When Claims are Fairly Debatable There is No Bad Faith
Post 4986
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Homeowners appealed from the district court’s denial of their breach-of-contract, consequential-damages, and bad-faith claims in Donnie Paul Bradley and Melanie Yvonne Bradley v. Allstate Insurance Company, No. 23-1397, Court of Appeals of Iowa on January 23, 2025 resolved the disputes.
BACKGROUND:
Donnie and Melanie Bradley appealed from the district court’s summary judgment ruling and final judgment following contractual disputes against Allstate Insurance Company. The Bradleys alleged errors in the district court’s interpretation of the insurance policy for their breach-of-contract claim and the granting of summary judgment to Allstate on their consequential damages and bad-faith claims. The dispute arose as a result of:
1. The Bradleys purchased an Allstate insurance policy in 2014 for their Cedar Rapids home.
2. The policy included actual cash value (ACV) and replacement cost value (RCV) coverage.
3. The August 2020 Derecho windstorm caused significant damage to their home.
4. The Bradleys reported the damage, and Allstate acknowledged the losses were covered under the policy.
5. The Bradleys, unhappy with Allstate, demanded appraisal in November 2020.
6. The parties signed an appraisal for the ACV in September 2021, and Allstate paid the Bradleys in accordance with the insurance policy.
7. The Bradleys claimed breach of contract for Allstate denying RCV coverage, alleged bad faith, and demanded consequential and punitive damages.
8. The Bradleys spent more on repairs than Allstate paid out and they continued with litigation.
9. The Bradleys ultimately paid for the repairs by refinancing their home to establish a home equity line of credit and taking out a loan against a retirement account.
10. Allstate was to reimburse the Bradleys for repair costs in excess of ACV-the equivalent of the RCV-if repairs were completed within 180 days of the ACV payment.
CLAIMS AND PROCEEDINGS:
The district court granted summary judgment to Allstate on the consequential damages and bad-faith claims but denied it for the breach-of-contract claim.
The Bradleys withdrew their request for a jury trial, and Allstate eventually paid the RCV from the appraisal.
APPEAL:
The Court of Appeals upheld the district court’s decision that consequential damages were not available under Iowa law.
The Court of Appeals agreed with the district court that the bad-faith claim was fairly debatable and that the Bradleys did not set forth a valid bad-faith claim.
DISPOSITION:
The question of whether the Bradleys were entitled to RCV payments was found to be fairly debatable as a matter of law. The Court concluded that the undisputed facts establish that there was no unreasonable delay in the ACV payment. Allstate reasonably disputed coverage as to the RCV payments on the basis that the explicit terms of the policy require repair to be completed for an RCV payment to be made.
The claim was, in the opinion of the Court of Appeals, fairly debatable because replacement was not completed within 180 days of the ACV payment. The Court of Apeals concluded that the Bradleys could not succeed on their bad faith claim.
ZALMA OPINION
The Iowa Court of Appeals educated the Bradleys and their counsel holding that an insurance policy is a contract with conditions. The Allstate policy provided, as a condition, that to receive the difference between ACV payment and the RCV the repairs must be completed within 180 days of the ACV payment. Although there was a dispute over when the repairs were completed Allstate paid both the ACV and the RCV making the entire claim moot and the other claimed damages were fairly debatable and no evidence to support a bad faith claim.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Concealing a Weapon Used in a Murder is an Intentional & Criminal Act
Post 5002
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In Howard I. Rosenberg; Kimberly L. Rosenberg v. Chubb Indemnity Insurance Company Howard I. Rosenberg; Kimberly L. Rosenberg; Kimberly L. Rosenberg; Howard I. Rosenberg v. Hudson Insurance Company, No. 22-3275, United States Court of Appeals, Third Circuit (February 11, 2025) the Third Circuit resolved whether the insurers owed a defense for murder and acts performed to hide the fact of a murder and the murder weapon.
FACTUAL BACKGROUND
Adam Rosenberg and Christian Moore-Rouse befriended one another while they were students at the Community College of Allegheny County. On December 21, 2019, however, while at his parents’ house, Adam shot twenty-two-year-old Christian in the back of the head with a nine-millimeter Ruger SR9C handgun. Adam then dragged...
Renewal Notices Sent Electronically Are Legal, Approved by the State and Effective
Post 5000
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Washington state law allows insurers to deliver insurance notices and documents electronically if the party has affirmatively consented to that method of delivery and has not withdrawn the consent. The Plaintiffs argued that the terms and conditions statement was not “conspicuous” because it was hidden behind a hyperlink included in a single line of small text. The court found that the statement was sufficiently conspicuous as it was bolded and set off from the surrounding text in bright blue text.
In James Hughes et al. v. American Strategic Insurance Corp et al., No. 3:24-cv-05114-DGE, United States District Court (February 14, 2025) the USDC resolved the dispute.
The court’s reasoning focused on two main points:
1 whether the ...
Rescission in Michigan Requires Preprocurement Fraud
Post 4999
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Lie About Where Vehicle Was Garaged After Policy Inception Not Basis for Rescission
This appeal turns on whether fraud occurred in relation to an April 26, 2018 renewal contract for a policy of insurance under the no-fault act issued by plaintiff, Encompass Indemnity Company (“Encompass”).
In Samuel Tourkow, by David Tourkow v. Michael Thomas Fox, and Sweet Insurance Agency, formerly known as Verbiest Insurance Agency, Inc., Third-Party Defendant-Appellee. Encompass Indemnity Company, et al, Nos. 367494, 367512, Court of Appeals of Michigan (February 12, 2025) resolved the claims.
The plaintiff, Encompass Indemnity Company, issued a no-fault insurance policy to Jon and Joyce Fox, with Michael Fox added as an additional insured. The dispute centers on whether fraud occurred in...
Insurance Fraud Leads to Violent Crime
Post 4990
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CRIMINAL CONDUCT NEVER GETS BETTER
In The People v. Dennis Lee Givens, B330497, California Court of Appeals, Second District, Eighth Division (February 3, 2025) Givens appealed to reverse his conviction for human trafficking and sought an order for a new trial.
FACTS
In September 2020, Givens matched with J.C. on the dating app “Tagged.” J.C., who was 20 years old at the time, had known Givens since childhood because their mothers were best friends. After matching, J.C. and Givens saw each other daily, and J.C. began working as a prostitute under Givens’s direction.
Givens set quotas for J.C., took her earnings, and threatened her when she failed to meet his demands. In February 2022, J.C. confided in her mother who then contacted the Los Angeles Police Department. The police ...
Police Officer’s Involvement in Insurance Fraud Results in Jail
Post 4989
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Von Harris was convicted of bribery, forgery, and insurance fraud. He appealed his conviction and sentence. His appeal was denied, and the Court of Appeals upheld the conviction.
In State Of Ohio v. Von Harris, 2025-Ohio-279, No. 113618, Court of Appeals of Ohio, Eighth District (January 30, 2025) the Court of Appeals affirmed the conviction.
FACTUAL BACKGROUND
On January 23, 2024, the trial court sentenced Harris. The trial court sentenced Harris to six months in the county jail on Count 15; 12 months in prison on Counts 6, 8, 11, and 13; and 24 months in prison on Counts 5 and 10, with all counts running concurrent to one another for a total of 24 months in prison. The jury found Harris guilty based on his involvement in facilitating payments to an East Cleveland ...
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To Dispute an Arbitration Finding Party Must File Dispute Within 20 Days
Post 4988
EXCUSABLE NEGLECT SUFFICIENT TO DISPUTE ARBITRATION LATE
In Howard Roy Housen and Valerie Housen v. Universal Property & Casualty Insurance Company, No. 4D2023-2720, Florida Court of Appeals, Fourth District (January 22, 2025) the Housens appealed a final judgment in their breach of contract action.
FACTS
The Housens filed an insurance claim with Universal, which was denied, leading them to file a breach of contract action. The parties agreed to non-binding arbitration which resulted in an award not
favorable to the Housens. However, the Housens failed to file a notice of rejection of the arbitration decision within the required 20 days. Instead, they filed a motion for a new trial 29 days after the arbitrator’s decision, citing a clerical error for the delay.
The circuit court ...
