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Various alleged wrongs in connection with offering, or not offering, UM/UIM coverage did not state bad faith claims upon which relief could be granted under New Jersey law. Such was the holding of the Third Circuit Court of Appeals in Ensey v. Government Employees Insurance Co., 663 F. App'x 172 (3d Cir. 2016).
The policyholder claimed that among other things the carrier breached its duty of good faith and fair dealing under New Jersey law. The appellate court quoted her allegations in her lawyers' own words:
Ensey alleges that GEICO breached the implied covenant of good faith and fair dealing in four ways: (i) when it “failed to offer insureds ... the option of higher available UM/UIM coverage limits when insureds increased their BIL coverage limits,” (ii) when it used “unlicensed agents to sell such increased BIL coverage limits so the agents would be unaware of their obligation to so advise insureds,” (iii) when it failed “to provide CSFs [coverage selection forms] and Buyer's guides after insureds purchased increased liability limits,” and (iv) when it denied “UM/UIM claims thereafter based on the reduced limits purportedly ‘chosen by the insureds.’ ”
Ensey v. Government Emp's Ins. Co., 663 F. App'x 172, 176-77 (3d Cir. 2016).
The Third Circuit held that the policyholder's fact allegations were legally insufficient to meet the legal standard for breach of the implied covenant of good faith and fair dealing under New Jersey law. In this case, the appellate panel affirmed the trial court's dismissal of her bad faith claims against the carrier. Ensey v. Government Emp's Ins. Co., 663 F. App'x 172, 177 (3d Cir. 2016).
In a ground-breaking decision of an unsettled question of law, the Supreme Court of Florida has held that the determination of damages in an underlying uninsured motorist (UM) action sets the measure of at least one element of damages in a later bad faith action:
[A]n insured is entitled to a determination of liability and the full extent of his or her damages in the UM action before filing a first-party bad faith action. That determination of damages is then binding, as an element of damages, in a subsequent first-party bad faith action against the same insurer so long as the parties have the right to appeal any properly preserved errors in the verdict. The history of first-and third-party bad faith actions, this Court's precedent, and the legislative intent to eliminate the distinction between first- and third-party bad faith claims all support our conclusion. We also conclude that the trial court in this case did not err in retaining jurisdiction to allow the filing of a bad faith cause of action.
Fridman v. Safeco Ins. Co., 185 So. 3d 1214, 1216 (Fla. 2016).
Information asymmetry is a term that sounds like it belongs to elites. It doesn't. It affects everyone.
Information asymmetry is a crucial part of understanding many kinds of insurance coverages and insurance relationships, meaning relationships between insurance carriers and their policyholders.
Information asymmetry is really simple: It means that one person has more information than others have. Usually, it also implies that the one person with the greater amount of information has an advantage over the many other people who do not have as much information.
This concept has been embedded in insurance law for a long time now. Not much work has been done on it recently concerning insurance, but I first came across this concept in a ground-breaking study of how uninsured/underinsured motorist (UM/UIM) claims were resolved based on 2,223 "closed claims" in 38 States in 1992. That study involved 61 insurance carriers which at the time held 70% of the UM/UIM premium business in the United States.
The evidence is uncontradicted: The information asymmetry or "unbalanced information" in the UM/UIM relationship, in which the 61 UM/UIM carriers involved all pretty much knew a whole lot more about how they handled UM/UIM claims than policyholders did, resulted in favorable outcomes which tended to favor the carriers settling "bad faith" claims in those cases. The carrier-favorable outcomes especially stand out when they are contrasted with claims which might go to judgment in simple and basic terms. I have written about this before. E.g., 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 9:1 (Third Edition and 2017 Supplement in process, Thomson Reuters West); Dennis J. Wall, § 2:11, in Catastrophe Claims: Insurance Coverage for Natural and Man-Made Disasters (Thomson Reuters West and 2017 Supplement in process).
Now information asymmetry has been recognized in health insurance. In that business, unbalanced information has been called out by economists who point out that, in economic theory, competition will theoretically lead to "lower prices and higher quality" only when buyers are "able to compare the quality of offerings of different sellers." Instead of asking how many angels can dance on the head of a health insurance plan, in other words, the reality that frames every question about health insurance coverage is that people do not ordinarily know the coverages available for treatments they might need now or in the future.
Add to this reality mix that health insurance policies, like many kinds of insurance policies, are "notoriously complex and technical," and what you have is reality displacing theory:
Consumers simply cannot make informed quality comparisons in this industry.
Robert H. Frank, "Economic View / What Comes Next for Obamacare? The Case for Medicare for All" (New York Times Online, posted March 24, 2017) (subscription may be required at www.nytimes.com).
In Alber v. GEICO General Ins. Co., No: 6:17-cv-160-Orl-31KRS, 2017 WL 1045504 (M.D. Fla. March 20, 2017) (Presnell, J.), a U.S. District Court denied a plaintiff's motion to remand because the plaintiff had filed a bad faith claim in addition to his claim for uninsured motorist (UM) coverage.
Under the UM contract claim, the plaintiff in this case conceded that he was seeking recovery of $40,000.00 in UM benefits. That left $35,000.00 in order to reach the $75,000.00 federal jurisdictional limit in this case.
Under the bad faith claim, "[a]ssuming," said the Court, that the bad faith claim "ripens," the plaintiff could theoretically seek to recover all the damages he incurred as a result of the UM carrier's coverage denial. In this case, those damages, the Court said, include:
“'[B]odily injury and resulting pain and suffering, disability, disfigurement, mental anguish, loss of capacity for the enjoyment of life, expense of hospitalization, medical and nursing care and treatment, loss of earnings, loss of ability to earn money, and aggravation of a previously existing condition'”;
"[H]e also asserts that these injuries are continuing and that he expects to suffer more in the future."
The plaintiff also "asserts that he suffers from serious pain in his back and neck, that he has undergone $15,000 in spinal injections and that he intends to have more in the future."
The plaintiff's "orthopedic surgeon opined that if Alber's pain continues, he may be required to undergo a discogram to his spine for surgical planning."
In the Court's eyes, "[t]hose alleged damages, combined with the attorney's fees incurred in pursuing the instant case, could easily exceed $35,000, taking the amount in controversy beyond the jurisdictional minimum." Alber v. GEICO General Ins. Co., No: 6:17-cv-160-Orl-31KRS, 2017 WL 1045504, at *2 (M.D. Fla. March 20, 2017).
However, consider that this same District Court has held that a bad faith claim in a UM case in Florida should be abated, because it will not be actionable unless UM coverage is determined in favor of the plaintiff in the first place. See"FLORIDA UM BAD FAITH CLAIM ABATED UNDER SECTION 624.155," posted on Insurance Claims and Bad Faith Law Blog on March 24, 2016. See in addition"REMOVAL DOES NOT REMOVE VALUE," posted here on March 1, 2017 (federal jurisdictional limit of $75,000.00 was met where record established that policyholder demanded $100,000.00 UM policy limit before removal). That would seem to make the bad faith claim speculative at best, and so perhaps an uncertain ground on which to assert federal jurisdiction.
Further, the mention of attorney's fees being available under the bad faith claim ignores the fact that in Florida an insured prevailing on coverage can recover his attorney's fees anyway, even without the bad faith claim. SeeFla. Stat. § 627.428.
Using theoretically recoverable damages to ignore whether a bad faith claim is viable in the first place. That is how this motion to remand came to an end. Now, having retained federal jurisdiction over this UM case, the federal court will be in a position potentially to award $40,000.00 in contract damages and grant a future motion to dismiss or for summary judgment on the bad faith claim, thereby removing the bad faith claim from this case and simultaneously adjudicating the absence of federal jurisdiction. In such an event, attorney's fees alone would most likely not make up all of the $35,000.00 shortfall in order to reach the $75,000.00 federal jurisdictional threshold in this particular case.
In Becker v. Progressive Am. Ins. Co., No: 6:17-cv-114-Orl-31TBS, 2017 WL 735404, at *1 (M.D. Fla. February 24, 2017) (Presnell, J.), a policyholder demanded Underinsured Motorist (UIM) policy limits of $100,000.00. When the limits were not paid, she served a Civil Remedy Notice of Insurer Violation of Florida's Bad Faith Statute.
The Court quoted her counsel's letter to the UIM carrier: "Plaintiff's counsel filed a civil remedy notice alleging bad faith on Progressive's part for its failure to pay the $100,000 policy limit, which he claimed was clearly warranted because Plaintiff's damages are 'far in excess of the minimal $100,000 policy limits.' (Doc. 9 ¶ 39.)" Becker v. Progressive Am. Ins. Co., No: 6:17-cv-114-Orl-31TBS, 2017 WL 735404, at *1 (M.D. Fla. February 24, 2017).
Thereafter the policyholder filed suit in Florida State Court for breach of contract, declaratory judgment, and alleged statutory bad faith.
The UIM carrier removed the case to Federal Court, where one of the requirements was that the case must present an amount in controversy in excess of the jurisdictional limit of $75,000.00. In many cases, policyholders dispute removal of their lawsuits to Federal Courts from the State Courts where they filed their bad-faith lawsuits by arguing that the amount in controversy has not been demonstrated in the record.
Holding that the amount in controversy requirement was met in this case, the U.S. District Court denied the policyholder's motion to remand her case back to Florida State Court. The Court effectively held that the policyholder's demand for $100,000.00 UIM policy limits precluded any argument based on record evidence of the amount in controversy in this case: "Speaking of bad faith, Plaintiff's counsel cannot, in good faith, contend that, under these circumstances, the value of this case does not meet the $75,000 jurisdictional threshold."
The headline of this post essentially describes one insurance company's request for "certain underwriting information" to policyholders in Mills v. AAA Northern Cal., Nev. & Utah Ins. Exch., 3 Cal. App. 5th 528, 207 Cal. Rptr. 3d 626 (Cal. 3d DCA 2016).
With one crucial added insert in the envelope, so to speak, that determined the outcome in this case regardless of the words used by the California courts here.
The insurance company offered the policyholders a choice: Exclude their son from coverage under their automobile insurance policy by filling out and returning the enclosed form, or add him to their policy by calling the carrier. If the carrier did not get either the filled-out form or a call, the carrier announced in the letter that it would cancel the policy.
The parents-policyholders did not call the carrier. The carrier cancelled the policy. Then another child of the policyholders had an auto accident. She made a claim for Uninsured Motorist benefits. The auto carrier denied coverage because the policy was not in effect. The injured daughter continued to claim coverage under the auto policy and sued.
The case dealt with statutory interpretation. California Regs explain a California Statute which allows for early cancellation of an insurance policy so long as there is "a substantial increase in the hazard insured against."
The Regs classify a non-response by the insured as a substantial increase in the hazard, after 30 days have passed following a "reasonable written request to the insured, [for] information necessary to accurately underwrite or classify the risk."
Four judges in California said that the carrier's letter and enclosure in this case was a "reasonable request" before the carrier cancelled the policy early. (This was the view of three judges on the DCA and one trial judge.)
The rulings on appeal and in the trial court in this case were so specific to the California Statute and Regs on early cancellation, that they may not affect the outcome of requests for information on an ordinary application for insurance in the first place. On the other hand, it is not difficult to foresee future insurance applications in California and elsewhere in which the carrier includes a question following the rulings in this case:
We need further information from you in order to process your application. Want to know what we need from you? Call us and we'll tell you. Otherwise, we might issue the policy and then deny coverage because you didn't tell us what we want to know.
It can't happen here, right? Maybe in California. Maybe not. But not anywhere else, right?
In Hackler v. State Farm Mut. Auto. Ins. Co., No. 3:14-cv-00531-MMD-VPC, 2016 WL 5402743, at *2 (D. Nev. September 26, 2016), the policyholder invoked many of the practices regarding coverage which are prohibited by Nevada's Unfair Claim Practices Act. She alleged these unfair practices in a claim against her underinsured motorist (UIM) carrier based upon the statute:
NRS § 686A.310 lists a number of activities that are considered unfair practices in the context of insurance. Hackler argues that State Farm has violated subsections (b), (c), (d), (e), (f), (k), and (n), which prohibit the following:
(b) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
(c) Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.
(d) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured.
(e) Failing to effectuate prompt, fair and equitable settlements of claims in which liability of the insurer has become reasonably clear.
(f) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered.
[...]
(k) Delaying the investigation or payment of claims by requiring an insured or a claimant, or the physician of either, to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.
[...]
(n) Failing to provide promptly to an insured a reasonable explanation of the basis in the insurance policy, with respect to the facts of the insured's claim and the applicable law, for the denial of the claim or for an offer to settle or compromise the claim.
NRS § 686A.310.
Her statutory claim for alleged unfair practices failed, however. There was no evidence in the record of what the statute required as to proof of who was responsible at the insurance company for these practices. The Nevada statute requires that the offending practice come at the hands of an officer, director or department head of the insurer who knowingly permitted the unfair practice. There was insufficient proof in the record on this issue. As a result, the policyholder's statutory claim failed in this case and the District Court both denied the policyholder's motion for summary judgment on this claim, Hackler v. State Farm Mut. Auto. Ins. Co., No. 3:14-cv-00531-MMD-VPC, 2016 WL 5402743, at *3 (D. Nev. September 26, 2016), and granted the carrier's motion for summary judgment on this claim. Id. at *5.
The Florida Supreme Court has held in a groundbreaking decision best reported in the Court's own words:
[A]n insured is entitled to a determination of liability and the full extent of his or her damages in the UM action before filing a first-party bad faith action. That determination of damages is then binding, as an element of damages, in a subsequent first-party bad faith action against the same insurer so long as the parties have the right to appeal any properly preserved errors in the verdict. The history of first-and third-party bad faith actions, this Court's precedent, and the legislative intent to eliminate the distinction between first-and third-party bad faith claims all support our conclusion. We also conclude that the trial court in this case did not err in retaining jurisdiction to allow the filing of a bad faith cause of action.
Fridman v. Safeco Ins. Co., ___ So. 3d ___, 2016 WL 743258 (Fla. 2016) (STATED NOT FINAL).
Soseeah v. Sentry Ins., ___ F.3d ___, 2015 WL 9244890 (10th Cir. December 18, 2015) is an appeal from a District Judge's Order certifying a class of unhappy UM/UIM policyholders in New Mexico. The class was certified by the District Court after a long hearing and much briefing and the District Court's review included a review of all of the Rule 23 class action certification factors under the Federal Rules of Civil Procedure.
However, on appeal the Tenth Circuit found a flaw in the District Court's analysis, and reversed and remanded 'for further consideration'.
The Tenth Circuit appellate panel held that the class certified by the District Court did not suffer a "common injury." The injury alleged by the putative class representatives was that their cases involved UM rejections and that, despite their claims for reformation of their policies to reflect stacking, their carrier did not tell them about two recent New Mexico decisions which effectively invalidated UM rejections here and required stacking just as the plaintiffs originally claimed when they presented their UM/UIM claims. The plaintiffs alleged several coverage claims and a first-party bad faith claim under New Mexico law accordingly.
It appears that the real claim here might have been alleged bad faith failure to apply the correct New Mexico UM/UIM law, but that claim, if it was raised, does not seem to be addressed in the appellate panel's opinion.
Therein lies the rub, so to speak. The District Court certified a class of all UM/UIM policyholders. The Tenth Circuit panel held on appeal that the only people with a required "common injury" would be UM/UIM claimants and not merely policyholders. And the panel could not see many claimants, it gratuitously added. So, the panel reversed and remanded, as noted, 'for further consideration.'
In the last sentence of its opinion, the Federal Tenth Circuit Court of Appeals gave an early Christmas gift to the carrier by granting the carrier's unopposed request to present material for the Court's review which no-one else can review, because they sealed it from public view:
Sentry's unopposed motion for leave to file exhibit under seal is GRANTED.
Soseeah v. Sentry Ins., ___ F.3d ___, 2015 WL 9244890, at *10 (10th Cir. December 18, 2015).
What exactly was this "exhibit" which was sealed? We do not know and we may never know.
What attention did the Federal Tenth Circuit Court of Appeals pay to this secret "exhibit"? Who knows? Why should we presume what we do not know, that the secret document(s) did, or did not, help to determine the outcome of this appeal?
Was the secret "exhibit" made available to the District Judge before entering the Order which was appealed to the Tenth Circuit in this case? We do not know. Not even the District Judge probably knows.
The list of questions raised by secret evidence admitted into of all things Federal Court proceedings in the United States is long and limited only by our experience with closed judicial proceedings in America. So, one last question in the interests of space and time limitations today:
WHY was the "exhibit" so special that it became sealed from everyone's view except perhaps the parties and the Federal Tenth Circuit Court of Appeals panel in this peculiar case?
In Wallace v. GEICO General Insurance Co., 2014 WL 4540328 (M.D. Fla. September 11, 2014), an Uninsured Motorist carrier removed its policyholder's bad faith lawsuit from State Court to Federal Court. Then the policyholder filed a motion to remand and the insurance carrier filed a motion to dismiss.
The basis was the same for both motions: Prematurity.
The Federal Court had no problem whatsoever finding that the instant case involved prematurity: "A bad faith claim does not accrue until the conclusion of the underlying uninsured motorist case. [Citations omitted.] It is undisputed that the state court has not entered a final judgment in the underlying uninsured motorist case." Wallace v. GEICO General Insurance Co., 2014 WL 4540328 *2 (M.D. Fla. September 11, 2014).
This helped only the policyholder on his motion to remand, however. It was fatal to the UM carrier's motion to dismiss. The insurance company defendant failed to provide the Federal Court with a basis in the record to determine "that the value of the bad faith claim meets the jurisdictional threshold of $75,000." Wallace v. GEICO General Insurance Co., 2014 WL 4540328 *1 (M.D. Fla. September 11, 2014). Accordingly, said the Federal Court, "the Defendant has not met its burden to demonstrate that the Court has subject matter jurisdiction."
The moral of this story (well, one of the morals, anyway): Be careful what you wish for. You might get it. In this case, the defendant wished that the Judge would find that the bad faith claim against it was premature. The Judge gave the defendant what it wanted, in that sense: The Judge found that the bad faith claim was premature.
Then the Judge granted the plaintiff's motion to remand the case back to State Court.
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In GEICO Casualty Co. v. Barber, 2014 WL 3966053 (Fla. 5th DCA August 15, 2014), a majority of a Florida District Court of Appeal panel granted certiorari and quashed a trial court's order. The lower court "Order on Plaintiff's Motion to Amend Pleadings and Defendant's Motion for Entry of Final Judgment" was entered "after [a U.M. carrier] confessed to judgment". That was the only reason that the two judges joining in this view voted to grant certiorari.
Certiorari is granted when lower courts act without jurisdiction. In the view of the two-judge majority, the trial court in this case "lacked jurisdiction to take any action other than to enter judgment in the amount of the UM policy limits in favor of Barber [the person claiming Uninsured/Underinsured Motorist benefits under the GEICO insurance policy]."
Parenthetically, under Florida law, a confession of judgment by an insurance company authorizes Florida courts to exercise jurisdiction over a motion for attorney's fees. It is just not accurate that an insurance company's confession of judgment automatically divests a Florida court of jurisdiction. To the contrary.
Further, as the dissenting judge on the panel observed, judicial action is required after a confession of judgment by any party. A party acting on its own cannot divest a court of jurisdiction to act. Here, for example, according to the dissenting appellate judge, the trial court had to have entered an order granting the confession of judgment first, before it ever attempted to enter other orders in the case in order for those other orders to be invalid for lack of jurisdiction. However, that is not what happened here.
The trial court entered the orders on all motions -- to amend and to enter judgment -- at the same hearing, at the same time in the same order.
Nonetheless, GEICO has precedent in favor of its position. In one earlier case, the same District Court of Appeal held that a confession of judgment by a U.M. carrier "mooted" all issues between them because the trial court could not provide any "substantive relief" once it entered judgment in the amount of the U.M. policy limits against the U.M. carrier.
The full Fifth District Court of Appeal, other District Courts of Appeal and the Supreme Court of Florida have all yet to be heard from on this issue. If a U.M. carrier can confess to judgment in a U.M. case and thereby foreclose any determination of damages in the U.M. case, then there may be questions concerning the U.M. insured's rights to pursue other claims against the confessional U.M. carrier.
The same questions would result if a verdict in the U.M. coverage case determining the damages caused by a U.M. tortfeasor were treated as having no legal effect after an entry of judgment for U.M. policy limits. This argument is also being advanced in Florida U.M. cases. See FLORIDA BAD FAITH ACTION AFTER U.M. VERDICT: DISCOVERY, DAMAGES, DUE.
One result is certain already. The team of lawyers who defend the U.M. carrier in a U.M. case is ordinarily not the same team of lawyers who defend the U.M. carrier in a bad faith case. Compare GEICO Casualty Co. v. Barber, 2014 WL 3966053 (Fla. 5th DCA August 15, 2014), with a U.M. bad faith case posted yesterday on Insurance Claims and Bad Faith Law Blog, Donna Batchelor v. GEICO Casualty Co., 2014 WL 3906312 (M.D. Fla. June 9, 2014).
In the Barber appeal, the majority pointed out at the end of their opinion that foreclosing a determination of damages in the U.M. contract coverage case did not preclude Mr. Barber from "litigating the damages issue on his bad-faith claim".
Presumably so. However, the damages in question in a U.M. coverage action are the damages caused by the uninsured motorist.
The damages at issue in a U.M. bad faith action are the damages caused by the Uninsured Motorist insurance carrier.
In Florida, recoverable damages in a statutory U.M. bad faith case can include the entire amount of damages in a verdict beyond the U.M. policy limits. In the Donna Batchelor case, for example, a jury found that GEICO's insured sustained damages "of approximately $1.8 million" caused by the uninsured motorist tortfeasor. As the dissenting judge in the Barber appeal pointed out, however, in Florida the law presumes that the damages caused by an uninsured motorist tortfeasor are already determined by the time a U.M. bad faith lawsuit is filed.
These are issues which concern the determination of damages necessary to pursue first-party bad faith claims in many jurisdictions besides Florida. Time, the Courts, and the Legislatures will tell us their answers.
A majority of the Supreme Court of Iowa ruled in Osmic v. Nationwide Agribusiness Insurance Co. that a passenger suing for underinsured motorist (UIM) benefits was bound by the limitations period in the policy just as the contractual limitations period would bind the policyholder in that case. Osmic v. Nationwide Agribusiness Insurance Co., 841 N.W.2d 853 (Iowa 2014)(three Justices specially concurred in the result, analyzing "third-party beneficiary" issues separately from the majority opinion).
The Court's question and answer stand on their own, concisely and directly to the point:
We must decide whether a policy provision limiting the time to file an action to recover underinsured motorist's benefits is binding on a passenger who was injured while riding in the named insured's vehicle. The passenger brought this action approximately one month after the deadline set forth in the policy, which required suit to be commenced "within two years after the date of the accident."
We conclude the passenger, as an insured and a third-party beneficiary of the policy, does not have greater rights than the policyholder. Thus, the passenger cannot avoid the contractual time limitation unless the policyholder under similar circumstances would have been able to avoid it. Because the record, when viewed in the light most favorable to the passenger, does not demonstrate either that the policy's time limit was unreasonable or that the insurer should be equitably estopped from enforcing it, we hold the insurer's motion for summary judgment should have been granted.
A passenger claiming UM benefits is held bound by the limitations period in the policy, by the Supreme Court of Iowa in Osmic v. Nationwide Agribusiness Ins. Co., 2014 WL 88240 (Iowa January 20, 2014) (three Justices specially concurring in the result, analyzing "third-party beneficiary" issues separately from the majority opinion).
Statutes of limitation and policy limitations periods are discussed in "Insurer's Defenses Against First-Party Action By Insured" in 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (Thomson Reuters West Third Edition and 2013 Supplement), in particular in § 11:15 thereof. Limitations defenses in the three kinds of Third-Party Bad Faith lawsuits are discussed in 1 id. §§ 5:20, 5:35 and 5:54.
In a unanimous answer to a certified question, the Supreme Court of Rhode Island addressed a case of first impression and ruled that the statute of limitations on an Uninsured Motorist/Underinsured Motorist claim does not begin to run on Rhode Island UM/UIM claims on the date of the accident. Rather, the statute of limitations on a UM/UIM claim begins to run on the date that the UM/UIM carrier breached its contract of insurance. American State Ins. Co. v. LaFlam, 69 A.3d 831, 839-41 (R.I. 2013).
The Supreme Court went beyond answering the certified question to declaring a contrary limitations period in the insurance contract void as against public policy. American State Ins. Co. v. LaFlam, 69 A.3d 831, 844 (R.I. 2013).
However, the issue of propriety of a contractually shortenedUM/UIM limitations period was left open for development in future cases. The Supreme Court was careful to note that "our holding in this case is limited: we need not and do not decide whether an insurance policy may properly contain a shortened time period within which a UM/UIM claim may be brought after the cause of action accrues ...." American State Ins. Co. v. LaFlam, 69 A.3d 831, 845 (R.I. 2013).
THE FLORIDA SUPREME COURT REQUIRES THAT A PROPERLY JOINED UNINSURED/UNDERINSURED MOTORIST CARRIER BE INTRODUCED TO THE JURY.
In 2001, the Florida Supreme Court held that its previous decisions "make clear that when the uninsured or underinsured motorist carrier is properly named as a party defendant, it must be identified as such. We have made it clear that the jury should know who the parties are ...." Lamz v. GEICO General Insurance Co., 803 So. 2d 593, 595-96 (Fla. 2001). In the Lamz case, the Court held that it was reversible error not to "fully apprise" the jury "of Geico's specific party status." Lamz v. GEICO General Insurance Co., 803 So. 2d 593, 596 (Fla. 2001). Parenthetically, it is not the subject of this post whether a UM/UIM carrier is properly joined or, if so, under what circumstances, just that if a UM/UIM carrier is properly joined, then its status and its representative(s) should be fully introduced to the jury.
Less than one week before this post is written, the Supreme Court of Florida amended Standard Jury Instruction 201.2 (Introduction of Participants and Their Roles) "to provide," as a result of its decision in Lamz, "for the introduction of a defendant uninsured or underinsured motorist insurance carrier where applicable." In re Standard Jury Instructions in Civil Cases, 2013 WL 2248678 (Fla. May 23, 2013)(pagination not available; quotation is from fourth paragraph of introductory section of opinion, following "PER CURIAM").
The New Jersey Appellate Court held that this was not Bad Faith on the part of General, the Underinsured Motorist Carrier:
We find, however, no basis to award Kearny counsel fees premised on General's alleged “bad faith.” Once the first Law Division judge granted NJM's summary judgment motion, and we denied leave to appeal, General acted reasonably in settling with Swartz. In that settlement, General reserved its right to seek reimbursement from Kearny in the amount of the Town's self-insurance reserve. General's subsequent application to recover the $100,000 from Kearny was not bad faith, in light of the Law Division's ruling on the UIM coverage issue, which was the law of the case at that time.
New Jersey Manufacturers Insurance Co. v. Town of Kearny, 2011 WL 867269 *6 (N.J. Super. Ct. App. Div. March 15, 2011)(authorized password required to access Westlaw). [Emphasis added.]
Defense lawyers are certainly not alone when "educating the Trial Judge" becomes a factor during the course of filing their motions and briefs. Sometimes at least some Policyholder or Plaintiff lawyers may have the same motivation during the course of filing their motions and briefs as well.
Such seems to have been among the motivating factors at work on the face of a judicial report concerning the Court's disposition of one of the approximately eight (8) Motions in Limine, from Plaintiff and Defendant collectively, in the First-Party Bad Faith Case of Download Altheim v. GEICO General Ins. Co. (M.D. Fla. Order Filed April 14, 2011) PUBLIC ACCESS, also published as 2011 WL 1429735 (M.D. Fla. April 14, 2011)(authorized password required to access Westlaw).
The Plaintiff, Ms. Bethany Altheim, was issued an Uninsured/Underinsured Motorist Policy by GEICO. Ms. Altheim got into an automobile accident with one Ms. Meredith Tucker. Ms. Altheim demanded the $10,000.00 UM/UIM Policy Limit, and later demanded $1,000.00 less. GEICO refused both UM/UIM demands. Ms. Altheim then sued GEICO in Florida State Court and recovered a $750,000.00 Judgment against GEICO, "pursuant to a stipulation by the parties." Before a week had passed, she filed her First-Party Bad Faith lawsuit against GEICO. Altheim v. GEICO General Insurance Co., 2011 WL 1429735 at *1.
With that one-paragraph of context all that seems reasonably necessary to understand the attempted Motion in Limine in question, Ms. Altheim's lawyers filed what the Court in that case described as a "Motion to Exclude State of Mind Evidence". Id. at *2. GEICO opposed this motion on the grounds that the motion was in essence overly broad and vague. The Court agreed with GEICO in this regard.
In addition, the Court served notice in this case that it refused to be "educated" about Florida law which, parenthetically, provides grounds in at least some circumstances to argue for the relevance and admissibility of evidence on the issue of whether a case "could" have been settled by the insurer if evidence tends to show that the underlying claimant was not willing to settle (see previous posts here, for example, in the Categories of Bad Faith, Defenses in Insurer Bad Faith Actions, Evidence, and Settlement Demands and Offers). The Court in considering this particular Motion in Limine wrote this in its ruling:
The Court agrees that the motion [is] over-broad and is unclear as to what specific testimony Plaintiff is seeking to exclude. In addition, the Court is not prepared to agree at this time that state of mind testimony can only be elicited from expert witnesses or that Plaintiff's willingness to settle is speculative or irrelevant.
Id.
Postscript: The same or a similar issue arising in a different case and involving defense attorneys is explored in a post on Insurance Claims Bad Faith Law Blog on Tuesday, April 19, 2011.
It is almost always a given that when there is a Count I for breach of contract, and a Count II for alleged Bad Faith, that the Bad Faith Claim will be awaited until the Breach of Contract Claim is final.
In the case of Download Illinois National Insurance Co. v. Bolen (Fla. 5th DCA Case No. 5D10.2856, Opinion Filed February 4, 2011) PUBLIC ACCESS,also published as 2011 WL 3355555 (Fla. 5th DCA Case No. 5D10.2856, Opinion filed Friday, February 4, 2011)(authorized password required to access Westlaw), that is exactly what happened. The Count I Claim proceeded to Trial and resulted in a verdict of $870,366.90. A "partial final judgment" was entered on the Verdict and Illinois National Insurance Company, the Defendant, appealed.
The appeal is apparently still pending. Ms. Bolen's attorneys filed a motion to dissolve the abatement of Count II. The Florida Trial Court agreed. The Florida Appellate Court did not agree.
Instead, the Florida Appellate Court, in a unanimous Opinion, agreed on this issue with the Defendant. "We agree that the bad faith claim may not proceed until the UM carrier's appeal has been finally determined." Id. at *1. [Emphasis added.]
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... Was Allowed in a Florida Statutory First-Party Bad Faith Action in Federal Court, Where the Evidence Was Offered for the Purpose of ShowingThat the Policyholder-Plaintiff "was directly harmed by them (i.e., that the bad faith in handling his claim resulted, at least in part, from these policies, practices, and procedures)."
An apparently new Uninsured Motorist Insurance Coverage requirement is causing problems in California. In order to claim the U.M. Coverage, a Policyholder apparently is now required to identify the motor vehicle owner/driver in order for the U.M. Carrier to be able to classify the tortfeasor as an "Uninsured Motorist". One way for the Policyholder to 'identify' the tortfeasor is by getting her or his license tag number. What happens if the uninsured motorist tortfeasor drives away before you can get the tag? The Policyholder might not be able to claim her or his U.M. Insurance Coverage in California, apparently. SeeDavid Lazarus, "Insured But Not Covered" (Los Angeles Times Online, Sunday, November 29, 2009). If so, then apparently California does not recognize U.M. Coverage in cases of a "phantom motorist" or a hit-and-run driver.
The Plaintiff-Policyholder had not yet deposed the Expert in that case. The Arizona Appellate Court also pointed out that in that case, the Plaintiff had not made an attempt to obtain "bias-related information" from the Expert other than by serving him with the Subpoena Duces Tecum at issue. The Plaintiff's announced purpose of this discovery, the Appellate Court recalled, was in fact to obtain "bias-related information". Download American Family Mut. Ins. Co. v. Hon. Larry Grant (Ariz. Ct. App., Div. One, Opinion Filed October 8, 2009), paragraph 19. The Trial Court ordered the Expert to provide the "extensive documentation" demanded by the Plaintiff's Subpoena. It included financial information and other documentation that went far beyond the discovery and reporting requirements imposed on Expert Witnesses under the Rules of Civil Procedure.
In fact, the Trial Court's Order greatly expanded the timeframe for which the Plaintiff-Policyholder's Subpoena demanded that the Expert produce documents. "For reasons not explained by the record, the court instead ordered Dr. Zoltan to produce documentation 'for the period of five years preceding the date of the accident to the present," or for the period of nine (9) years before the appellate decision. Download American Family Mut. Ins. Co. v. Hon. Larry Grant (Ariz. Ct. App., Div. One, Opinion Filed October 8, 2009), paragraph 17.
In addition, the Expert Witness in that case acknowledged that he was subject to being deposed, that he would be filing a Report, and that in short he had to meet the discovery and reporting burdens imposed on Experts under the Rules of Civil Procedure. Nothing in the record indicated that the Expert was reluctant to meet or resistant to these burdens. Download American Family Mut. Ins. Co. v. Hon. Larry Grant (Ariz. Ct. App., Div. One, Opinion Filed October 8, 2009), Paragraph 27.
The Arizona Court of Appeals vacated the Trial Court's Order compelling the subpoenaed production from this Witness, and remanded after stating this holding:
We vacate the challenged portions of the superior court's discovery order and remand this matter for further proceedings consistent with this opinion, including an assessment of whether Allo [the Policyholder-insured] has explored less intrusive discovery and, if so, whether she can demonstrate good cause for more expanded inquiries. The [trial] court shall also impose a more reasonable time frame for any disclosures ordered on remand.
Expert Witnesses in Insurance Cases are examined in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" (Second Edition Shepard's/McGraw-Hill, 2009 Supplement West Publishing Company), particularly §§ 8:17, 9:6, and 12:18 among many others. A related post concerning this new decision was published yesterday on Insurance Claims and Bad Faith Law Blog.