General Liability Insurer Has No Duty to Defend Massage Therapist’s Alleged Sexual Assault

Posted in: Bad Faith, Commercial General Liability Insurance, Duty to Defend October 23, 2014

General liability insurers and their agents often lure commercial clients with grandiose promises of coverage for business operations, but upon receiving a notice of a claim, interpret their policy exclusions liberally to limit what they consider covered business operations so as to deny coverage.  A recent case from the California Court of Appeal, Baek v. Continental, 2014 Cal App. LEXIS 893 (2d Dist. Oct. 6, 2014) (“Baek”), expanded on an insurer’s broad duty to defend wherever there is a potential for coverage but in this case denied a duty to defend. Baek involved a Heaven Massage Wellness Center (“HMWC”) client, “Jaime W.,” who brought suit against HMWC and her massage therapist (“Jaime W. action”), Luiz Baek (“Baek”), for sexual assault during a massage, alleging Baek handled the “Plaintiff’s breasts, buttocks, inner thighs and genitals.”  HMWC had a general liability insurance policy with Continental Casualty Co. (“Continental”) which covered employees or partners “only for acts within the scope of their employment” or committed “while performing duties related to the conduct of [HMWC’s] business.”  Continental asserted there was no coverage, and HMWC sued for breach of contract and bad faith.  The trial court granted summary judgment for Continental.  Subsequently, Baek filed suit…

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Can an Insurer Escape Bad Faith Liability When it Unreasonably Forces an Insured to Arbitrate an Uninsured Motorist Claim? No Way!

Posted in: Auto Insurance, Bad Faith, Case Updates July 14, 2014

In a very good ruling for policyholders, the California Court of Appeal ruled that an insurance company cannot escape insurance bad faith liability by forcing a claimant to arbitrate his claim without first fairly investigating, evaluating and attempting to resolve the claim.  In Maslo v Ameriprise Auto & Home Insurance, 2014 Cal. App. LEXIS 564, 2014 WL 2918866 (June 27, 2014), the court explained that “[t]here can be no serious dispute that an insurer is required to thoroughly and fairly investigate, process, and evaluate its insured’s claim,” and the failure to do so exposes the insurer to bad faith liability.

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