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

September 2019 Archives

MISSOURI COURT UPHOLDS ATTORNEY-CLIENT PRIVILEGE

In State ex rel. Shelter Mut. Ins. Co. v. Wagner, 575 S.W.3d 476 (Mo. Ct. App. 2018), transfer denied (July 31, 2018), reh'g denied (July 31, 2018), the Missouri court held that in a bad faith lawsuit arising from the failure to settle, the insured was not entitled to discovery communications between the insurance company and its attorney who was retained to advise the insurer in the underlying case.

Nevada Adopts Minority View That An Insurer's Failure To Deend Can Render The Insurer Liable For An Excess Judgment Without A Finding Of Bad Faith Misconduct

In Century Surety Co. v. Andrew, 432 P.3d 180 (Nev. 2018) the Nevada Supreme Court adopted the minority view holding that the insurer's failure to defend its insured made the insurer liable for the excess judgment that was entered, even though there was no finding of bad faith misconduct. According to the court, the excess judgment was foreseeable, and therefore the insurer's liability was not limited to defense costs and indemnity within limits.

Safeco Waives Anti-assignment Clause

Clear Vision was an automobile windshield repair company which operated inside individual auto dealership repair shops. Clear Vision's business practice was to repair a customer's windshield once the customer had signed an assignment of the right to payment to Clear Vision under the customer's insurance policy. After the windshield was repaired, Clear Vision would then submit the invoice directly to the customer's insurance company. With respect to Safeco, Clear Vision had submitted thousands of glass repair claims, even though there was no contractual relationship between Clear Vision and Safeco. Eighty-five percent of the direct invoices were paid in the full amount of the invoice while 15% of the invoices were not paid. Throughout this process, Safeco never raised the anti-assignment clause as the reason why it was not paying the Clear Vision invoice. Recently the Texas Appeals Court found that the relationship between Clear Vision and Safeco resulted in a waiver of Safeco's policy right to assert the anti-assignment clause in its policy.

Mississippi Rejects Blue Ridge Doctrine

In Colony Ins. Co. v. First Specialty Ins. Corp., 262 So. 3d 1128 (Miss. 2019) , the Mississippi Supreme Court, as a matter of first impression, found that a liability insurance company could not fund a settlement under a reservation of rights and then seek reimbursement of its payment from the insured. According to the Court, the insurance company must make a selection of either absorbing the settlement or rejecting the demand with the hopes that it would prevail on its declaratory judgment action. In so finding, the Court held that while a payment which is made under compulsion is not a voluntary payment, the mere threat of a lawsuit was not the type of compulsion that would render an insurance payment non-voluntary. Insurers should pursue a declaratory judgment action as a legal avenue for determining coverage obligations. Settling the case before receiving a ruling on the coverage obligations resulted in the insurer having no right to seek reimbursement of the settlement payment that it might not otherwise have been obligated to make.

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