Mealey's Insurance Bad Faith
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July 09, 2025
Bad Faith, Unfair Insurance Practices Claims Dismissed In Remediation Coverage Suit
LAS CRUCES, N.M. — A New Mexico federal judge granted an insurer’s motion to dismiss claims alleging bad faith and violations of New Mexico Unfair Insurance Practices Act (NMUIPA) after determining that the insureds, which are seeking coverage for environmental contamination remediation costs related to the release of a waste byproduct from a gas pipeline, failed to show that the insurer’s reservation of its right to deny coverage was arbitrary or unreasonable.
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July 09, 2025
4th Circuit Finds Some Coverage Possible in Suit Over Faulty Stucco Claims
RICHMOND, Va. — A panel of the Fourth Circuit U.S. Court of Appeals found that a commercial general liability insurer owned no coverage to a general contractor for the costs incurred in repairing faulty stucco, but said the trial court erred in dismissing as moot the contractor’s breach of contract and bad faith claims because the court didn’t assess whether the costs associated with the property damage were covered under the policy.
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July 09, 2025
Claims Against Long-Term Care Insurer Fail But Insured Permitted To Amend Complaint
FRESNO, Calif. — A California federal judge granted a long-term care insurer’s motion to dismiss breach of contract, bad faith and financial elder abuse claims without prejudice after determining that the insured failed to specifically show how the long-term care insurer breached its contract when it denied the insured’s claim for benefits under the policy.
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July 09, 2025
Auto Insurer Failed To Show Handling Of UIM Claim Was Reasonable, Judge Says
SAN DIEGO — A California federal judge refused to dismiss an insured’s bad faith claim against an auto insurer after determining that the insurer failed to show that it acted reasonably in handling the insured’s claim for underinsured motorist (UIM) benefits.
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July 08, 2025
Surplus Lines Insurer, Insured File Notice Of Settlement In Water Damage Suit
ATLANTA — A surplus lines insurer and its insured filed a notice of settlement in Georgia federal court, agreeing to settle the insured’s breach of contract and bad faith suit stemming from the insured’s claim for coverage for a number of insured apartment units damaged as a result of frozen water pipes that burst.
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July 08, 2025
Misrepresentation, Fraud Claims Will Not Proceed In Mold, Water Damage Suit
SALT LAKE CITY — A Utah federal judge determined that misrepresentation and fraud claims alleged against a homeowners insurer and an engineer hired by the insurer cannot proceed because no party or entity actually relied on any alleged misrepresentation in the engineer’s report regarding the cause of water and mold damage sustained at the insureds’ home.
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July 07, 2025
Judge Dismisses Bad Faith Suit Against Employment Practices Liability Insurer
BUTTE, Mont. — A federal judge in Montana granted an employment practices liability insurer’s motion to dismiss with prejudice a bad faith coverage lawsuit arising from claims that a hospital insured and its employees wrongfully harassed and retaliated against other employees for reporting patient abuse and neglect.
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July 03, 2025
California Federal Judge Sanctions Lawyer For AI-Faked Cites In Disability Case
SANTA ANA, Calif. — A California federal judge imposed sanctions including a $500 payment on a plaintiff’s attorney who told the court that he “failed to scrutinize and oversee the preparation of” memoranda “filed with erroneous case citations that were invented by AI”; the breach of contract suit over termination of total disability benefits is headed toward a jury trial after the judge last month granted summary judgment for the insurer on a bad faith claim.
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July 02, 2025
Fungus Coverage Provision Does Not Provide Coverage For Water Loss Claim
MILWAUKEE — A commercial property insurer did not breach its contract and act in bad faith in refusing to pay an insured’s claim for water damage under the policy’s additional coverage provision for fungus, rot and bacteria because the water damage was caused by repeated seepage or leakage of water, an excluded cause of loss, a Wisconsin federal magistrate judge said July 1 in granting the insurer’s motion to dismiss.
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July 02, 2025
No Coverage Owed For Roof Damage; Defective Materials Exclusion Precludes Coverage
GALVESTON, Texas — No coverage is owed under a homeowners policy for roof damage because the homeowners insurer met its burden of showing that the damage was caused by defective roof shingles, an excluded cause of loss, and the insured failed to meet his burden of showing that some of the damage was caused by a hailstorm, a Texas federal magistrate judge said in granting the insurer’s motion for summary judgment on the breach of contract and extracontractual claims.
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July 02, 2025
Breach Of Contract, Extracontractual Claims Against Insurer Are Time-Barred
WACO, Texas — An insured’s breach of contract and extracontractual claims alleged against a homeowners insurer cannot proceed because the claims are barred by the applicable two-year statute of limitations, which began to run when the insurer denied the insured’s claim for damages to his home incurred during a storm, a Texas federal magistrate judge said in recommending that the insurer’s motion for summary judgment be granted.
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June 30, 2025
Earth Movement Exclusion Bars Coverage For Foundation Damage, Judge Says
SIOUX CITY, Iowa — An earth movement exclusion clearly applies to bar coverage for foundation damage to an insured home even if the cause of the foundation damage was an excess amount of water flowing from a burst pipe within the home, an Iowa federal judge said in granting a homeowners insurer’s motion for summary judgment on breach of contract and bad faith claims.
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June 30, 2025
California Insureds Allege Insurers Underinsured Homes Destroyed In Wildfires
LOS ANGELES — In two separate complaints filed in Los Angeles County Superior Court, insureds whose homes were destroyed in the January wildfires allege that their homeowners insurers underinsured their homes, leaving the homeowners unable to rebuild their destroyed homes.
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June 27, 2025
Judge Refuses To Toss Bad Faith Claim In Coverage Suit Over Antitrust Conspiracy MDL
DENVER — A federal judge in Colorado denied a data liability protection insurer’s motion to dismiss a common-law bad faith claim brought by a multifamily housing lessor insured in its lawsuit seeking coverage for an underlying multidistrict litigation alleging that it was involved in an antitrust conspiracy when it used revenue management software to artificially inflate multifamily housing rents above market across the country.
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June 27, 2025
Breach Of Contract, Bad Faith Claims To Proceed Against Life Insurer, Judge Says
FRESNO, Calif. — A life insurer’s filing of a third-party interpleader complaint does not absolve it of liability for a beneficiary’s breach of contract and bad faith claims based on the life insurer’s delay in handling the beneficiary’s claim after the insured’s death, a California federal judge said in partially denying the life insurer’s motion for summary judgment.
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June 26, 2025
Auto Insurer Prevails On Summary Judgment; Bad Faith Claims Cannot Proceed
PHILADELPHIA — A statutory bad faith claim alleged against an auto insurer cannot proceed because the insureds failed to present any evidence supporting their contention that the insurer acted in bad faith in handling their claim, a Pennsylvania federal judge said in granting the insurer’s motion for summary judgment.
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June 26, 2025
Insured Seeks More Than $5M From Property Insurer For Business Income Losses
PORTLAND, Ore. — An insured hotel filed suit in Oregon federal court, seeking more than $5 million from its commercial property insurer for business income losses and extra expenses incurred as a result of water damage and the repairs necessitated by the water damage.
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June 26, 2025
California Federal Judge Gives Disability Insurers Win In Breach, Bad Faith Row
LOS ANGELES — Granting summary judgment for insurers in an individual disability insurance (IDI) dispute, a California federal judge ruled in part that insurers were prejudiced by late notice of the claim.
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June 26, 2025
Insurer Was Not Contractually Bound To Provide COVID-19 Premium Relief, Judge Says
SAN DIEGO — A California federal judge on June 25 granted an auto insurer’s motion for summary judgment on a claim alleging that the insurer breached the implied covenant of good faith and fair dealing by not sufficiently refunding policyholders a percentage of premium payments made during the COVID-19 pandemic because the insurer was not contractually bound to refund any premiums under its auto policies.
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June 26, 2025
Questions Of Fact Exist On Insurer’s Decision Not To Settle, Federal Judge Says
BATON ROUGE, La. — A Louisiana federal judge denied a third-party claimant’s motion for summary judgment in a bad faith suit stemming from an insurer’s failure to settle a claim on behalf of its insured after determining that questions of fact exist regarding the reasonableness of the insurer’s decision not to settle the claim on behalf of its insured.
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June 26, 2025
Missouri Judge Enters $43.8M Judgment Against Law Enforcement Liability Insurers
JEFFERSON CITY, Mo. — A Missouri judge entered a $43.8 million final judgment against law enforcement liability insurers after a jury determined that the insurers acted in bad faith and vexatiously refused/delayed a claim for coverage of a lawsuit brought against the city of Columbia, Mo., by a man who was convicted and incarcerated for robbery and homicide and later discharged from custody.
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June 25, 2025
1st Circuit Partly Reverses Ruling In Coverage Suit Over Hurricane Maria Damage
BOSTON — The First Circuit U.S. Court of Appeals reversed a lower federal court’s denial of an insurer’s postverdict motion to reduce a jury’s $873,000 contractual damages award and to set aside a jury’s $250,000 consequential damages award in a Hurricane Maria coverage dispute and affirmed the lower court’s denial of the insured’s postverdict motion for attorney fees and prejudgment interest.
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June 23, 2025
Insurer Owed No Duty To Ensure Mold Cleanup Work Was Properly Completed
CHICAGO — An Illinois federal magistrate judge on June 20 partially granted a homeowners insurer’s motion for summary judgment on a breach of contract claim alleging that the insurer owed a duty to ensure that water and mold remediation work at an insured home was properly completed because the policy at issue does not impose any such duty on the insurer.
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June 23, 2025
Judge Denies Insured’s Motion For Relief From Judgment In COVID-19 Coverage Suit
ELIZABETH CITY, N.C. —A federal judge in North Carolina denied a hotel and restaurant owner insured’s motion for relief from a March 4, 2021, judgment dismissing its breach of contract and bad faith lawsuit arising from the coronavirus pandemic, rejecting the insured’s argument that the North Carolina Supreme Court’s ruling in N. State Deli, LLC v. Cincinnati Ins. Co. constitutes extraordinary circumstances that warrant relief.
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June 19, 2025
Insureds’ Breach Of Contract, Bad Faith Suit Remanded To California State Court
FRESNO, Calif. — A breach of contract and bad faith suit filed against a homeowners insurer must be remanded to state court because the insurer failed to meet its burden of proving by a preponderance of the evidence that the amount in controversy exceeds the federal jurisdictional minimum, a California federal judge said, noting that the insurer specifically failed to provide a reasonable estimate of the amount of attorney fees that could potentially be awarded to the insureds.