The Illinois Court of Appeals, applying Illinois law, affirmed a trial court’s ruling that an insurer did not act in bad faith by denying coverage where there was a “bona fide” coverage dispute concerning an underlying lawsuit against the insured.  Nine Grp. II, LLC v. Liberty Int’l Underwriters, Inc., 2020 Ill. App. WL 190320 (Ill. Ct. App. Jun. 18, 2020).  The court held that the trial court had correctly refused to award certain costs to the insured under an Illinois statute applicable where an insurers’ conduct is “vexatious and unreasonable.”

Continue Reading Illinois Court of Appeals Rules Insurer Did Not Act in Bad Faith in Denying Coverage Where Claim Was Made Before Policy Period

The United States District Court for the District of Nevada, applying Nevada law, has held that the court’s prior favorable coverage determination was evidence that an insurer did not act in bad faith when refusing to defend or provide coverage under a policy.  My Left Foot Children’s Therapy, LLC v. Certain Underwriters at Lloyd’s London, 2019 WL 1810956 (D. Nev. Apr. 23, 2019).

Continue Reading Prior Favorable Coverage Determination is Evidence of Good Faith

A Washington federal district court, applying Washington law, has held that an insurer who issued a public officials and employment practices liability policy to a utility had a duty to defend the insured in an action stemming from damages to a refinery after a power outage, despite the policy’s property damage exclusion.  Indian Harbor Ins. Co. v. City of Tacoma, Wash. Dep’t of Pub. Util., 2018 WL 6304767 (W.D. Wash. Dec. 3, 2018).  The court found that the underlying complaint was ambiguous as to whether the refinery sought any damages other than those for property damage.

Continue Reading Insurer Must Defend Utility in Suit Based on Outage, Despite Exclusion for Property Damage and Resulting Loss of Use

The United States District Court for the District of New Mexico, applying New Mexico law, has held that an insurer owed no duty to defend a title and escrow agent against a demand by a title insurer because no civil proceeding had been brought against the insured.  The court also held that the insured owed no duty to indemnify due to a prior knowledge exclusion in the policy.  Aztec Abstract & Title Ins., Inc. v. Maxum Specialty Group, et al., 2018 WL 734285 (D.N.M. Feb. 6, 2018).

Continue Reading Lack of Civil Lawsuit Precludes Duty to Defend, While Prior Knowledge Exclusion Bars Indemnity Coverage

Applying Mississippi law, the United States Court of Appeals for the Seventh Circuit has held that an exclusion in a bankers’ professional liability policy barred coverage for class claims alleging that the insured bank wrongfully maximized overdraft fees charged to its customers.  BancorpSouth, Inc. v. Federal Ins. Co., 2017 WL 4546144 (7th Cir. Oct. 12, 2017).  The court also concluded that the bad faith claim against the insurer failed because of the absence of coverage in the first instance.

Continue Reading Fee Exclusion Bars Coverage for Overdraft Fee Settlement

The United States District Court for the Southern District of Indiana, applying Mississippi law, has held that a bankers’ professional liability insurance policy did not cover a class action suit against a bank alleging that it wrongfully maximized overdraft fees charged to its customers.  Bancorpsouth, Inc. v. Federal Ins. Co., 2017 WL 373300 (S.D. Ind. Jan. 26, 2017).  The court also dismissed the bad faith claim made against the insurer because of the absence of coverage in the first instance.

Continue Reading Bankers’ Professional Liability Policy Excludes Overdraft Fee Litigation From Coverage

The United States District Court for the Western District of Oklahoma has held that, under Oklahoma law, a policy’s “no action” clause does not apply to an insured’s breach of contract claims against its insurer premised on a breach of the duty to defend the underlying claim.  Wilbanks Securities Inc. v. Scottsdale Ins. Co., 2016 U.S. Dist. LEXIS 144761 (W.D. Okla. Oct. 19, 2016).  In so holding, the court explained that the “no action” clause “is a provision that applies to the claims of third parties” and specifically those claims “seeking recovery of settlements or judgments and not declaratory judgments regarding the duty to defend.”

Continue Reading No Action Clause Does Not Bar Insured’s Duty to Defend/Bad Faith Claims Against Insurer

Applying California law, the United States District Court for the Southern District of California has held that a policyholder stated a claim against the claims administrator for a policy because the plaintiff had pleaded a plausible factual allegation that the claims administrator issued the policy, which was sufficient to survive a motion to dismiss.  Reno v. Nat’l Union Fire Ins. Co., 2016 WL 4595955 (S.D. Cal. July 27, 2016).
Continue Reading Insured Stated Claim for Breach of Contract and Bad Faith Against Claims Administrator

A California intermediate appellate court has held that an insurer is liable for bad faith failure to settle, even though it had made a timely offer to settle for its full policy limits, where the insurer declined to agree to release terms proposed by the claimants to which the insured refused to agree. Barickman v. Mercury Cas. Co., 2016 WL 4274674 (Cal. Ct. App. July 25, 2016).
Continue Reading Insurer that Rejected Exception from Release Language Liable for Bad Faith Failure to Settle Despite Offering Policy Limits

Applying Mississippi law, a federal district court has held that a participant in an employee stock ownership plan cannot pursue his claims against the insurer of the plan fiduciaries because those claims were previously released in a settlement agreement between the plan fiduciaries and the insurer. Sealey v. Beazley Ins. Co. Inc., et al., 2016 WL 4392624 (S.D. Miss. Aug. 17, 2016).
Continue Reading Employee Stock Ownership Plan Participant Cannot Pursue Fiduciary Breach and Bad Faith Claim Against Insurer of Plan’s Fiduciaries