Practice Areas

Related Case Studies

Print to PDF Print to PDF

Bad Faith - Representative Experience

  • Issues
  • Venue
  • Client Type
  • Lawyers
  • Full Description
  • Result
  • Conversion; Unfair Business Practices; Bad Faith; Negligence
  • San Francisco County Superior Court
  • Defendant Insurer
  • Jennifer E. Acheson, Michael J. Brady
  • Represented an insurance company who was named as a co-defendant in a lawsuit stemming from an auto collision. The plaintiff sued our client for the loss of his vehicle and unfair business practices when a driver fell asleep at the wheel and struck the plaintiff’s vehicle causing total damage to the vehicle’s front end.

  • The matter proceeded to a jury trial in San Francisco Superior Court and our client prevailed. The plaintiff was then unsuccessful in his attempt to appeal the verdict.

  • Breach of Contract; Bad Faith Claims
  • Colusa County Superior Court
  • Defendant Insurer
  • Jennifer E. Acheson, Michael J. Brady
  • Represented an insurer against claims for breach of contract and bad faith claims handling. The plaintiff, a regional medical center, hired a construction company insured by our client to install a new roof on the plaintiff’s hospital. A subsequent rainstorm caused damage to the property after the construction company failed to take precautions to cover a section of the roof. Our client denied coverage based on policy exclusions based on faulty, inadequate and defective workmanship.

  • Damages claimed by the plaintiff were in excess of $1.3 million. The dispute settled before trial for less than half of the damages claimed, a favorable result for our client.

  • Appeal; Arson
  • Sacramento County Superior Court
  • Defendant Insurance Provider
  • The firm was retained to appeal a $3.2 million judgment against a homeowner's insurer in a bad faith case. The insured alleged that the insurer had instigated a criminal prosecution for arson against him in relation to a fire that destroyed his home.

  • The court of appeal completely reversed the judgment.

  • Breach of Contract; Bad Faith; Misrepresentation; Discrimination
  • United States District Court, Eastern District of California
  • Defendant; Insurance Company
  • Stacy Monahan Tucker
  • The plaintiffs claimed over a quarter of a million dollars in goods were stolen from their home in a two hour period and filed a claim for reimbursement on their homeowners insurance. During the investigation a number of discrepancies arose between the plaintiffs' various statements and the evidence available. The claim was denied for failure to cooperate with the investigation and the plaintiffs subsequently filed suit.  The plaintiffs alleged breach of contract, bad faith and racial discrimination.


     

  • During the course of discovery, we obtained significant evidence of the plaintiffs' misrepresentations, and confirmed their failure to cooperate with the investigation under the terms of the policy. Confronted with the evidence against them, the plaintiffs chose to voluntarily dismiss the case on the eve of our filing for summary judgment. No settlement was paid.  

     

  • Breach of Contract; Bad Faith, Insurance Coverage
  • Los Angeles County Superior Court
  • Defendant Insurance Provider
  • Michael T. Ohira
  • The plaintiffs, the insured homeowners, sued the defendant, an insurance provider, for breach of contract and bad faith arising from a first party property damage and bodily injury claim arising from water damage and mold in a residence. The insureds accused the insurer of inadequate investigation, low-balling, and delay which culminated in special damages exceeding of $400,000 and seven figure extra contractual damage claims.

     

  • The case was ultimately settled for a confidential sum.

  • Breach of Contract; Bad Faith, Insurance Coverage, Unfair Business Practices
  • Los Angeles County Superior Court
  • Defendant Insurance Provider
  • Michael T. Ohira
  • The insured, a general contractor, sued the insurer for breach of contract, breach of the implied covenant of good faith, unfair business practices and declaratory relief. An investigation revealed a potential for coverage not previously recognized by the third party administrator (“TPA”), and a failure by the TPA to fully reserve the insurer's rights.

  • The case was ultimately settled for $25,000 less than our $73,000 settlement authority.

  • Professional Liability; Coverage; Bad Faith
  • USDC: Middle District of Pennsylvania
  • Defendant Insurance Provider
  • Andrew L. Margulis
  • Represented the defendant insurance provider in an insurance coverage and bad faith suit arising out of the denial of coverage under a professional liability life agent and securities broker/dealer policy. Insured was a securities registered representative involved in providing investment recommendations and the sale of investment products to clients. The insured opened his own business with a long time client and the client invested funds to get the business started. After a dispute between the partners, the insured's business partner filed an NASD arbitration against the insured alleging that the insured was negligent in advising the client to invest in the insured's business. The insurer denied coverage as the claim did not allege any covered professional services since the investment was in the insured's own business and not in any securities or products approved by the insured's broker/dealer. The insured brought suit to obtain coverage and to recover for the alleged bad faith denial by the insurer.


     

     

  • Obtained summary judgment dismissing the claims for coverage and bad faith. The court held that no coverage existed and that the denial of coverage was proper, and that the insurer acted reasonably in denying coverage so that no claim for bad faith was supported. The case is reported at 2008 U.S. Dist. LEXIS 45251 (N.D. Oh. 2008). The case was appealed by the insured and the dismissal was affirmed by the U.S. Court of Appeals for the Sixth Circuit, reported at 2009 U.S. App. LEXIS 16174 (6th Cir. 2009).

  • Professional Liability; Coverage; Bad Faith
  • USDC: Middle District of Florida
  • Defendant Insurance Provider
  • Andrew L. Margulis
  • Defended an insurance provider in a suit involving insurance coverage and bad faith arising out of the denial of coverage under a professional liability life agent and securities broker/dealer policy. The insured was involved in selling coverage under national group health insurance plans that were purported to be qualified ERISA plans, but were actually multiple employer welfare plans. The plans ultimately became insolvent and were unable to pay submitted claims. Three separate underlying actions were filed against the insured by clients whose medical claims were unpaid. The insurer denied coverage on the grounds that the claims were excluded by two exclusions, one that barred coverage for claims involving multiple employer welfare plans and another that barred coverage for claims arising out of the insolvency of any benefit plan or company in which the client's coverage was placed. The insured brought suit to obtain coverage and to recover for the alleged bad faith denial of the insurer.

     

  • Obtained summary judgment dismissing the claims for coverage and bad faith. The court held that no coverage existed and that the denial of coverage was proper, and that the insurer acted reasonably in denying coverage so that no claim for bad faith was supported. The case is reported at 2008 U.S. Dist. LEXIS 39171 (M.D. Fla. 2008).

  • Duty to Indemnify, Coverage, Property Damage, Insurable Interest, Commercial, Landlord, Tenant
  • Sonoma County Superior Court
  • Defendant Insurance Company
  • Robert M. Forni
  • A rain storm damaged part of a strip mall and the improvements that had been made to it that several tenants had leased.  When these damages occurred, the owner of the building was an insured under a policy issued by our client, Insurer No. 1. Additionally, the tenants were insured under a policy that a second insurance company, Insurer No. 2, issued to them.  Insurer No. 2 paid the tenants for the damages to their improvements.  The tenants then vacated the building and sued the owner. Insurer No. 1 defended the owner in this lawsuit until Insurer No. 2 assumed its defense. In response, the owner sued Insurer No. 2 alleging claims for breach of contract and bad faith for withdrawing from its defense in the tenants’ lawsuit.  While this action was pending, the tenants, the owner, Insurer No. 1 and Insurer No. 2 reached a global settlement of “any and all claims and causes of action” arising out of the events giving rise to the tenants’ lawsuit in exchange for Insurer No. 1's contribution to the settlement. 

     

  • The trial court granted our client's motion for summary adjudication concerning the owner's causes of action for breach of contract and bad faith based on its claim for indemnity for the damaged tenant improvements. The court held the owner had no insurable interest in this property at the time of loss for the same reasons the insurer denied the claim (i.e., the owner did not use, own, or control this property, and did not suffer any direct pecuniary loss when it was damaged.)

  • Duty to Defend; Judgment Creditor Suit; Personal Injury defense
  • Los Angeles Superior Court
  • Defendant Insurance Company
  • Stephen J. Erigero
  • Represented the insurer of a salon in a case in which a party was injured as a result of pedicure, and obtained a judgment and assignment of the defendant's right to obtain insurance benefits. The plaintiff sued as a judgment creditor and as an assignee of the insured.

  • The case settled for a confidential amount after discovery showed medical specials and wage loss did not support the total amount of the judgment, and after our analysis of coverage issues indicated the insurer ran a risk of not prevailing on the showing that the policy did not apply to the loss.

  • Insurance; Mold
  • USDC: Central District of California
  • Defendant Insurer
  • Stephen J. Erigero
  • Represented an insurer in an action for breach of contract and bad faith arising out of a denial of a first party claim for mold personal injury and property damage. The plaintiff policyholder contended that significant items of personal property sustained damage as a result of mold in an apartment complex. The insurer denied coverage contending it was the landlord's responsibility. The plaintiff tenant sued under a renter's policy. We successfully argued application of the mold exclusion, argued the statute of limitations for the items potentially covered and achieved a favorable confidential settlement.

  •  The case settled for a confidential amount within the contractual limits, applying the mold exclusion.

  • Defamation, Crime Policy, Insurance Bad Faith
  • Los Angeles Superior Court
  • Defendant Insurance Carrier
  • Stephen J. Erigero
  • Defended an insurance carrier in an action for insurance bad faith and defamation arising out of the payment of a claim under a crime policy by an insurer upon proof of loss from the insured and the resulting subrogation action filed by the insurer against the alleged perpetrator of the crime. 

  • The carrier paid the loss to the insured, but the plaintiff did not have sufficient evidence to establish the theft by the individual sued for recovery, dismissing the case with prejudice. The individual sued for defamation and malicious prosecution. The case settled for a confidential amount.

  • Bad Faith
  • Alameda County Superior Court
  • Defendant Insurance Company
  • Pamela E. Cogan (Retired)
  • Defended an insurance company in a bad faith action arising from a denial of disability insurance benefits to a woman employed as a web developer whose alleged disability was due to a back injury following a fall from a horse.

  • After five week jury trial, the  jury found in favor of the plaintiff, but awarded contract benefits only, which was substantially less than offered before trial. The jury awarded zero emotional distress damages and no punitive damages. Brandt fees (attorneys' fees) were limited on a motion in limine ruling to $14,000.

  • Bad Faith
  • USDC: Northern District of California
  • Defendant Insurance Company
  • Pamela E. Cogan (Retired)
  • Defended an insurance company in a claim in which the plaintiff was a company that ran tours nationally and internationally. The tour guides filed a class action wage and hours claim, including claims that the tour guides were improperly excluded from participating in the company’s 401K plan. The tour company tendered its defense under the employee benefit liability coverage of its business insurance policy. The defense fee incurred exceeded one million dollars. The insurer refused to defend or indemnify and the insured filed suit for breach of contract and bad faith. The defense fees claimed were over $1 million.

  • Proved that there was no duty to defend or indemnify the insured, and the court granted summary judgment for the insurer, which the Ninth Circuit affirmed on appeal.

  • Bad Faith
  • USDC: Northern District of California
  • Defendant Insurance Company
  • Pamela E. Cogan (Retired)
  • Defended an insurance company in a bad faith action which was filed by the insured under a personal auto policy for an alleged failure to pay the value of a car recovered after auto theft.  Fraud investigation took place during the claim due to its suspicious nature.

  • The case settled for minimal gain at the close of evidence,  and the plaintiff was referred by the trial judge to the US attorney for perjury charges based on its trial testimony.

  • Bad Faith
  • USDC: Central District of California
  • Defendant Insurance Company
  • Michael J. Brady
  • Defended an insurance company in a bad faith for failure to pay the fidelity claim brought by one of Italy's largest banks. The underlying claim arose out of the activities of the famous sports entrepreneur Bruce McNall, who allegedly swindled various Southern California banks out of millions. We arranged for the insurance company to do an extensive investigation of countless witnesses, including experts and built a strong case for the validity of the denial.

  • A federal judge ultimately granted summary judgment based upon the "thoroughness" of the investigation, even though mistakes may have been made by the company. The matter was completely dismissed, and the dismissal was affirmed by the Ninth Circuit.

  • Professional Liability; Coverage; Bad Faith
  • USDC: Northern District of Ohio; US Court of Appeals, Sixth Circuit
  • Defendant Insurance Provider
  • Andrew L. Margulis
  • Represented the defendant insurance provider in an insurance coverage and bad faith suit arising out of the denial of coverage under a professional life agent and securities broker/dealer policy. The insured was a securities registered representative involved in providing investment recommendations and the sale of investment products to clients. The insured was sued by a client whose investment in an offshore asset protection trust was lost when funds were invested in an investment management business which ultimately filed for bankruptcy. The insurer denied coverage on the grounds that the policy only provided coverage for specified professional services, which services did not include investment activities in connection with unregistered offshore investments or products that were not approved by the broker/dealer. Coverage was also denied pursuant to an exclusion that barred coverage for claims arising out of insolvency of any company in which the client's funds were placed. The plaintiff insured brought suit to obtain coverage and to recover for the alleged bad faith denial of the insurer.

     

  • Obtained summary judgment dismissing the claims for coverage and bad faith. The court held that no coverage existed and that the denial of coverage was proper, and that the insurer acted reasonably in denying coverage so that no claim for bad faith was supported. The case is reported at 2008 U.S. Dist. LEXIS 76818 (M.D. Pa. 2008). The case is currently on appeal to the U.S. Court of Appeals for the Third Circuit, and decision is pending.
     

  • Duty to Defend; Bad Faith; Director & Officer
  • U.S. District Court, Central District, Los Angeles
  • Defendant Insurer
  • Stephen J. Erigero
  • Defended a former officer of corporate insured under a D&O policy. The insurer originally defended then withdrew coverage during the litigation. The officer sued the carrier for defense, indemnity, a settlement and bad faith.

  • Successfully settled for a confidential amount during trial.

  • Breach of Contract; Fraud; Unfair Business Practices
  • San Francisco County Superior Court
  • Plaintiff
  • Jennifer E. Acheson, Michael J. Brady
  • Represented a plaintiff in an action for breach of contract, fraud, and unfair business practices against the owner of a consignment piano shop. The defendant sold the plaintiff’s piano without permission and did not turn over the proceeds from the sale.

  • A default judgment was entered against the defendant for money damages and the return of the piano to our client. Following the defendant’s declaration of bankruptcy, the matter resulted in the criminal prosecution of the defendants by The San Francisco District Attorney for felony counts of grand theft, embezzlement, and restitution.

  • Breach of Contract; Bad Faith
  • United States District Court; Northern District of California
  • Defendant; Insurance Company
  • Pamela E. Cogan (Retired), Stacy Monahan Tucker
  • A limited partnership created for real estate development was sued for construction defects after the sale of a property they developed.  The partnership sought a defense from their insurance company both for the partnership and the individual partners sued.  Because the partnership had rented out the property as apartments prior to selling the property, the insurer maintained that the claim was excluded due to an exclusion in the policy for damage to “property you own, rent or occupy.”  The insured’s argued that they rented out individual units but not the entire building, and that the “you” applied only to the partnership, not the individual partners.

  • The parties filed cross motions for summary judgment. The court upheld the insurer’s interpretation of the contract and dismissed the complaint with prejudice.

  • Bad Faith
  • Alameda County Superior Court
  • Defendant Insurance Company
  • Pamela E. Cogan (Retired)
  • Defended an insurance company in a bad faith case involving insurance agent malpractice which arose from a property and business interruption claim following a fire at a glass business. The plaintiff alleged that he had asked the agent to increase his business interruption coverage shortly before fire. The plaintiff claimed the coverage was not increased, resulting in inefficient funds to cover the damage.

  • Following five week trial, a defense verdict was obtained for our client and 75% of the fault for the case was attributed to the plaintiff. Net judgment against the agent was only $12,000.

  • ERISA
  • USDC: Central District of California; US Court of Appeals for the Ninth Circut
  • Defendant Insurance Company
  • Pamela E. Cogan (Retired)
  • Defended an insurance company against an ERISA action brought by the former in-house counsel in a large corporation against the company's ERISA plan. The plaintiff stopped working due to emotional stress and depression. The claim was paid and then closed at the end of the two year limitation period for disability due to mental illness. The plaintiff did not challenge the termination of benefits at that time. Years later, the plaintiff demanded that the insurer reopen her claim as a “late appeal” or as a “new claim” based on alleged newly discovered information that she suffered from chronic fatigue syndrome all along,  requiring benefits to be paid on the basis of physical disability until age 65.

  • Our client prevailed on two grounds: (1) the plaintiff’s right to challenge the original decision to apply the two year mental illness limitation was barred by failure to exhaust administrative remedies and (2) the insurer’s denial of her alleged “new claim” on the basis she was no longer an active employee was upheld. The Ninth Circuit affirmed the judgment for the defendant.

  • insurance; excess; trigger; exhaustion; gap
  • US Court of Appeals for the Fifth Circuit
  • Geoffrey W. Heineman, Amber W. Locklear, Eric C. Weissman
  • An oil and gas company sought coverage under its directors and officers liability policies for the defense costs and settlement of an underlying shareholder action brought by a former minority shareholder against the company and its directors and officers.  The D&O insurers denied coverage on numerous grounds, and the company filed suit in United States District Court for the Eastern District of Texas.  After the company settled with its primary insurer for less than the full $10 million limits of liability of the primary policy, the first excess insurer, AXIS Insurance Company, moved for summary judgment on the grounds that as a result of the below-limits settlement, the primary policy was not fully exhausted and the AXIS Policy could never be triggered.  In May 2014, the District Court granted summary judgment in favor of AXIS, and the Insureds appealed to the United States Court of Appeals for the Fifth Circuit.  

  • The Fifth Circuit affirmed the District Court’s decision and order granting summary judgment to AXIS.  Applying Texas law, the Fifth Circuit held that the AXIS Policy unambiguously precludes below-limits settlements by detailing precisely what must be paid and by whom before the AXIS Policy can be triggered.  Specifically, the Fifth Circuit held that the phrase “actual payment of all applicable Underlying Insurance” requires that only the primary insurer can make payment and that the insurer must pay “all” of its limits in order to exhaust the primary policy.   Because the primary insurer only paid a portion of its full underlying limits, the Fifth Circuit held that the AXIS Policy has not and can never be triggered.  

  • Insurance, Government Tort Claims Act
  • Alameda County Superior Court
  • Defendant - Insurance Company
  • Pamela E. Cogan (Retired), Stacy Monahan Tucker
  • Plaintiff sued both her disability insurer and her employer, The Regents of the University of California, for the termination of her disability benefits.  She brought allegations against the The Regents of the University of California for fraud and intentional infliction of emotional distress for alleged misstatements in the Plan Booklet distributed by The Regents to all employees describing the insurance offered.

  • Plaintiff argued that an exception to the Gov't Tort Claims Act applied because The Regents should be held directly liable for violations of Cal. Ins. Code. Section 790.03, which imposes a duty on an entity "engaged in the business of insurance".  We successfully explained that The Regents is not "engaged in the business of insurance" simply by offering an insurance plan to its employees and forwarding premiums for that plan to the insurer, and the court dismissed The Regents from the action with prejudice.

  • ERISA; Insurance; Bad Faith; Breach of Contract; Employee Welfare Plan; Disability; Employee Benefits; Claim Determination
  • US Court of Appeals for the Ninth Circuit Court; USDC: Northern District of California
  • Defendants Employee Welfare Benefit Plan; Insurance Carrier
  • Pamela E. Cogan (Retired), Robert M. Forni
  • Defended an insurance carrier and an employee welfare benefits plan in an ERISA action which arose from the termination of long term disability benefits. The employee welfare benefit plan was insured under a group disability policy issued by an insurance carrier. Following a bench trial, the trial court remanded the case to the claim administrator for further investigation. On remand, the claim demand was again upheld and the plaintiff filed suit again.

  • The trial court entered judgment for our client concluding that the insurer did not abuse its discretion under the plan in terminating the plaintiff’s benefits even though they had a “structural conflict” in that it both funded and decided claims under the plan. The ninth circuit affirmed on appeal.

  • Rescission; Professional Liability; Bad Faith
  • USDC: Northern District of California
  • Defendant Insurance Provider
  • Andrew L. Margulis, Enrique Marinez
  • Defended an insurance provider in a case involving claims for coverage under a Professional Liability General Partnership issued to a real estate development company. Three separate claims were brought against the insured. One claim was brought by a former partner arising out of certain lost partnership opportunities. The second claim was brought by the founder of the company for breach of fiduciary duty and fraud arising out of a prior settlement between the parties. The third claim arose out of the insured's development of an apartment complex and involved the parties' interests in the property as well as claims that the project was negligently built. The insurer denied coverage for all three claims on various grounds, including as to the first two claims that they were brought by "insureds" and were excluded by the insured v. insured exclusion, and as to the third claim based on the property damage exclusion. During discovery, it was learned that the insured were aware of the potential claim by the former partner before the policy was issued, and the insurer brought a counterclaim for rescission of the policy based on material misrepresentations.

     

  • Obtained summary judgment granting the insurer's claim for rescission based on material misrepresentation and breach of warranty in the application based on the insured's failure to disclose the dispute with the former partner. The court also granted our motion for summary judgment on the coverage issues, holding that even if the policy were enforced, no coverage existed and the denial was proper. The bad faith claim was dismissed as well. The case is reported at 2005 U.S. Dist. LEXIS 20562 (N.D. Cal. 2005).
     

  • Insurance, Cancellation & Premiums; Underwriting: Insurance Agents
  • Ventura County Superior Court
  • Defendant Insurer
  • Stephen J. Erigero
  • Defended an insurer in an action in which the insured brought suit for a premium refund and bad faith based on the carrier's prior suit for a premium refund. The insurer contended that no premium was due,  the policy had been properly cancelled and the insured had in fact failed to make premium payments leading to its cancellation.

  • The insured dismissed suit for a waiver of costs.

  • declaratory relief, covered auto, insurance coverage, bad faith, med-pay, underinsured motorist, rental car,
  • U.S. District Court, Northern District of California
  • Plaintiff Automobile Insurance Company
  • Robert M. Forni
  • Prosecuted declaratory relief action on behalf plaintiff automobile insurer against claimant arising from the denial of his claim for underinsured motorist (“UIM”) and medical payments (“med-pay”) benefits under the insured's policy. The insured submitted his UIM and med-pay claim following an accident in June 2003, in which he was injured while occupying a rental car driven by the insured  in Florida.  At the time of the accident, the claimant was as neither an insured nor injured in an insured in a “covered auto,” he  did not reside with the insured.  The insured alleged that the rental car was a temporary substitute for the insured's Lexus, which was operated and garaged in California, where the insured and the claimant resided.  The insurer denied the claims on the grounds that the claimant was not an “insured” under the policy, because  the rental car in which he was injured was not a “temporary substitute” for the insured vehicle. Thus, the central issue of the case was  whether the claimant was entitled to UIM and med-pay benefits even though neither he nor the rental car was covered by the policy.

  • The district court granted our client's motion for summary judgment and denied the insured's cross motion for partial summary judgment on grounds that the rental car was not a “covered auto” under the insurance policy.  The court concluded that California’s uninsured/underinsured motorist statute, California Insurance Code §§ 11580.1 and 11580.2, did not expand coverage beyond the terms stated in the policy.  The court then held that the rental car was not a temporary substitute for the insured's vehicle under the terms of the policy, because the claimant failed to meet his burden to prove both that the insured vehicle was inoperable, and that the insured vehicle's normal use involved the same use in Florida as the rental car.