Supreme Court Allows Excess Insurer’s Bad Faith Claim Against Primary

Tapas: Small Dishes of Insurance Coverage News & Notes

The Supreme Court of Hawaii held that “an excess liability insurer can bring a cause of action, under the doctrine of equitable subrogation, against a primary liability insurer who in bad faith fails to settle a claim within the limits of the primary liability policy, when the primary insurer has paid its policy limit toward settlement.” St. Paul Fire & Marine Ins. Co. v. Liberty Mutual Insurance Co., No. SCCQ–14–0000727 (Haw. June 29, 2015), [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance].

[At issue: Pleasant Travel was sued for damages resulting from an accidental death. The primary insurer, Liberty Mutual, appointed counsel to represent Pleasant Travel. The excess insurer, St. Paul, alleged that Liberty Mutual rejected multiple pretrial settlement offers within the $1 million limit. Trial resulted in a verdict of $4.1 million. After the verdict, the action was settled for a confidential amount in excess of the Liberty Mutual policy limit. St. Paul claims that it paid the amount in excess.]

Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit www.coverageopinions.info.

The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

   Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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