Bad faith/duty to settle

Applying California law, the Ninth Circuit held that an excess insurer may challenge the allocation of an underlying settlement that resolves both an underlying claim against an insured and the insured’s coverage dispute with the primary insurer. Scottsdale Ins. Co. v. Certain Underwriters at Lloyds., 2020 WL 7419261 (9th Cir. Dec. 18, 2020). The court further held that a primary insurer is not entitled to equitable contribution from an excess carrier if the excess carrier was not notified of the underlying claim until after the primary insurer denied coverage.
Continue Reading Ninth Circuit Holds that Excess Carrier May Challenge Allocation of Primary Carrier’s Settlement that Resolves Both the Underlying Claim and a Coverage Dispute

The United States District Court for the Western District of Texas, applying Texas law, has held that a legal malpractice insurer was not liable for a statutory bad faith claim by the insured law firm because the evidence presented a bona fide coverage dispute, not a bad faith denial of the request for a defense.  Ryan Law Firm v. New York Marine & Gen. Ins. Co., 2020 WL 5820531 (W.D. Tex. Sept. 30, 2020).

Continue Reading Malpractice Insurer Not Liable for Bad Faith for Rejecting Settlement Demand Within Limits

The U.S. Court of Appeals for the Ninth Circuit, applying California law, affirmed a district court’s ruling that an insurer did not act in bad faith by failing to defend its insureds and settle a claim where there was a “genuine issue” as to the insurer’s liability.  Sharp v. Evanston Ins. Co., 2020 WL 2569694 (9th Cir. May 21, 2020).  However, the court concluded that the insurer’s denial of coverage was incorrect because various policy exclusions requiring malice and California Insurance Code Section 533 did not apply to bar coverage for the insureds’ alleged negligent mishandling of fiduciary funds.

Continue Reading Ninth Circuit Holds That Alleged Misappropriation of Client Funds Triggers E&O Coverage, But No Bad Faith Where Insurer’s Denial Was Reasonable

The Massachusetts Supreme Judicial Court has held that consent-to-settle clauses in professional liability policies that give the insured absolute discretion regarding settlement do not inherently conflict with the state’s unfair insurance settlement practices statute, Mass. G.L. ch. 176D § 3(9)(f).  Rawan v. Continental Casualty Company, 136 N.E.3d 327 (Mass. Dec. 16, 2019).  The case had attracted considerable attention from amici concerned about potential disruption of the professional liability insurance market in Massachusetts if such consent-to-settle clauses were deemed impermissible.

Continue Reading Massachusetts SJC: E&O Insurers May Allow Insureds to Veto Settlement, But Settlement-Related Duties to Claimants Remain

Applying Delaware law, a Delaware state trial court has held that insurers did not act in bad faith by denying coverage for underlying settlements when they had reasonable grounds for their position and promptly sought a declaratory judgment as to their indemnification responsibilities.  Arch Ins. Co. v.  Murdock., 2019 WL 1932536 (Del. Super. Ct. May 1, 2019).

Continue Reading Dole Insurers Did Not Act in Bad Faith

Applying Colorado law, the United States District Court for the District of Colorado has held that a medical professional liability insurer was entitled to reimbursement of a settlement payment made on behalf of an insured to settle a dispute with a former patient.   Evanston Ins. Co. v. Aminokit Labs., Inc., 2019 WL 479204 (D. Colo. Feb. 7, 2019).

Continue Reading Court Holds Under Colorado Law Insurer is Entitled to Reimbursement of Settlement Payment From Insured

The Supreme Court of Delaware has held that under Delaware law, the three-year statute of limitations period applicable to a statutory bad faith action governed by Louisiana law commences when the insured could plead a prima facie case and was therefore barred.  Homeland Ins. Co. of New York v. Corvel Corp., 2018 WL 6061261 (Del. Nov. 20, 2018).

Continue Reading Statute of Limitations Period Begins When Insured Can Plead Prima Facie Elements of Bad Faith Case

The United States District Court for the Northern District of Alabama has held that alleged constitutional due process violations under 42 U.S.C. § 1983 do not constitute professional services “caused by the negligence” of an insured.  Madison County v. Evanston Ins. Co., 2018 WL 4680213 (N.D. Ala. Sept. 28, 2018).

Continue Reading Alleged 42 U.S.C. § 1983 Violations Not Professional Services Caused by “Negligence”

The United States District Court for the Northern District of Illinois, applying New York law, has held that a real estate service firm’s professional liability insurance policies cover four claims regarding the firm’s allegedly improper use of a certain appraisal methodology because neither the prior knowledge exclusion nor an exclusion regarding investment activity applied.  Cushman & Wakefield, Inc. v. Illinois Nat’l Ins. Co., 2018 WL 1898339 (Apr. 20, 2018).  In doing so, the court determined that the four claims were related and thus all properly treated under the same policy period and, therefore, the primary insurer for that policy period is entitled to recoup all amounts paid in excess of its limit for that policy.  The court also granted summary judgment for the first excess insurer on the insured’s bad faith claim.

Continue Reading Four Claims Regarding Same Appraisal Methodology Are Covered but Related and Therefore Confined to One Policy Year