On May 5th, I blogged about an important case pending before the California Supreme Court—Nickerson v. Stonebridge Life Insurance Company—that was set to address an important issue for policyholders forced to sue their insurers for bad faith and punitive damages. You can check out my prior blog addressing the issues in the case here.
In a Colorado insurance claim for breach of the duty of good faith and fair dealing, the plaintiff may recover damages for emotional distress without proving substantial property or economic loss.
Last year I blogged about the requirements for asserting a successful bad faith claim in Tennessee under Tenn. Code Ann. § 56-7-105.
I did not specifically address a policyholder’s ability to pursue punitive damages against the insurance company.
New York’s treatment of bad faith claims and in particular first-party bad faith claims1 is, to put it mildly, draconian. The New York courts have largely curtailed bad faith as a legal remedy through case law. Although it is technically possible under New York law for a first-party bad faith claim to be awarded, it is very difficult and rare to receive such a judgment on this basis in New York. The traditional rule in New York is to severely restrict the recovery of punitive damages for breach of contract,2 which makes it very difficult to effectively litigate bad faith claims.
Let’s say you are immersed in bad faith litigation and the damages you seek include punitive damages – what kind of punishment-related discovery are you going to want?1 Well, some obvious starting points would be discovery pertaining to other claims involving similarly-situated insureds, the insurer’s net worth, and the bonus/incentive program(s) that the insurer has in place to reward personnel for lowering claim payouts. But do you get to have at that kind of discovery by simply including the phrase “punitive damages” in the WHEREFORE clause of your bad faith complaint? Most Florida courts these days will require you to first clear the hurdles set forth in Section 768.72 of the Florida Statutes; and proffer evidence supportive of your bad faith punitive damage claim before allowing you to conduct punishment-related discovery. This post highlights a decision that, in my opinion, got the punitive damage proffer analysis right – the Royal Marco decision out of the Middle District of Florida.2
An insurer’s duty of good faith and fair dealing to its insured continues even after litigation is filed against the insurer. Colorado recognizes that an insurer’s litigation tactics may be considered by the jury in determining unreasonableness and punitive damages. See Tait ex rel. Tait v. Hartford Underwriters Ins. Co., 49 P.3d 337 (2001) (trial court increased punitive damages because during litigation the insurer committed discovery violations and delegated to counsel many of its continuing obligations to the insured despite insurer’s ongoing duty to insured pursuant to Southerland v. Argonaut Insurance Co., 794 P.2d 1102 (Colo. App. 1990); Dale v. Guaranty National Insurance Co., 948 P.2d 545 (Colo. 1997) (an insurer’s conduct even after an arbitration proceeding is relevant to a claim of bad faith breach of an insurance contract); and Coors v. Security Life of Denver Ins. Co., 112 P.3d 59 (2005) (Supreme Court upheld punitive damages award because insurer’s bad faith conduct continued after the lawsuit was filed).