SNR Denton LLP on Lennar Corp. v. Transamerica Insurance Co.: Whither Bad Faith in Arizona?

SNR Denton LLP on Lennar Corp. v. Transamerica Insurance Co.: Whither Bad Faith in Arizona?

William Barker and Ronald Kent   By William T. Barker & Ronald D. Kent, Partners, SNR Denton

This commentary examines a potentially pivotal court decision in the law of bad faith and its implications. The Arizona Court of Appeals in Lennar Corp. v. Transamerica Insurance Co. held that a later-reversed trial court summary judgment finding that there was no coverage did not preclude claims that the denial had been in bad faith.  The commentary explains why, under generally accepted principles of bad faith law, a ruling favorable to the insurer on coverage, even if later reversed, ordinarily ought to preclude any claim of first-party bad faith. The commentary further argues that, unless there is some question about what the insurer knew or should have known, the existence of first-party bad faith in most jurisdictions is ordinarily a question of law, not a question of fact. The commentary argues that in most jurisdictions, showing that a claim was fairly debatable would preclude bad faith liability, as long as the insurer did not injure any interest independent of the insured's rights under the policy. The commentary explains how the appellate court decision also extended certain unusual principles of Arizona bad faith law in new directions. The commentary analyzes each holding in the court's decision in terms of both principles of bad faith law accepted elsewhere and under the sometimes divergent law of Arizona. The article examines and criticizes the decision and many of the unusual features of Arizona bad faith law which affected the availability of summary judgment on bad faith in Lennar.  But it offers a reading that suggests a possible extension of bad faith law that might be reconcilable with traditional principles.

William T. Barker is a member of SNR Denton's Insurance Litigation & Coverage Practice Group and practices in the firm's Chicago office.  He has a nationwide practice in the area of complex commercial insurance litigation, including coverage, claim practices, sales practices, risk classification and selection, agent relationships, and regulatory matters. He is the co-author, with Ronald D. Kent of THE NEW APPLEMAN INSURANCE BAD FAITH LITIGATION, SECOND EDITION and with Charles Silver of the forthcoming PROFESSIONAL RESPONSIBILITIES OF INSURANCE DEFENSE COUNSEL; he has written over 100 published articles on insurance and litigation subjects.  He has been described as "[t]he leading lawyer commentator" on the relationships between insurance and civil procedure.  Charles Silver & Kent Syverud, The Professional Responsibilities of Insurance Defense Lawyers, 45 Duke L.J. 255, 257 & n.4 (1995).  He is an Adviser to the American Law Institute project on Principles of the Law of Liability Insurance.  He is a member of the EDITORIAL BOARD OF THE NEW APPLEMAN ON INSURANCE LAW LIBRARY EDITION and THE NEW APPLEMAN INSURANCE LAW PRACTICE GUIDE.  He is Editorial Board Director and Senior Contributing Editor of INSURANCE LITIGATION REPORTER and a member of the Board of Editors of DEFENSE COUNSEL JOURNAL.

Ronald D. Kent heads the Litigation Department in SNR Denton LLP's Los Angeles office. He is also Co-Chair of the Firm's National Insurance Litigation and Coverage Practice and is a member of the firm-wide Policy & Planning (Management) Committee. Since 2005, he has been named each year as a leading trial lawyer nationally and in California, based on peer and client evaluations, by Chambers USA: America's Leading Lawyers, the highly respected independent attorney rating organization. Mr. Kent has extensive experience representing major insurance companies on a wide variety of matters, including fraud and bad faith actions, class action and multiple plaintiff litigation, defense of toxic tort and other environmental claims, insurance coverage actions and general business disputes. Mr. Kent has tried matters in state and federal courts throughout California, and in other states, and has successfully handled in excess of 70 arbitrations to final resolution. In addition, he has briefed and argued numerous appellate matters in the California Supreme Court, nearly all California district courts of appeal and the Ninth Circuit Court of Appeals. Mr. Kent is the co-author of the second edition of New Appleman Insurance Bad Faith Litigation.

Sign in with your Lexis.com ID to access the full text of this commentary, SNR Denton LLP on Lennar Corp. v. Transamerica Insurance Co.: Whither Bad Faith in Arizona?. Additional fees may be incurred. (approx. 72 pages)

If you do not have a lexis.com ID, you can purchase the full text of this commentary on the LexisNexis Store or you can access this commentary and additional Insurance Law Emerging Issues Commentaries on the Store.

Judge's Gavel and Law Books

Sign in with your Lexis.com ID to access the Lexis enhanced version of the Lennar Corp. v. Transamerica Ins. Co., 256 P.3d 635 (Ariz. Ct. App. 2011) decision with summary, headnotes, and Shepard's.

Download a free copy of the unenhanced version of the decision Lennar Corp. v. Transamerica Ins. Co., 256 P.3d 635 (Ariz. Ct. App. 2011).

Sign in with your Lexis.com ID to access the complete set of Emerging Issues Analysis for Insurance Law.

For more information about LexisNexis products and solutions connect with us through our corporate site.