Insurer’s Motion for Summary Judgment to Dispose of Bad Faith Claim Denied

    The court denied the insurer's motion for summary judgment seeking to dismiss the insured's bad faith claim. Landmark Am. Ins. Co. v Esters, 2024 U.S Dist LEXIS 93008 (W.D. La. May 23, 2024).

    The case arose out of circumstances occurring due to Hurricane Laura making landfall on August 27, 2020. Insurance Unlimited (IU) was a licensed independent insurance agency that obtained and maintained insurance coverage for customers. IU had a policy with Landmark under which it was the named insured.

    The issue in a motion for summary judgment filed by Landmark was whether IU had an right to assert bad faith claims against Landmark for IU's payment to Gloria Robinson, payments to Sam's Residential, LLC, or a settlement payment to Manick Investments arising out of Landmark's alleged breach of the duty to provide coverage and defend.

    Landmark filed a lawsuit against IU and certain IU customers seeking a declaratory judgment and other relief in connection with Defendant Valerie Muses' errors, fault, negligence and/or theft during the time she worked as a licensed insurance producer agent and account manager with IU. IU's customers sought damages and relief against IU. IU paid Robinson $127,385.74. IU further paid Robinson for "consulting or labor" in the amount of $13,174.35. Robinson was subsequently dismissed from the suit. IU paid Par Consulting, GM Consulting, and Quality Northside Roofing over $250,000 for Sams' Residential Claim. Sam's Residential was dismissed from the suit. Landmark directly paid Manick $25,000 in which Manick released its claim against Landmark and IU. 

    The court previously found that Landmark's policy provided coverage to IU for the claims of Sam's Residential, Robinson, and Manick, among other people, and that Landmark breached its duty to defend UI as to these customer claims. 

    Landmark filed a motion for partial summary judgment seeking dismissal of the bad faith claims asserted by IU. While Landmark sough dismissal of any bad faith claims for IU's voluntary settlement payments, IU explained it was not seeking bad faith damages for Landmark's failure to settle. Therefore, to the extent that Landmark was asserting that such claims should dismissed, the motion was granted.

    Landmark also contended that IU had no right to assert bad faith claims for IU's voluntary payments to Robinson and Sam's Residential or for IU's settlement payment to Manick because Robinson, Sam's Residential and Manick had no right to assert such claims agains Landmark as third-party tort victims. IU argued that no third-party was making a bad faith claim; only IU was asserting a claim, and IU was the named insured. 

    The court noted it previously found that Landmark breached its duty to defend and provide coverage. However, there remained a genuine issue of material fact as to whether IU was owed damages for breach of the duty to provide coverage and defend. Therefore, to the extent Landmark asserted dismissal of any damages arising out of its alleged breach of the duty to provide coverage or defend, the motion was denied.