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

August 2019 Archives

Insurance Agents Not Held Accountable For Excess Judgments Under Utah Law

The Utah Supreme Court in Espenschied Transp. Corp. v. Fleetwood Servs., Inc., 2018 UT 32, 422 P.3d 829 (Utah 2018) held that the law allowing insureds to sue their insurance companies for bad faith conduct resulting in unpaid excess judgments did not apply to lawsuits brought against insurance agents who failed to procure requested coverage which, in turn, resulted in uncollectable judgment. In this case, the insured hired Fleetwood Services, an insurance agency, to procure a commercial lines insurance policy for their trucking company. As part of the procurement process, the insured provided Fleetwood with a list of vehicles to be insured. The policy was issued covering the vehicles that were on the list. Thereafter, one of the insured's vehicles was involved in an accident which resulted in a death. The survivors of the decedent sued the trucking company and its successor. The insurance company denied coverage because the vehicle involved in the accident was not on the list Fleetwood had provided to the insurer. A settlement was then reached between the decedent's family and the insured trucking company. At the time of the settlement the insured trucking company had formally dissolved its business and had no assets other than potential claims against third parties. As part of that settlement, the insured assigned to the decedent's family any claim it had against Fleetwood and the insurance company. As part of the settlement, the insured trucking company agreed to pursue claims against Fleetwood and the insurance company. Because the trucking company was a defunct corporation with no assets, the only way the family could recover from the trucking company was if the trucking company recovered from Fleetwood or the insurer.

Make Sure You Allege Mental Incomptency When Seeking a Defense in an Assault Case for There to Be a Defense Obligation

Recently, the Superior Court of Pennsylvania found that an insurer had properly denied a defense to its insured who had been sued for assault. See Kiely on Behalf of Feinstein v. Philadelphia Contributionship Ins. Co., 2019 PA Super 90 (Mar. 26, 2019). The facts before the court indicated that Christine Feinstein had hired Nydia Parkin as a domestic employee in her residence. Inexplicably, Feinstein physically attacked Parkin during her employment. Parkin sued for assault. Feinstein tendered the claim for a defense to her homeowner insurance company. The claim was denied on the ground that the assault was not an occurrence. In the ensuing coverage trial, Feinstein's attorney argued that Feinstein had suffered from a stroke and bipolar disorder and may even have had dementia at the time of the assault. The court nonsuited the case, finding that the attorney's testimony did not prove Feinstein's mental capacity was diminished to a point where she could not appreciate the nature of her conduct. The case was affirmed on appeal. The Superior Court held that Feinstein's reported mental incapacity, irrespective of whether it was real or imagined, was irrelevant because the underlying complaint did not mention mental incapacity. Instead, the complaint alleged that Feinstein had attacked Parkin, including choking and punching her, while uttering racial epithets, and that Parkin did not provoke the attack or fight back. Under those circumstances, the Superior Court found that Feinstein's mental health was not in question and that it was error for the trial court to even consider Feinstein's health in assessing the insurer's duty to defend.

Rhode Island Supreme Court Says That Insurance Companies Do Not Owe Third-party Claimants Any Duty To Attempt Settlement

In Summit Insurance Co. v. Stricklett, 199 A.3d 523 (R.I. 2019) the court found that the insurer did not owe a minor child pedestrian who was struck by the insured's vehicle or the child's parents any duty to attempt to settle the child's personal injury claim. The court resoundingly rejected the claimant's argument that the insurance company owed them a duty of good faith and fair dealing in settlement negotiations. In rejecting this assertion, the court discussed how the insurer's duty to settle arose from the contractual fiduciary duty that was owed between the insurer and its insured. In contrast, the relationship between the insurance company and a third party was adversarial, which did not give rise to a fiduciary obligation on the part of the insurance company to the claimant.

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