In June of this year, Judge Tom Anderson joined the ranks of other judges in Tennessee that have held that punitive damages can be awarded against an insurance company for breach of an insurance contract, if the breach was intentional, malicious, reckless, or malicious. The case was Carroll v. Nationwide Property & Casualty Company,
Bad Faith
Farm Bureau’s “Take It or Leave It Offer” Determined to be Unfair Claims Practice
In Brooks v. Tenn. Farmers Mut. Ins. Co., 2014 Tenn. App. LEXIS 776 (Tenn. Ct. App. Nov. 26, 2014), an insured’s home was damaged by a tornado and an independent adjuster hired by the insurance company offered the homeowner $56,788 to resolve the claim. The homeowner disagreed with the estimate and refused to settle…
Cosmetic Damage – Honest Disagreement or Reckless Misbehavior?
Insurance companies are increasingly denying claims based on engineering reports that there is “no functional damage” (damage which impairs the functionality of the roof) and that the damage is “cosmetic only.” For example, if a hail storm comes through and wreaks havoc on a metal roof to a home, it might still be functional even…
Legitimate Difference of Opinion Should Not Constitute Bad Faith
Tennessee “bad faith” law has long held that the statutory “bad faith penalty” set forth in T.C.A. 56-7-105 is not appropriate when the insurer’s refusal to pay rests upon legitimate and substantial legal grounds or when the payment demand is greater than the judgment ultimately recovered. Tyber v. Great Central Ins. Co., 572 F.2d …
Tennessee Federal Court Allows Claim for Punitive Damages Against Insurer to Proceed
In Montesi v. Nationwide Mut. Ins. Co., 970 F. Supp.2d 784 (W.D. Tenn. Aug. 8, 2013), the United States District Court for the Western District of Tennessee allowed a policyholder’s claim for punitive damages to proceed, holding that punitive damages are recoverable in a stand-alone claim for negligence infliction of emotional distress. Ms. Montesi…
Tennessee Federal Court Denies Motion for Summary Judgment as to Bad Faith Claim
In a recent opinion by the U.S. District Court for the Middle District of Tennessee, Judge Sharp denied an insurance company’s motion for summary judgment seeking dismissal of an insured’s claim for statutory bad faith. The case is New Hampshire Ins. Co. v. Blackjack Cove, LLC, 2014 U.S. Dist. LEXIS 40122 (M.D. Tenn. March 26,…
Is Cosmetic Roof Damage a “Direct, Physical Loss?”
I recently represented the owner of a commercial property in a hail damage claim in which the metal roof was clearly dented by hail. Remarkably, the insurance company denied the claim on the basis that the roof was still functional. In the process of working with the opposing lawyer to obtain payment, I ran across…
Punitive Damages for Failure to Pay on an Insurance Policy?
The issue of whether punitive damages are available to an insured when an insurance company wrongfully denies a claim was recently addressed by the Tennessee Court of Appeals in Riad v. Erie Insurance Exchange. Over the years, this issue has been confused by many state and federal courts in Tennessee, but the Riad court…
Another Take on the U.S. Bank Case
Far from being “ho hum” as my colleague writes, the case of U. S. Bank, N.A. as servicer for the Tennessee Housing Development Agency v. Tennessee Farmers Mutual Insurance Company, No. W2012-00053-COA-R3-CV, filed November 29, 2012, the did establish some important points of law – but from the insurer’s perspective, in limiting bad…
TN Court of Appeals Impliedly Recognizes Claim for Common Law Bad Faith
You might recall the 2011 legislation that took away consumers’ right to bring claims against insurance companies under the Tennessee Consumer Protection Act, but that same legislation seemed to recognize the existence of a common law cause of action for bad faith in Tennessee. (click here for a prior post on that topic). Since that…