California Court Affirms Decision Finding Bad Faith Where Insurer Interprets Policy Against Insured's Interests

Posted in: Attorneys Fees, Attorneys' Fees, Bad Faith, Commercial General Liability Insurance, Duty to Defend, Insurance Bad Faith, Insurance Litigation Blog, Life Insurance, Punitive Damages October 11, 2017

On August 31, 2017, the California Court of Appeal discussed a variety of topics touching upon important matters in insurance “bad faith” litigation in Pulte Home Corp. v. Am. Safety Indemnity Co., 14 Cal.App.5th 1086 (Aug. 31, 2017). In this blog, we discuss the case in detail as well as the potential benefits the opinion provides to insureds’ future claims for bad faith. Before we discuss the details of the case, we first address the basics of insurance bad faith. Next, we detail the issues addressed in the case, the facts of the case, the court’s reasoning and ultimate rationale. Finally, we address the Pulte’s broader impact, solidifying the insurer’s good faith duty to interpret ambiguous policy provisions in …

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Insureds May Still Have a Claim for Insurance Bad Faith Even If Their Insurer Offered to Pay the Policy Limits

Posted in: Bad Faith, Case Updates, Commercial General Liability Insurance, Duty to Settle, Insurance Bad Faith, Insurance Litigation Blog December 13, 2016

Under California law, an insurer has an obligation to, among other things, make reasonable efforts to settle a third party’s lawsuit against an insured.  As a recent decision rendered by the California Court of Appeals illustrates, “reasonable efforts” entail more than timely offering the policy limit to settle a claim from a third party.  The insurer’s conduct must be reasonable given the circumstances and they must do everything reasonably within their power to effect a settlement.  An insurer’s responsibilities are not necessarily complete when they offer to pay their policy limits or other amounts agreed-upon by the parties. …

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Ninth Circuit Severely Limits Known-Loss Doctrine in Insurance Cases

Posted in: Case Updates, Commercial General Liability Insurance, Duty to Settle, Insurance Litigation Blog, Policy Interpretation July 11, 2015

Have you ever wondered whether the liability policy you purchased covers losses you already knew about before you bought the policy?  How much do you have to know?  What if you knew about certain property damage at a construction project you caused but not about other related damage your policy would otherwise cover?  A recent case from the Ninth Circuit sheds light on these issues, and it is good news for policyholders.…

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What’s a Policyholder to Do? California Court Permits “Conditional Judgment” Awarding Replacement Cost to Policyholders

Posted in: Breach of Contract, Case Updates, Commercial General Liability Insurance, Insurance Bad Faith, Property & Casualty Insurance December 11, 2014

When a covered property is damaged, the insured may face a quintessential Catch-22—the insured cannot afford to proceed with costly repairs or replacement without insurance money, but until the repairs or replacements are finished, the insured cannot recover under the replacement cost provision of the liability policy.  A recent court decision held a policyholder must actually repair or replace the damage in order to claim replacement cost value, but may recover a “conditional judgment” for replacement cost benefits and satisfy the condition after trial.  Stephens & Stephens XII, LLC v. Fireman’s Fund Insurance Co., 2014 Cal. App. LEXIS 1073, 2014 WL 6679263 (Cal. App. 1st Dist. Nov. 24, 2014) (“Stephens”).  Stephens fashions a pragmatic approach whereby insurers …

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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”), …

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Insurers Have a Duty to Defend Where a Complaint Could Be Fairly Amended to State a Covered Liability; California Supreme Court Clarifies Duty to Defend Disparagement Claims Under Advertising Injury Coverage

Posted in: Breach of Contract, Case Updates, Commercial General Liability Insurance, Insurance Bad Faith June 20, 2014

An insurer has a duty to defend even if the causes of action in a lawsuit are not expressly covered by a liability policy if the factual allegations may support a potentially covered claim.  This was expansive interpretation of the duty to defend adopted by the United States District Court Southern District of California in Millennium Laboratories, Inc. v. Darwin Select Insurance Company, __ F. Supp. 2d ___ (S.D. Cal. May 13, 2014).  This highly significant decision further buttresses the now well-established position of courts in California that all of the facts and allegations in a lawsuit, not just the stated causes of action and facts stated in the complaint, must be considered in determining whether there exists a …

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Expert Testimony Can Help Policyholders Establish Property Damage and Survive Summary Judgment

Posted in: Breach of Contract, Case Updates, Commercial General Liability Insurance, Expert Testimony, Insurance Bad Faith May 22, 2014

Policyholders often face a formidable challenge proving causation on property damage claims, particularly when insurance companies insist on deferring to their own experts and adjustors.  Of course, insurance companies must conduct reasonable investigations and review and evaluate all of the evidence before making a claim decision.  The Ninth Circuit Court of Appeals held in an insurance action where the policyholder provides admissible evidence showing a genuine dispute as to coverage, the evidence should be evaluated by a trier of fact.  Pyramid Technologies Inc. v. Hartford Casualty Insurance Co., 2015 DJDAR 6205 (Cal. App. May 19, 2014).

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Insurers Have a Duty to Defend at the Outset of Litigation Even If a SIR Has Not Been Exhausted

Posted in: Case Updates, Commercial General Liability Insurance, Duty to Defend, General Liablity, Policy Interpretation October 16, 2013

Insurers providing general liability insurance cannot shirk their duty to defend insureds at the outset of litigation by relying on self-insured retention (SIR) provisions in those policies unless the policies expressly and unambiguously make the insurer’s duty to defend contingent upon the SIR.  So held the Fourth District Court of Appeals in American Safety Indemnity Company v. Admiral Insurance Company, __ Cal. App. 4th ___, 2013 Cal. App. LEXIS 779 (2013).  The court’s decision in American Safety is highly favorable to insureds because it substantially limits the ability of insurers to circumvent their obligation to pay first-dollar for the defense of their insured by arguing that the SIR has not been exhausted.…

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Insurer's General Reservation of Rights Does Not Entitle Insured to Cumis Counsel

Posted in: Commercial General Liability Insurance, Directors & Officers Insurance, Duty to Defend, Policy Interpretation, Property & Casualty Insurance September 05, 2013

In a recent ruling, the California Court of Appeal held that an insurer’s general reservation of rights to deny coverage of damages outside its policy does not create a conflict of interest with the insured, such that the insured in entitled to Cumis counsel.  The decision in Federal Insurance Co. v. MBL, Inc. __ Cal. App. 4th __,  2013 Cal. App. LEXIS 679, 2013 WL 4506149 (August 26, 2013) follows California precedent denying insureds the right to select independent counsel at the insurer’s expense absent an actual conflict of interest.…

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Insurers May Intervene and Assert the Same Rights as Their Insured's to Contest Both Liability and Damages

Posted in: Case Updates, Commercial General Liability Insurance, Duty to Defend, Property & Casualty Insurance October 14, 2011

Under certain circumstances, an insurer has the right to intervene in a case against its insured to protect its own rights and to avoid harm to the insurer.  These circumstances usually involve cases where an insured is either prevented from appearing and defending, or simply chooses not to and a default is taken against the insured.  The recent case Western Heritage Insurance Company v. Superior Court, __ Cal. App. 4th __ (Oct. 11, 2011), addresses the second set of circumstances, and provides an examination of California intervention law and holds that an insurer has the right to intervene in a case and take over in litigation if an insured is not defending the action, and may contest both liability …

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