Articles Posted in Insurance Bad Faith

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The courts have, in turn, opened their ears (and maybe their hearts, too) to the plight of American businesses that have suffered on a truly historic scale.

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In the October 15, 2020 edition of The Legal Intelligencer Edward T. Kang, managing member of Kang Haggerty wrote “Business-Interruption Claims in the COVID-19 Era: Litigators Find Hope.

While the coronavirus itself may be novel, business interruption insurance lawsuits are not. Accordingly, in the initial wave of lawsuits arising from the pandemic, both business owners and courts throughout the country seemed trapped in a fixed mindset about this new type of case. Reeling from loss and damage, business owners assumed that since their businesses had been interrupted by COVID-19, their claims had merit. Courts, meanwhile, reading insurance policies narrowly, dismissed claims related to the virus for lack of tangible alteration to business property. In recent months, however, litigators have embraced more creative arguments to persuade the courts to hear their cases. The courts have, in turn, opened their ears (and maybe their hearts, too) to the plight of American businesses that have suffered on a truly historic scale.

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With Complaints Rapidly Increasing across the U.S., Now is the time to act

As of May 26, 2020, 2,278 complaints have been filed nationwide over the global pandemic COVID-19 according to the COVID-19 Complaint Tracker developed by lawyers at Hunton Andrews Kurth LLP. While the largest amount of these complaints deal with prison conditions and civil rights , the next highest areas of litigation involve insurance disputes, consumer disputes, labor and employment issues  and contract disputes. Claims regarding employment, contracts and force majeure provisions, or clauses contained in contracts which excuse performance due to natural destructive acts also known as “acts of God,” are on the rise. These complaints will continue to be filed as the effects of COVID-19 continue to be felt in ever-changing ways. Many of these complaints have been filed in jurisdictions where Kang Haggerty regularly practices—namely COVID-19 hot spots New York, Pennsylvania and New Jersey. Continue reading ›

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In a changing COVID-19 world filled with new regulations, adjustments, and uncertainty, Kang Haggerty provides services to help our clients avoid litigation or to obtain favorable outcomes in litigation. Some COVID-19 services offered by Kang Haggerty that will help you address COVID-19-related issues include: Continue reading ›

The Superior Court of Pennsylvania found that the court erred in a bad faith claim in Mohney v. American General (2030 & 2046 WDA 2013). The Court reasoned that the insurer acted in bad faith by having no reasonable basis for terminating the plaintiff’s benefits.

Mohney purchased life insurance from U.S. Life (now succeeded and represented by American General) in October 1991 and September 1992. A year later, the plaintiff suffered an injury as a result of a traffic accident preventing him from returning to work. U.S. Life found Mohney to be totally disabled under the definition of their policy and disbursed insurance benefits on a monthly in basis. In February 1995 U.S. Life suddenly terminated Mohney’s benefits alleging that Mohney no longer met “the covered criteria for total disability as stated in [his] certificates” and was “able to perform regular duties of an occupation for which [he was] qualified”.

The plaintiff immediately initiated civil action against the defendant, and in June 1997 filed a complaint for fraud, breach of contract, violation of the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), and insurance bad faith. During the following four years, U.S. Life’s objections were granted by the court. In 2001, U.S. Life filed a motion for summary judgement which was granted in part with the exception of Mohney’s breach of contract claim. The trial court found Mohney to be “totally disabled under the terms of the insurance contract” and awarded the plaintiff $20,772.58. Upon appeal the Superior Court affirmed the trial court’s breach of contract judgement, but remanded for a trail on the bad faith matter. In October 2013 the trial court ruled in favor of U.S. Life prompting Mohney to appeal the bad faith ruling which is the central consideration of the present memorandum.

The Superior Court of Pennsylvania recently affirmed the trial court’s opinion involving a bad faith action in Davis v. Fidelity National Title Insurance Company (674 MDA 2014). In the bad faith action law suit brought against Fidelity in the lower court, the plaintiffs were awarded over $2 million in damages.

The plaintiffs, Richard and Maria Davis, purchased a 15 acre-plot in Lackawanna County, Pennsylvania to develop a residential housing project. Three years later in 2007, a neighboring property owner, Louis Norella claimed that a part of that property, a 1.86 acre-plot, belonged to him. Fidelity, the title insurance company that had insured the Davises’ property, recognized later that year that there was a problem with the title and assured the Davises that the matter would be resolved. It wasn’t until 2012 that Fidelity finally purchased Norella’s property for $50,000. The plaintiffs claimed that this five-year delay on Fidelity’s part prevented the project from coming to fruition at the time, thus causing a lost profit damage.

In affirming the lower court’s opinion, the Superior Court of Pennsylvania stated that the “excessive delay” experienced by the Davises implicated Fidelity in bad faith action. The court also stated this excessive delay caused direct damage to the plaintiffs.

The Supreme Court of Pennsylvania has clarified the question of whether, under Pennsylvania law, an insured may transfer the right to recover damages against his or her insurance company in an insurance bad faith claim to a third party. In a recent decision in AllState Property and Casualty Insurance Company v. Jared Wolfe, No. 39 MAP 2014, 2014 WL 7088147 (December 15, 2014), the Supreme Court ultimately decided that yes, an insured may assign their rights to pursue an insurance bad faith action to a third party.

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A Pennsylvania state court has found Nationwide Insurance Co. engaged in bad faith in handling its insured’s first party auto insurance claim and in its litigation tactics when the dispute led to a lawsuit.  The court’s forty page opinion catalogues the types of specific conduct that evidences bad faith in violation of Pennsylvania Insurance Bad Faith Statute ( 42 Pa. C. S. A. § 8371), which warrants an imposition of punitive damages to deter insurers from engaging in such conduct.

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Reversing the trial court’s order granting summary judgment in favor of the insurer in a declaratory judgment action brought by the insured, the Superior Court in Lanigan v. T.H.E. Insurance Company, No. 646 WDA 2013, (Pa. Super. March 14, 2014) held that the insurer breached its duty to defend the insured in a claim arising from an accident during a race.

On March 31, 2007, in a dramatic and fatal twist of events, Lanigan was racing at the Mercer Raceway Park in Mercer, Pennsylvania when his throttle stuck and he lost control of his car while turning. Crashing into the catch-fence near the pit, his car struck Steven Guthrie, Jr. and Samuel Ketcham, who were standing behind the fence. Mr. Guthrie died as a result of the injuries incurred, and Mr. Ketcham was seriously injured.

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