It is hard to believe that Rancosky v. Washington National Ins. Co., No. 28 WAP 2016, 2017 Pa. LEXIS 2286 (Pa. Sept. 28, 2017) is the Pennsylvania Supreme Court’s first foray into the proof required for statutory insurer bad faith claims, particularly since it has been over twenty-five years since the Pennsylvania legislature created the private cause of action. 42 Pa. Cons. Stat. § 8371. It was the Pennsylvania Superior Court that first articulated the elements of statutory bad faith in Terletsky v. Prudential Property & Cas. Co., 649 A.2d 680 (Pa. Super. 1994), appeal denied, 659 A.2d 560 (Pa. 1995). Under Terletsky, a plaintiff claiming bad faith must prove by clear and convincing evidence that: 1) the insurer did not have a reasonable basis for denying policy benefits; and 2) that the insurer knew or recklessly disregarded the lack of reasonable basis for denying the benefits. 649 A.2d at 688. Continue reading The Supreme Court of Pennsylvania Shores Up Nature of Intent Required for Statutory Bad Faith Claims against Insurers
The California Court of Appeal for the Fourth District, Division Two, in 21st Century Ins. Co. v. Superior Court (Tapia), ___ Cal.App.4th ___ (No. E062244, September 10, 2015), recently confirmed some of the important protections for defending insurers against stipulated judgments that were established in the Hamilton and Safeco decisions and limited the application of other decisions that have been relied on by claimants and policyholders seeking to get around the Hamilton rule against bad faith actions premised on such stipulated judgments. Continue reading Protections Against Defended Policyholder Manufacturing Bad Faith Case Via Stipulated Judgment Confirmed By California Court
The insured ran a red light and crashed into Shirley Reid, who then careened into another car. The insured is indisputably liable and Ms. Reid had injuries later valued at $5.9 million, dwarfing the insured’s $100,000 limits. Nevertheless, the insurer failed to initiate settlement discussions or offer its limits until 10 months after the accident, at which point Ms. Reid’s attorney said it was too late, and proceeded to get a multimillion dollar judgment, and an assignment of bad faith rights against the insurer.
On March 13, 2012 in DeWitt v. Monterey Ins. Co., 204 Cal.App.4th 233 (2012), the California Court of Appeal, Fourth District, held that an insurer which erroneously failed to defend an insured “real estate manager” under a commercial general liability policy in a serious social host liquor liability case was not liable for bad faith damages. There was no bad faith because the failure to defend was not unreasonable, and because the manager never proved it was a covered claim. But the insurer still paid several million dollars to satisfy a default judgment against him.