Steven Plitt, Expert Witness Steven Plitt, Expert Witness
Insurance Bad Faith Claim Handling Expert Serving Clients Nationwide

October 2017 Archives

Covenant Judgment Settlements In Washington Do Not Automatically Constitute A Waiver Of Attorney-Client Privilege And Work Product Protection When The Insured's Claims For Bad Faith Against The Insurer Are Assigned To The Adverse Party

In Steel v. Philadelphia Indemnity Co., 381 P.3d 111 (2016), a daycare center employee was convicted of child rape and child molestation while working at a daycare center. The parents brought a negligence action against the center. The daycare center had $1 million in coverage. Plaintiffs offered to settle for $4 million, which was rejected by Philadelphia. As trial approached, the insureds entered into a $25 million covenant judgment settlement with the plaintiffs. As part of the settlement the insureds received a covenant not to execute and the plaintiffs received an assignment of the insured's bad faith claims.

Timely Offering Policy Limits Does Not Immunize Insurer From Bad Faith Exposure

The California Supreme Court in Barickman v. Mercury Casualty Co., 2 Cal. App. 5th 508 (2nd Dist. 2016) held that the insurance carrier was liable for bad faith failure to settle, notwithstanding the fact that the carrier offered its policy limits to the claimants in a timely manner in exchange for a full release of civil liability. The court found that the insurer's failure to do "all within its power to effect a settlement" could constitute bad faith, notwithstanding the fact that the insurance company offered its policy limits to the injured claimants in exchange for a full release of liability. The insurance company had refused to consent to additional language in the release designed to preserve the claimant's rights to receive criminal restitution from the insured tortfeasor.

7th Circuit Finds that Extrinsic Evidence is Admissible in a Declaratory Judgment Action to Determine the Carrier's Duty to Defend

In Landmark American Insurance Co. v. Hilger, 838 F.3d 821 (7th Cir. 2016) the U.S. Circuit Court of Appeals for the 7th Circuit found that the insurance company was allowed to offer evidence outside the underlying court complaints and that the defendant did not render the professional services in question as an independent contractor. In this case the insured was sued by two credit unions in two different states (Michigan and Tennessee) for allegedly joining with a life insurance agent and a life insurance broker to persuade the credit unions to fund loans based upon life insurance policies with an overstated value that was used as collateral. When the insured and the insurance agent were sued, they tendered their defense to Landmark American under the agent's and the broker's liability policy. The policy provided coverage for claims arising out of any negligent act, error, or omission committed in the agent's rendering of professional services as an agent or broker. However, the tenders were denied.

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