News - Tharpe & Howell - Litigation and Transaction Lawyers

FIRM DEFEATS BAD FAITH CLAIM!

Firm litigators Johnna Hansen and Stacey Miller were recently granted an order for Summary Adjudication on behalf of a large insurer carrier client which had been sued by its insured for bad faith. In addition to general and special damages, the plaintiff sought punitive damages in its Complaint.

In the subject case, the plaintiff/insured alleged that the Firm's insurance carrier client had committed bad faith when it denied the insured's claim for business personal property loss due to water damage from a broken sprinkler. The carrier's denial of the claim had been based on material misrepresentations made in the presentation of the claim by its insured.

On behalf of the insurer/client, Firm litigators Miller and Hansen argued that a genuine dispute existed with regard to coverage given the nature of the documentation submitted by the insured (including overstated values, duplicative receipts, and apparently altered receipts); and that, based on this genuine dispute, no claim for breach of the covenant could exist.

In addition, litigators Miller and Hansen argued that the client's denial of the claim came after all documentation had been submitted to coverage counsel for review, the insured had testified at an examination under oath conducted by counsel, and an extensive recommendation had been made by that counsel to deny the claim. Because the Firm's carrier client had relied on counsel's advice in denying the claim, it had a complete defense to the claim for breach of the covenant of good faith.

After extensive briefing, the Court agreed with litigators Miller and Hansen and ruled there were no triable issues of material fact, the Firm's client had a complete defense as a matter of law to the cause of action for breach of the implied covenant of good faith and fair dealing, and the associated prayer for punitive damages under both the genuine dispute doctrine and the advice of counsel defense could not stand.

This ruling came after the recently published opinion pertaining to the genuine dispute doctrine in Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713.

If you need assistance on an insurance related matter, please feel free to contact attorneys Johnna Hansen or Stacey Miller at (818)205-9955.

Related Attorney(s):
Johnna J. Hansen
Stacey A. Miller

Related Practice Area(s):
Bad Faith and Coverage