 (Cal. 1967).
11. Henderson, supra n. 1, at 25.
12. Crisci, 426 P.2d at 178.
13. Id. at 179.
14. 510 P.2d 1032 (Cal. 1973).
15. Id. at 1037.
16. See The Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 52-53 (Tex. 1997).
17. See Restatement (Second) of Torts § 46 (1965).
18. Gruenberg, 510 P.2d at 1041.
19. 271 N.W.2d 368 (1978).
20. Id. at 378.
21. Henderson, supra n. 1, 56-57.
22. Kewen v. Massachusetts Mutual Life Ins. Co., 409 Mich. 401 (1980).
23. Id. at 414.
24. 84 N.W.2d 816 (Mich. 1957).
25. Id. at 824.
26. 431 A.2d 966 (Penn. 1981).
27. Id. at 970.
28. See Duffy v. Nationwide Mutual Ins. Co., 1993 U.S. Dist. LEXIS 16197, *10 (E.D. Pa.,Nov. 10, 1993).
29. See Marshall Contractors, Inc. v. Peerless Ins. Co., 827 F. Supp. 91, 95 n. 2 (D.C. R.I.1993); see also Pace v. Insurance Co. of North America, 939 F.2d 572, 580 (1st Cir. 1988).
30. No. 90,869, 1998 Fla. LEXIS 1157 (June 12, 1998).
31. Under the "impact" rule, a person cannot recover compensatory damages for mental distress or psychiatric injury in the absence of a discernible physical injury. See, Brownv. Cadillac Motor Car Division, 468 So. 2d 903 (Fla. 1985).
32. No. 90,869, 1998 Fla. LEXIS 1157, at *3 (June 12, 1998).
33. Id.
34. Id.
35. Id. at *10.
36. Id. at *13-14.
37. Chelini v. Nieri, 196 P.2d 915 (Cal. 1948).
38. No. 90,869, 1998 Fla. LEXIS 1157, at *3 (June 12, 1998).
The critical fact that seems to have been glossed over by all of the courts considering this question is the fact that once a final judgment has been entered by a Florida trial court, the court loses jurisdiction to do anything further.
In the January 26, 2015 edition of this publication, I shared a collection of excerpts from documents authored by attorneys. Given the sheer volume of paper which crosses my desk in reviewing claims for coverage and bad faith, I inevitably come across some very humorous (though not intentionally so) mistakes in the various documents reviewed. This month, I share some of the funniest entries I've seen in deposition transcripts and medical records.
As an attorney for more than sixteen years, and a practitioner of insurance bad faith for nearly eleven years, I have seen virtually every kind of bad faith set-up one could imagine. I have shared my observations through various articles published in this fine periodical as well as other publications. The law of insurer bad faith is obviously one which is constantly in flux. Therefore, it would be a simple matter to wax eloquent upon the latest pronouncement from the high court of one of our many state and federal courts. However, I feel compelled to digress from the usual stately discussion of the intricacies of bad-faith law and share some of the more amusing things I have come across during my review of tens of thousands of documents contained in claim files, medical records and correspondence, done in connection with representing insurers in this field.
Generally, if an insurance company refuses to defend its insured against a claim, the insured may protect himself by entering into a stipulated agreement with the claimant and holding the insurance company responsible for paying the claimant the agreed-to amount.
Florida state and federal courts struggle with excess damage verdicts in first-party bad-faith actions arising out of uninsured motorist/underinsured motorist (UM) coverage. Recent case decisions produce mixed results for insurers. But mention UM coverage, bad faith, and total damages, and Florida Statute Section 627.727(10) immediately comes to mind. Comments by two judges framed the Section 10 debate.
This article examines the third party beneficiary doctrine in conjunction with the approaches courts follow with regard to the collection of an excess judgment from a liability insurer.
Liability policies typically require the insured to provide prompt notice of a claim or suit. Notice is regarded as a condition precedent to the insurer's duty to defend or indemnify. The notice provisions in a typical liability policy seem straightforward. However, issues surrounding notice become complicated when an additional insured, who is typically not a party to the insurance contract and sometimes unnamed in a policy, is involved. Under those situations, courts have had to address, among other issues, the sophistication and resources of the additional insured, whether the additional insured is aware that coverage potentially exists or even that policies potentially exist, whether the jurisdiction requires the additional insured to actually tender the claim or suit or whether another insured's tender of the claim or suit is sufficient and whether there was late notice or no notice at all by the additional insured. Different jurisdictions have reached different results.
On July 20, 2012, a three-judge panel of Florida's Second District Court of Appeal released what, on its face, appeared to be a relatively innocuous opinion in Geico General Insurance Company v. Bottini . The Bottini appeal arose as a result of Geico's appeal of a jury verdict in the amount of $30,872,266 rendered against it in an uninsured/underinsured motorist (''UIM'') case. Consistent with precedent, the trial court entered a judgment against Geico in the amount of the policy's limit of liability, $50,000. Because the huge verdict had the effect of fixing the plaintiff's damages in a subsequent bad faith case, Geico naturally sought review of that verdict. The panel opinion concluded simply, ''Based on the evidence presented, we are satisfied that even if Geico were correct that errors may have affected the jury's computation of damages, in the context of this case and the amount of the judgment, any such errors were harmless.''
First-party bad-faith claims arising from uninsured motorist (UM) coverage are separate and independent actions, too. If the uninsured motorist coverage action is truly separate and distinct from bad faith, one naturally expects a separate trial on bad-faith liability and extracontractual damages. However, there is a unique problem confronting first-party bad-faith claims arising from uninsured motorist coverage under Florida Statute Section 627.727(10). One decision characterizes the problem as a ''conundrum'' created by Florida law.
When a carrier refuses to defend its insured, the insured may consent to entry of a stipulated judgment. 1 In most jurisdictions the insured (or claimant) bears the burden of proof to show coverage exists as a prerequisite to recovery of an excess judgment. 2 The burden of proving coverage for a consent judgment can sometimes create problems. Consent judgments raise many other issues beyond the scope of this article. 3
Generally, liability insurers must secure a release of all of their insureds when settling claims against their insureds. However, some courts have recognized circumstances where an insurer may settle for an insured at the exclusion of another while still maintaining its good faith duties toward all of its insureds. Other courts have seemingly rejected the notion that an insurer can ever settle for one of its insureds at the exclusion of others. These release issues occur most prevalently in automobile accidents involving insured owners and additional insured drivers.
A common scenario: claimant's counsel issues a time limit demand for policy limits and the insurer decides to accept the demand and tender the limits. Once the decision is made to accept the demand, the insurer should go through its checklist of concerns to make sure that each element of the time demand is met, while ensuring that the insured is adequately protected.
Bad faith and ordinary negligence typically involve two very different standards of care. In most jurisdictions, courts agree that proof of bad faith requires a showing of insurer culpability greater than ordinary negligence.
The gravamen of a third-party claim of bad faith is that the insurer failed to settle a claim against an insured when it had the opportunity to do so. The essence of the claim is that the insurer acted solely on the basis of its own interests, failed to properly and promptly defend the claim, and thereby exposed the insured to an excess judgment. However, a claim based on insurer negligence is insufficient to establish bad faith
Mediation is an effective dispute resolution tool because it allows participants to openly discuss all aspects of a dispute without the fear of recourse or retribution. Confidentiality is a critical component of this process. Litigants and insurers participating in mediation often proceed under the assumption that all communications and conduct occurring during mediation will be cloaked with protection. However, exceptions to confidentiality are slowly eroding what is commonly referred to as the absolute ''mediation privilege.''
Few legal maneuvers generate greater skepticism – among courts and insurers – than the excess consent judgment, an increasingly common settlement device used In liability cases.
Liability insurance carriers should be prompt and proactive when they receive a time-limit demand from a claimant. Time is usually not on the carrier's side when it comes to these settlement communications.
Sometimes it is better to be lucky than good, as the insurers in the following cases learned. These cases demonstrate that, even where the facts indicate that the insurer acted in bad faith, it is still possible for the insurer to escape extra-contractual exposure. In the absence of a causal link between the excess judgment and the insurer's actions, bad faith liability cannot exist as a matter of law.
Over forty states have hospital lien laws. Those laws typically allow hospitals to recover against parties, including insurers, who impair their liens. In many states, the hospital lien laws do not clearly identify the type and extent of damages a hospital can recover against a party who impairs a hospital lien. The damages a hospital can recover from a party who impairs a lien depends upon the language of the applicable hospital lien law and the courts' interpretations of that law. Results vary from state to state.
Bad faith aside, insurers often assume a claim's ''total" exposure under the insurance contract is the policy's limit. Courts traditionally allow insureds to recover contractual damages based on the limit, plus legal interest. However, a new trend is emerging in some jurisdictions.
In an effort to create yet another way to present a claim for bad faith against an insurance company, plaintiff attorneys have been submitting ''package deal'' demands on behalf of multiple claimants who have all incurred damages as a result of the same occurrence.
Over the last 25 years, courts have wrestled with the issue of whether to apply an absolute privilege to preclude bad-faith lawsuits based on an insurance company's conduct during the litigation of an underlying first-party or third-party claim. Some courts still refuse to recognize a bad-faith claim against an insurance company based upon its post-litigation conduct. However, the prevailing trend seems to suggest that courts will find that some of the insurer's conduct remains relevant and admissible, while the conduct of the insurer's attorneys in defending the claim remains privileged.
The United States Supreme Court has recognized the "attorney-client privilege" as "one of the oldest recognized privileges for confidential communications," the purpose of which is to encourage "full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and the administration of justice."
In the Southeast, catastrophic natural disasters have become all too common, and the physical and financial consequences are borne by the entire region. Five of the top ten costliest hurricanes to hit the United States have impacted North Carolina, and with approximately $159.6 billion in insured coastal assets, North Carolina continues to have significant loss exposure.
A recent discovery order in the federal court case of Signature Development, LLC v. Mid-Continental Casualty Company is illustrative of our liberal discovery. Note, this liability insurer has yet to be found liable or guilty of any wrongdoing. Signature alleges, however, that the corporate defendant insurer breached the contract of insurance, committed ''bad-faith,'' breached its fiduciary duty to its insured, committed unfair trade practices, intentionally inflicted emotional distress and vexatiously refused to pay. Based upon these allegations alone, the court addressed the scope and burden of discovery.
By definition, mediation begins with ''me.'' Once conflicting parties have resorted to litigation, they naturally act purely in their own respective self-interest. When a mediation involves allegations of insurer ''bad faith,'' this is especially so. The parties are initially polarized.
If given the chance, most property adjusters would skip the aspect of their job involving litigation. Avoiding lawyers, depositions, and, of course, trials would alleviate much stress. Unfortunately, dealing with lawyers and litigation is an unavoidable job hazard for most adjusters.
How can a first-party insurer be legally liable for insurance ''bad faith'' if it has already been found not to be liable for breach of the insurance contract? According to at least one Florida appellate court, by paying an Appraisal Award timely.
Are all attorney-client communications contained in such claim files that were thought to be confidential now discoverable because the insurer lost the underlying first-party claim, litigation, or appeal
On April 25, 2012, the United StatesDistrict Court for the Southern District of Florida issued its opinion in Moultrop v. GEICO General Ins. Co., remanding a bad faith claim to state court pursuant to the one-year ''repose'' provision of 28 U.S.C. § 1446(b). The Moultrop decision is one more in a growing line of cases which refuse insurers access to a federal forum based on the repose provision, under the anomalous reasoning that the right to removal expired before the cause of action for bad faith accrued. Unfortunately for the insurers, 28 U.S.C. section 1447(d) precludes appellate review of an order granting a motion to remand.
Discovery of the insurance company's entire claim file—including confidential communications between the insurer and its attorney—is often the first target on the insured's agenda in a first-party bad-faith lawsuit. In any other context, a party's request for discovery of the opposing party's confidential attorney-client communications would be viewed by courts as a brazen and inappropriate attempt to obtain information obviously protected by the attorney-client privilege; however, in the context of bad-faith litigation, this type of request has been dignified by courts who often look for ways to permit discovery of the insurer's attorney-client communications.
In the past decade, the bad-faith environment has rapidly shifted from a useful tool used by consumers to protect themselves from arguably egregious actions to an elaborate trap set by personal injury plaintiff attorneys to reap outrageous awards from seemingly innocent conduct by claims professionals. Insurance companies now fear multi-million dollar verdicts based on policies written for insureds who did not want more than the absolute minimum coverage allowed. Based on technicalities, clever plaintiff attorneys attempt to convince courts to rewrite insurance policies, allowing for unlimited recoveries.
Many cases hold that a liability insurer can settle a claim against its insured without the insured's consent because the policy language gives an insurer the right to settle even when an insured may not want to settle.1 For the most part, courts in California, Florida, and Louisiana allow insurers to settle claims without the insured's consent where the policy gives the insurer the right to settle as it deems expedient. However, courts may nonetheless consider whether a settlement may have adversely impacted the insured to determine whether an insurer acted in good faith.
On November 30, 2011, the California Supreme Court exercised its discretion and let stand a $13.8 million punitive damage award that was more than 16 times the compensatory damages awarded by the jury. The case, Bullock v. Philip Morris, 1 (Bullock) involved a smoker diagnosed with lung cancer who filed suit against the cigarette manufacturer, seeking damages based on products liability, fraud, and other theories.
In every state in the union an insured can seek some form of compensation for an insurer's ''bad faith'' in adjusting a claim.Yet only one state, Tennessee, currently allows an insurance company to recover damages caused by the insured's bad faith.This imbalance has allowed ''bad faith'' litigation to become big business.The tendency of courts to treat insureds like a disadvantaged class has created an uneven playing field for insurance companies in claims adjustment.
[ Editors note: Alan J. Nisberg, Esq., is a partner with the law firm of Butler Weihmuller Katz Craig LLP, which has offices in Tampa, Chicago, Charlotte, Mobile, Tallahassee, and Miami. He is an experienced trial and appellate attorney, specializing in extra-contractual, class action and complex coverage litigation. This commentary, other than the quoted material, expresses the authors opinions - not the opinions of Butler or Mealey's. Copyright © 2011 by the author. Responses are welcome. ]
Proximate causation is an element of a claim for bad faith. An often-overlooked element, but an element nonetheless. Even claims with grievous claim-handling errors and high excess judgments can still be very defensible if there is no proximate causation between the two. This article examines the element of the bad-faith cause of action that is most often glossed over.
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 25, #10 (September, 2011). © 2011
[ Julie A. Simonson is an associate with the law firm of Butler Weihmuller Katz Craig LLP, which has offices in Tampa, Chicago, Charlotte, Mobile, Tallahassee, and Miami. She is active in the firm's Extra-Contractual and Liability Departments. Any commentary or opinions do not reflect the opinions of Butler or Mealey's. Copyright © 2011 by Julie A. Simonson. Responses are welcome. ]
[BrianD.Webb,Esq.,is a partner with the law firm of Butler Weihmuller Katz Craig LLP, which has offices in Tampa, Chicago, Charlotte, Mobile, Tallahassee, and Miami. He is an experienced trial and appellate attorney specializing in extra-contractual and complex coverage litigation. This commentary expresses the author's opinions–not the opinions of Butler or Mealey's. Copyright#2011 by Brian D. Webb. Responses are welcome.]
[Editor's Note: Alan J. Nisberg is a partner in the Tampa office of Butler Weihmuller Katz Craig LLP, which also has offices in Chicago, Charlotte, Mobile, Tallahassee, and Miami. He is an experienced trial attorney and appellate lawyer, specializing in extra-contractual, class action, and complex coverage litigation. This commentary, other than the quoted material, expresses the author's opinions - not the opinions of Butler or Mealey's. Copyright#2011 by the author. Responses are welcome.]
[R. Steven Rawls is a partner and Ryan K. Hilton is a senior associate with the law firm of Butler Weihmuller Katz Craig LLP, which has offices in Tampa, Chicago, Charlotte, Mobile, Tallahassee, and Miami. This commentary expresses the author's opinions–not the opinions of Butler or Mealey's. Copyright © 2011 by R. Steven Rawls and Ryan K. Hilton. Responses are welcome.]
In some jurisdictions, including Florida, the courts recognize a duty in some circumstances for a liability insurer to initiate settlement negotiations with a third-party claimant before the claimant has ever made a demand. This duty is a relatively recent invention in the common law and has yet to be fully defined. While most articles on the subject tend to focus on whether or not this duty should exist in the first place, this article skips that threshold question and delves into the particulars that apply in the jurisdictions that recognize it. What triggers the duty? What is required of the insurer to discharge it? What are the defenses to a claim for bad-faith failure to initiate settlement negotiations? This article tackles these emerging questions and more in attempt to define this nascent duty.
[Editor's Note: Laura A. Turbe-Capaz is a senior associate in the Tampa office of Butler Weihmuller Katz Craig LLP, which also has offices in Chicago, Charlotte, Mobile, Tallahassee, and Miami. She is an experienced trial attorney in the firm's Extra-Contractual, Third-Party Coverage, and Liability Departments. Copyright#2011 by Laura A. Turbe-Capaz. Responses are welcome.]
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 24, #15 (December 9, 2010). © 2010
[Editor's Note: Fay E. Ryan is a partner the Tampa office of Butler Weihmuller Katz Craig LLP, which also has offices in Chicago, Charlotte, Mobile, Tallahassee and Miami. She is an experienced trial attorney in the firm's Extra-Contractual, Third-Party Coverage, and Liability Departments. Kimberly N. Gorak is a senior associate in the Tampa office of Butler , also practicing in the firm's Extra-Contractual, Third-Party Coverage, and Liability Departments. Any commentary or opinions do not reflect the opinions of Butler or Mealey's. Copyright © 2010 by Fay E. Ryan and Kimberly N. Gorak. Responses are welcome .]
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 24, #14 (November 24, 2010). © 2010
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 24, #10 (September 23, 2010). © 2010
[Editor's Note: John V. Garaffa is a Partner and Jason M. Seitz is an associate with the law firm of Butler Weihmuller Katz Craig LLP in Tampa, Florida. Any commentary or opinions do not reflect the opinions of Butler or Mealey's Publications. Copyright © 2010 by Jason M. Seitz and John V. Garaffa. Responses are welcome.]
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 24, #8 (August 26, 2010). © 2010
[Editor's Note: Steve Rawls is a partner and Ryan K. Hilton is a senior associate with the law firm of Butler Weihmuller Katz Craig LLP in Tampa, Florida. Any commentary or opinions do not reflect the opinions of Butler or Mealey's Publications. Copyright © 2010 by R. Steve Rawls and Ryan K. Hilton. Responses are welcome.]
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 24, #6 (July 29, 2010). © 2010
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 24, #2 (May 27, 2010). © 2010
The Florida Third District Court of Appeal's 1991 decision in Powell v. Prudential Property & Casualty Insurance Co. recognized a duty, in some circumstances, for a liability insurer to initiate settlement discussions with a third-party claimant who has not made a demand. The case proved to have a strong ripple effect, bringing about a sea change in bad-faith jurisprudence for the next twenty years. This article examines the expansion of Powell from a unique facts-driven anomaly to an entire branch of bad-faith jurisprudence and discusses early indications that the courts may be retreating again to applications more in line with the original case.
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 23, #22 (March 25, 2010). © 2010
Insurance intermediaries (insurance agents and insurance brokers) are especially vulnerable to claims by insureds. While bad-faith actions continue to be the favored method of pursuing recovery beyond a policy limit, some litigants turn to claims against insurance intermediaries (and the insurers they represent) for extracontractual recovery. In addition to bad-faith law, insurers need to know what kinds of claims can be brought in relation to the procurement of the insurance policy itself and what defenses can be raised. This article delves into this often-misunderstood area of the law and illuminates some legal issues with which every insurer should be familiar.
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 23, #18 (January 28, 2010). © 2010
Many businesses are increasingly utilizing insurance policies with large self-insured retention endorsements in order to exercise better control over the defense of claims. In these circumstances, an issue may arise regarding whether an insured who is responsible for defense costs under a self-insured retention ("SIR") owes a duty of good faith to its insurer.
On August 5, 2009, the South Dakota supreme court joined an exceedingly small minority of courts in the United States that have imposed a duty to conduct a reasonable investigation into first-party claims in order to avoid "bad-faith" liability.2 As they say, the road to Hell is paved with good intentions. This decision certainly affirms the truth of that old saw
On March 31, 2009, the United States Supreme Court dismissed, as improvidently granted, a writ of certiorari in Philip Morris USA, Inc. v. Williams. While the reason for the court's action remains a mystery, it seemed to signal an end to the court's interest in the central constitutional issue in the case: punitive damages. Unfortunately, the court's decision to abandon the issue leaves both the litigants and observers wondering what, if anything, had been gained by years of decisions, reversals and remands.
In Grilletta v. Lexington Insurance Company,8 the United States Court of Appeals for the Fifth Circuit reviewed the insurer's handling of a Hurricane Katrina property claim.9 Mr. Xavier Grilletta and Mr. Randy Lauman owned a vacation lakehouse on the southeastern shore of Lake Pontchartrain, a lake bordering New Orleans to the north.
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 22, #22 (March 26, 2009).
This is one of a series of articles originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 22, #20 (February 26, 2009).
The scene is all too familiar: an insured, disenchanted with its insurer's refusal to defend an action the insured believes is within coverage, decides to enter into a "consent judgment" with the plaintiff, in return for which, the plaintiff agrees only to pursue satisfaction of the "judgment" against the insurer.
The responsibility of caring for a child is not one to be taken lightly. Our society demands vigilance from those who bring new life into rld, and rightly so. We are held to a higher standard in dealing with our offspring than with others. The special relationship between a parent and a child is built upon trust and an expectation that one (the parent) will give security tothe other (the child). So too is the bond between insurer and insured.
On June 25, 2008, the United States Supreme Court issued its much anticipated opinion in Exxon Shipping Co. v. Baker. The Supreme Court reduced the punitive damage award from $2.5 billion dollars to $507 million dollars, an amount approximately equal to the jury's award of compensatory damages. While the decision certainly warmed the hearts of Exxon's previously discomfitted stockholders, the Court's opinion provides only limited encouragement to defendants involved in the current punitive damage lottery.
The ability of an insured to recover consequential damages under an insurance contract allegedly caused by failure or delays in the insurer making payments has traditionally been controversial. Jurisdictions have been divided in their approach as noted in the following annotation cited by the district court in Indiana
In many jurisdictions, jurors can award punitive damages to punish or penalize an insurer for improper claims handling, in addition to any compensatory damages caused by an insurer's bad faith. Such jury awards of punitive damages now are subject to scrutiny under State Farm Mutual Automobile Insurance Company v. Campbell.1 As a result of Campbell, insurers have one final check against excessive punitive damages awards by juries.
Since the Supreme Court's decision in State Farm Mutual Automobile Insurance Company v. Campbell, courts have struggled to define when the Campbell court's presumptive limit of 9 to 1 ratio of punitive damages to compensatory damages is appropriate. The Supreme Court stated that the "most important indicium of the reasonableness of a punitive damages award" was the highly subjective measure of the "degree of reprehensibility." Wrestling with such an amorphous concept trial courts and appellate courts have sought to justify various punitive damage awards on the basis of a sliding scale, doing little more than subjectively comparing the "reprehensibility" in the case being reviewed, to other recent cases decided before it. The result is a marked disparity from one court to the next as to what constitutes behavior falling within the five (5) factors of reprehensibility discussed in Campbell.
This is one of a series of articles under the by line "Butler on Bad Faith" originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 21, #6, p. 32 (July 24, 2007).
On February 20, 2007, the United States Supreme Court issued its much-anticipated second opinion in the negligence and fraud suit brought by the widow of Jesse Williams against Philip Morris. Mrs. Williams had asserted that the company had purposefully taken actions to obscure the dangers of smoking and, as a result, her husband was deceived into believing smoking was not harmful, a 47 year delusion that ultimately led to his illness and death.
On December 21, 2006, the Florida Supreme Court released its opinion in Dadeland Depot, Inc. v. St. Paul Fire & Marine Ins. Co.[FN1] In Dadeland, a bare majority of the high Court, led by Justice Lewis, held that an obligee under a performance bond qualifies as an "insured" within the meaning of section 624.155, Florida Statutes (1999). The Court's decision resulted from the following question certified to it by the Eleventh Circuit Court of Appeals:
On May 30, 2006, the U.S. Supreme Court again granted a petition for writ of certiorari in the ongoing dispute between Philip Morris and the widow of Jesse Williams, an Oregon resident who died of lung cancer after smoking cigarettes for about 47 years.
Insurance "bad-faith" is recognized throughout the United States. In the setting of first-party property insurance, the relationship between the insured and insurer commences contractually. However, that contractual relationship can also provide exposure for tort damages in a first-party "bad-faith" action. Indeed, the threat of facing a first-party property "bad-faith" tort action commonly influences insurers to resolve litigation out of fear, rather than for substantive purposes based on the merits. One of the "Achilles' Heels" of such causes of action is the inability of the insured to prove any measurable "bad-faith" damages. The identification and measurement of "damages" in first-party property "bad-faith" actions varies greatly depending on the jurisdiction. This commentary will discuss certain jurisdictional differences relating to damages in first-party "bad-faith" actions, exclusive of punitive damages.[FN1]
Until the 20th Century, insurance contracts were treated the same as any other contract, with recovery generally limited to the damages contemplated by the parties when they entered into the contract. Insurance contracts, like any other, were enforced by their explicit terms, and courts were reluctant to substitute their own judgment for the terms upon which the parties agreed absent some independent tort or injustice. By the end of the 19th Century, however, the judiciary in the United States began to recognize a general obligation of good faith performance implied in every contract. By the 1930s, the implied covenant of good faith became a standard doctrine. This duty of good faith and fair dealing originated to resolve disputes over agreements that were not explicit on pivotal contract terms, or left discretionary power in the hands of one of the contracting parties.
Ging v. American Liberty Insurance Company, 423 F.2d 115 (5th Cir. 1970) is a case often cited for the proposition that third party insurers who act in bad faith could be held liable for punitive damages awarded against their insureds. However, the strength of this proposition appears to depend upon the extent to which a jurisdiction would permit the insurability of punitive damages. Those jurisdictions that permit coverage for punitive damages would also likely permit recovery of those damages later as a result of the carrier's bad faith. Jurisdictions whose public policy precludes insuring against punitive damage awards, may be more reluctant to permit recovery in a later bad faith action, depending upon the nature of the liability giving rise to the punitive damage award.
Dealing with punitive damage claims is like driving down a road that is constantly under repair. The road is dangerous, uncomfortable, and full of detours. Although the United States Supreme Court has issued a rather clear and accurate map to help us through this rocky road, in some respects the map is already outdated, just as the road darkens and your interior auto light dims.
Imagine your insured is at fault in an accident that kills her and causes devastating injury to another individual. You (the insurer) fail to meet a settlement demand within policy limits. Liability is clear and excess exposure is inevitable. The claimant files a civil lawsuit naming the "estate" of the insured as the defendant. However, the estate of the insured is not set up yet. Having no entity to actually serve with the complaint, the claimant petitions the probate court for administration of the decedent's estate, has a personal representative appointed, and immediately serves legal process on that representative. A multi-million dollar excess judgment is obtained in the civil action.
Given that the Utah Supreme Court ("Utah") previously reinstated a $145 million punitive damages award in favor of the Campbells, it is not surprising that on remand from the U.S. Supreme Court, this same state high court goes to great lengths to justify the largest punitive damages award it believes could possibly survive further constitutional review.
Many jurisdictions have hospital lien laws. These laws ensure payment to hospitals for the beneficial services they provide. Some jurisdictions liberally interpret these laws so that technical deficiencies in establishing or seeking enforcement do not defeat payment to the hospitals. Other jurisdictions are less likely to ignore such deficiencies.
In Liggett Group Inc. v. Engle, the Florida's Third District Court of Appeal reversed the largest punitive damage award in history. The circumstances of the award indicate it would have bankrupted the defendants and was, in essence, a civil death sentence. If that were the only error, Engle would merely mark another notch in the continued upward spiral of American jury awards. However, the compounded procedural and constitutional errors in Engle make it particularly useful for those who wish to examine the pros and cons of the current system of punitive damages.
A liability insurer has a duty to handle and settle claims made against its insured in good faith. Courts have grappled with whether this duty requires an insurer to make a settlement offer when there is no claim against the insured.
Everyone knows that an insurer has to act in good faith to its insured when settling claims with third parties. However, when an insurer is faced with multiple claims exceeding the limits of coverage, the insurer is faced with tough choices. Insurers are frequently called upon to defend these choices in "bad-faith" actions. Can an insurer get summary judgment on the issue of "bad-faith" in multiple claimant/inadequate limits cases? Will the insurer be forced to litigate the "bad-faith" issue through a trial? This article attempts to answer these questions and provide guidance to insurers on meeting their duty of good faith when met with multiple claims, the sum total of which exceed policy limits.
It has long been accepted that parties to an insurance contract have an obligation to deal with each other fairly and in good faith. As early as 1914, this obligation was found to be grounded within an implied covenant within the contract between the insurer and its insured. If a denial of benefits under the policy was ultimately resolved by a suit on the contract of insurance, a policyholder who prevailed would receive the amount due plus interest. The recognition of a cause of action for the tortious breach of the duty of good faith and fair dealing in the context of the first-party contract of insurance is relatively recent.
Sometimes several people sustain injuries in an accident. This article addresses a recent decision of Florida's Fourth District Court of Appeal, Farinas v. Florida Farm Bureau General Insurance Company, that discusses what liability insurers should do when several people sustain injuries in an accident caused by the insured and the value of most, if not all, of each individual claim exceeds policy limits. This article discusses the basis for the Farinas holding and identifies some questions raised by Farinas.
Once again the annual "hold-your-breath" season is upon us. In Hartford, New York, and London weather channels are beating "sitcoms" on the "Nielson" ratings. Internet strikes on weather.com are out-numbering those for kournikova.com – well, maybe this is a slight exaggeration. But the point remains; that is, CAT losses, especially windstorm, commonly called Hurricanes, make or break a property insurer's profitability, not just in the year of the occurrence, but typically with a two to three year tail.
In most every jurisdiction, the basis for a claim of insurer bad faith is the recognition of a duty of good faith and fair dealing inherent in any contract of insurance. See, e.g., Boston Old Colony v. Gutierrez, 386 So. 2d 783 (Fla. 1980). The focus in such cases is usually the question of whether or not the insurer has violated that duty. Inevitably, the question arises as to whether or not the actions of the insured can be considered bad faith and, if so, whether such actions can be raised as an affirmative defense to a claim of insurer bad faith.
The involvement of legal counsel to provide advice concerning the settlement of property and liability claims has become increasingly commonplace. This is primarily due to the general proliferation of litigation and specifically "bad-faith" claims. As the involvement of legal counsel becomes more prevalent, so does the "defense" of "advice of counsel." This commentary will address this so-called "defense" in the context of "bad-faith" cases.
In 1844, Alexandre Dumas, one of the most famous French writers of the nineteenth century, shared his vision of comradery and unified ambition. In his classic, The Three Musketeers, set under the seventeenth century rule of Louis XIII, a small association of elite combatants swore their allegiance to a common purpose . . . and to each other: All for one, and one for all! Is this sense of nobility and uniformity present in the battle cry of plaintiff lawyers brandishing their swords in modern day litigation against the insurance industry?
Horace once wrote: "Anger is a brief madness." Such human condition apparently has not changed in over 2000 years.
USA Today's January 9, 2003 editorial page began with the topic sentence: "Horror stories abound about huge damage awards turning courts into lotteries, transforming plaintiffs and their lawyers into instant winners." In addressing a recent Ohio Supreme Court decision, the editorial stated
In recent months, insurance company clients of the author have faced allegations that the filing of a declaratory action, by an insurer, to determine or cut off coverage, is bad faith. This is a somewhat novel and, as it turns out, disfavored cause of action. To begin with, a "declaratory judgment action is the preferred manner of deciding a dispute between an insured and insurer over the construction and effect of the terms of the insurance contract."
Insurers find nothing more frustrating than paying for unearned indemnification dollars. In a first-party context this may result from unreported values causing a deflated premium. In other words, the insurer's actual exposures require more premium than charged -- usually over many policy years. In a third-party context this unearned protection is the result of an excess judgment that the liability carrier is required to pay. In most jurisdictions this is the consequence of the liability insurer's failure to settle within policy limits when it had the opportunity to do so.
What happens when an insurer's employee, insured, adjuster or attorney alters or destroys critical evidence? Can spoliation of evidence also constitute bad faith? Although there is no published decision directly on point, it appears that some courts may be willing to extend an insurer's exposure to include extra-contractual damages for such conduct
The Seventh Circuit recently addressed the question of whether an independent insurance broker, who provided clients to the insured, was their intermediary, thus barring coverage and bad faith claims. (First Insurance Funding Corporation v. Federal Insurance Company, No. 01-2855 (7th Cir. March 28, 2002)).
"The insurer does not . . . insure the entire range of an insured's wellbeing outside the scope of and unrelated to the insurance policy, with respect to paying third party claims. It is an insurer, not a guardian angel."
"The insurer does not . . . insure the entire range of an insured's wellbeing outside the scope of and unrelated to the insurance policy, with respect to paying third party claims. It is an insurer, not a guardian angel."
Two recent state court decisions jeopardize the right of insurers to consult legal counsel when considering whether to pay or deny the claim of a policyholder. The Arizona and Ohio state supreme courts have issued opinions eroding, even abrogating, the attorney client and work product privileges. In one of these decisions, Boone v. Vanliner, 744 N.E.2d 154 (Ohio 2001), the insurer has petitioned the United States Supreme Court to issue the writ of certiorari, hear the case and reverse the Ohio Supreme Court. The undersigned urges the United States Supreme Court to take the Vanliner case for the reasons stated below.
Coverage determinations regarding the nature of policy duties that liability insurers owe to additional insureds may create bad faith exposure for the unwary insurer. Bad faith liability frequently arises when an insurer fails to recognize the scope of defense and indemnification obligations it owes to an additional insured. Issues also arise when additional insureds compete with named insureds for limited policy proceeds which cannot adequately protect the interests of both. This article highlights the source of the dilemma – the scope of the coverage afforded to an additional insured – and provides illustrations of bad faith exposure in the wake of claims asserted against additional insureds.
In every jurisdiction that has considered the issue, a claim for bad faith does not accrue until there has been a final determination of the underlying claim for insurance benefits or third party damages. Taylor v. State Farm Mutual Automobile Ins. Co., 913 P.2d 1092 (Ariz. 1996); Blanchard v. State Farm Mutual Automobile Ins. Co., 575 So. 2d 1289 (Fla. 1991). Thus, before a plaintiff can sue an insurance company for bad faith, he must first finally resolve the claim which he contends the insurance company failed to settle in good faith. What constitutes a resolution of that claim varies with the type of claim asserted and the jurisdiction in which it is brought, but it can generally be broken down into three categories: excess judgment, settlement of the underlying claim, and judgment below policy limits.
We have seen, in recent years, a spate of actions for bad faith, and class actions, on the issue of so-called diminished value. These suits claim payment by the insurance company of the actual cash value of a property loss - or the cost to repair a loss - does not make the insured whole. This is because of some intangible quality in the property that cannot be restored by repair. Before the loss it was pristine or original. Afterward it is corrupted or compromised. It is worth less in the market.
An insured causes damage or injury that results in a third party claim for continuous loss spanning three years. The third party makes a claim under the policy in effect at the time of the loss. The policy covers the same three years as the loss and provides $300,000.00 for each year. In other words, the policy provides a total of $900,000.00 aggregate coverage over three years. We will assume the claim is settled for $300,000.00.
In representing insurers in bad faith litigation, from time to time one will find a coverage issue that was not raised in the underlying litigation. The question to be addressed in this article is whether the coverage issue may be raised for the first time as a defense to the bad faith litigation.
It is beyond dispute that the duty to defend, under liability insurance, is contractual, and is broader than the duty to indemnify. National Grange Mut. Ins. Co. v. Continental Cas. Ins. Co., 650 F. Supp. 1404 (S.D.N.Y. 1986). Even if some allegations of the complaint clearly are outside the scope of coverage, the insurance company is obligated to defend the entire suit. Id. See also, Aerojet-General Corp. v. Transport Indemnity Co., 948 P.2d 909 (Cal. 1997).
Before resolution of a first-party action for coverage or a third-party action to establish an insured's liability, a plaintiff will often initiate an action for bad faith. By doing so, the plaintiff attempts to gain an unfair advantage in discovery and at trial. This article outlines some of the reasons why the bad faith action should be abated in its entirety or, at the very least, stayed pending resolution of the underlying claim.
Mr. Lesser is a prominent public adjuster. His business office is located in Miami Beach, Florida. The views and opinions stated by Mr. Lesser in this interview are his own. Neither Mr. Craig, nor Butler , necessarily approve or agree with any of them.
A contractor's performance and payment bond creates rights and obligations among three parties the principal, the obligee and the surety. The principal may be the general contractor or a subcontractor. The obligee (under a performance bond) usually is the owner of the project or (under a payment bond) the subcontractors, materialmen and equipment suppliers. The surety most often is an insurance company or financial institution engaged, among other things, in the business of issuing performance and payment bonds.
In the trial of a bad faith case, plaintiff often tries to put into evidence the reserves the insurance company set for the claim. This article contends that evidence ought not be admissible. It will outline three reasons why not.
In this journal, in May 2000, the author discussed the then recent decision in Ginn Construction Co. v. Reliance Insurance Co., 51 F. Supp. 2d 1347 (S.D. Fla. 1999). He argued that, contrary to a suggestion in Ginn, an obligee under a general contractor's performance bond ought not be allowed to sue the surety for bad faith. This article will look at some decisions handed down since. The trend is toward no bad faith liability by a surety to either an obligee or a principal under a surety bond.
per-func-to-ry per-fúngk'tere adj. Done or acting routinely andwith little interest or care. The American Heritage Dictionary, NewSecond College Edition (1983).
per-func-to-ry per-fúngk'tere adj. Done or acting routinely andwith little interest or care. The American Heritage Dictionary, NewSecond College Edition (1983).
Consider a common scenario. An insurance company issues a liability policy. The policyholder does something, or fails to do something, as a result of which a partyis injured. The injured party becomes the plaintiff, and the policyholder the defendant,in a tort action. The insurance company reviews the tort action and sees right awaythat probably it is not covered. It retains a defense attorney to handle the tort action butsends a reservation of rights letter to the policyholder and files a separate declaratoryaction to determine coverage. So far so good. See, e.g., Insurance Co. of the West v.Haralambos Beverage Co., 195 Cal. App. 3d 1308, 1319 (1987).
This is one of a series of articles under the by line "Butler on Bad Faith" originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 13, #16, p. 25 (December 21, 1999). © Copyright Butler 1999.
Courts, commentators, lawyers and others have applied the word "fiduciary" to insurance companies and insurance claims in a loose manner. The result has been bad law and confusion over if and when an insurer is a fiduciary. This article will argue that an insurer does not, and ought not, owe a fiduciary duty to an insured who has presented a first party claim.
First-party bad faith cases are typically based on conduct or events (e.g., settlement offers, investigations and evaluations) occurring during the time period after a claim is made but before any litigation is commenced. Once a breach of contract or declaratory action is filed, it is generally understood that the insured and insurer stand in an adversarial relationship which presumably entitles each party to zealously pursue its litigation tactics and strategy. Thus, courts generally will not permit an insurer's litigation conduct to be admitted as evidence of bad faith. Over the years, however, a significant number of courts have held an insurer owes a continuing duty of good faith to an insured throughout the litigation process and, therefore, an insurer's post-filing conduct may be admitted as evidence of bad faith. This article is a brief review of some of the leading cases addressing the continuing duty of good faith and its ramifications affecting insurance companies and defense counsel.
Insurers and insureds alike may find themselves in the dark when claims against multiple insureds exceed policy limits. Only a few jurisdictions explicitly have addressed how policy proceeds should be allocated in this situation. The jurisdictions that have addressed the issue have split into two general camps. Some hold that carriers must allocate proceeds proportionately among all insureds. Other jurisdictions hold that a carrier need only act in "good faith" and may settle on behalf of fewer than all insureds. The manner of proportional allocation and the characteristics of a "good faith" settlement under such circumstances are not well described in the case law.
When courts and state legislatures expand the duties owed by liability insurers to insureds there is a commensurate expansion of the grounds for extracontractual claims. One area of expansion has been in cases involving multiple third-party claimants - with liability clear and damages exceeding the policy limits. These cases make difficult issues for claims professionals.
The dynamic nature of bad faith law throughout the country practically mandates that insurers have ongoing legal advice to protect the interests of the company, the shareholders and all insureds. Such advice can prevent unwitting misconduct by the insurer. The "advice of counsel defense" in the context of insurance bad faith litigation issimply an insurer asserting, as proof that it did not act in bad faith, that it reasonably relied on the advice given by its legal advisors.
Since the early 1970s, when first-party bad faith actions came into being, a considerable body of law has developed on the standard of care for insurers to avoid liability. In creating and defining such standards, courts have struggled to balance the interests of insureds and insurers. This article is a general review of those decisions and standards.
Determining which statute of limitations governs a cause of action against an insurer for bad faith is complicated. It depends on whether the action is a first or third party action. It depends also on whether the controlling jurisdiction deems the action to be one sounding in tort or contract.
During the past year, numerous areas in the United States have experienced severe and, at times, unprecedented flooding. Whether the flooding occurred as a result of the active Atlantic hurricane season or the effect of "El Nino" on national weather patterns, the result for insurers is the same: an increase in the number of claims under flood insurance policies. With this comes a corresponding increase in the likelihood of extracontractual or bad faith claims.
This is a supplement to the December 1998 article published in Mealey's Litigation Reports: Bad Faith on "Federal Preemption of Extracontractual Claims Under Flood Insurance Policies" following the U.S. Third Circuit Court of Appeals reversal of its decision on rehearing in Van Holt v. Liberty Mutual Fire Insurance Co. This supplement was originally published in Mealey's Litigation Report: Bad Faith, Vol. 12, #18, p. 27 (Jan. 19, 1999). Copyright Butler 1999.
Bad faith litigation is complex and the stakes are high. In such cases, the discovery process has become critical as litigants struggle for advantage. The litigation often raises issues outside the facts of the particular case or claim. The conduct of the insurance company as a whole sometimes is placed on trial.
Liability insurance policies typically provide the insurer with complete control over the defense and settlement of third-party claims against the insured. This control imposes upon the insurer a duty to exercise good faith in settling claims. When the claimant makes a reasonably prudent offer to settle within the policy limits, courts generally agree the good-faith duty owed an insurer will require the insurer to settle the case.
The substantive law of bad faith is not uniform from state to state. Some states treat bad faith as a breach of contract; some as a tort. In some states, punitive damages are available. In others, they are not. Some allow claims for emotional distress, while others reject them.


text:
Award news: Großer Preis des Mittelstands
Dear customers, partners, and friends of Multiphoton Optics,
Delightful Award news for Multiphoton Optics GmbH: We have reached the jury stage for the "Großer Preis des Mittelstands", an award for small and medium-sized enterprises making a difference in Germany. Companies can only be nominated by a third party, which makes being accepted as nominees and reaching the second phase of the competition an outstanding achievement.
Sustainable Development is the theme for this year's award and that is what Multiphoton Optics GmbH is in for in all aspects of our company. We are looking for lasting growth in accordance with our corporate social responsibility for employees, partners and society.
On July 8, Robert Knitt, CEO of IM BE MA Consult GmbH, representing the award sponsor Oskar-Patzelt-Stiftung, visited our company to personally deliver the jury stage certificate. We are greatly pleased to move on in the competition and are looking forward to the final round.
Sincerely yours,
Ruth Houbertz, CEO of Multiphoton Optics GmbH, and Robert Knitt of Oskar-Patzelt-Stiftung present the jury stage certificate
Read more here: mittelstandspreis.com

subset: commoncrawl


text:
How many times have you sat in commuter traffic stewing over the money that's slowly siphoning out of your pockets as your gas guzzling car idles in the never ending gridlock? It's a frustrating experience that the majority of working people have to deal with on an almost daily basis and while it may seem like something that's as inevitable as your annual tax bill it doesn't have to be.
Making the switch to a fuel efficient car can eliminate a lot of the frustrations associated with an inefficient older vehicle. It may seem like the cost of switching to a new fuel efficient vehicle outweighs the fuel savings you'll experience, but that's not necessarily the case if you approach the issue at the right time. In the rest of this article we're going outlying the main reasons you should be making the switch to a fuel efficient vehicle today.
Keep Money in Your Pocket
Probably the main reason you'd consider switching to a fuel efficient vehicle would be to keep money in your pocket and if you're smart about it you will. It pays to do your research and to help you out we've done a little bit of that for you. The top three fuel efficient vehicles in 2017 according to the US Department of Energy are: the Smart fortwo cabriolet, the Smart fortwo coupe, and the Fiat 500e.
Of course you have to like the car you're going to drive, so if none of the top three sound appealing to you then you may want to check out the full list on the US Department of Energy's website for yourself. There's a great deal of variety available that should suit most tastes. With the money you can save on one of these fuel efficient cars in the long run you can use it to purchase some great water power washers and keep that new vehicle nice and clean.
Saving the Environment One Car at a Time
Another great reason to switch to a fuel efficient vehicle is so that you can do your part for the environment. It's short sighted to think that the pollution problems caused by internal combustion engines are a problem for future generations. These problems are very real and they're affecting the way we live our lives today. In some of the world's largest cities such as Beijing and Mexico City they often implement car bans when pollution approaches dangerous levels. We need to convince people to make the switch to fuel efficient vehicles today not in a few years from now.
Towards a Sustainable Economy
The bottom line is that oil won't be around forever. It's a finite resource and eventually it will run out. Granted, we're talking about a time frame of 50 to 100 years before this becomes a real concern, but why wait until it's too late? Hybrid and electric vehicles can break our dependence on these non-renewable energy sources and move us towards a sustainable and renewable economy that's better for everyone concerned. It's no longer a matter of if we should make the switch to energy efficient vehicles, but rather how soon we can get this done.
Market Freedom
Finally, it's important to remember that our dependence on carbon based fuels can cause wild fluctuations in our economy. The oil cartels often make moves to control the price of fuel to support their own agendas – not because it's actually in the interest of the majority of the world's population. By moving away from an oil dependent economy we can eliminate our reliance on unstable regimes and their erratic policies.


text:
Events Update
About Boardroom Development
Our Client Work
Accelerated Board Performance
Board Watch Coaching
Board Ready
Boardroom Conversations
Margaret's Blog
Events Update
About Boardroom Development
Our Client Work
Accelerated Board Performance
Board Watch Coaching
Board Ready
Boardroom Conversations
Margaret's Blog
Search by typing & pressing enter
Board & Executive
Team Development
Over 20 years experience helping
boards and directors improve
their performance
read More
"Conversational intelligence is key
to board effectiveness"
Margaret Williamson, Director,
"I've been working with boards from more than 30 years now; as an investment analyst , as a non executive director and as a consultant, coach and facilitator. Great boards are always looking to improve and the greatest scope for improvement lies in the areas of board dynamics and boardroom conversations. Group dynamics can be challenging for boards who meet regularly and infrequently, often in a very carefully controlled environment.
Boards are not natural teams. They have to work harder to build relationships and trust..
Listening to boardroom conversations can give real insights into the health of the board and the health of the organisation. Recent governance failures have highlighted the fact that even highly experienced board members have blind spots, can be drawn into group think and miss or ignore significant risks. Improving the quality of boardroom conversations can have a significant, measurable impact on board and organisation performance.
I work with boards and top teams to improve performance by improving the quality of their conversations."
Call me on
07767 225 813
or by email at
Indicates required field
We promise not to bombard you with emails, but from time to time we'd like to send you information and comment that you might find of value. If you are happy to receive this please sign up to our mailing list.
You can read our Privacy Policy here
Please add your name and email adddress
Subscribe to Mail List
Powered by
Create your own unique website with customizable templates.
Get Started


text:
The February kit from Sarah's Cards features the 'Love Nest' range from Glitz Designs. This kit is packed full of gorgeous papers and fab embellishments from some of my favourite manufacturers including stickers from Crate and brads from Dear Lizzy at American Crafts. This month's kit is amazing for both masculine and feminine pages - I love it! Have you checked out what is coming up in the next few months? Some amazing paper ranges hot off the press from CHA, I can't wait!
Here's a little peek at what is coming your way in February's kit.


text:
Butterick 3120; ©1985; Dress, mid calf or lower calf has close fitting lined, low waist, shaped bodice with front princess seams, slightly flared or flared skirt and back zipper. A and B bodice boning. B: attached underskirt. B and C: contrast and purchased trim. C: shoulder straps and skirt with attached tiers.
Links to reviews/blog posts Edit
Sources/Vendors Edit
Gallery Edit
[insert your photos of this pattern made up]
Add a photo to the gallery by clicking the "modify" button below.
Wishlist Edit
[insert your username, and make sure your preferences allow for people to contact you via e-mail. Do not list your email address here!]
Community content is available under CC-BY-SA unless otherwise noted.