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Vol. 5, Iss. 10
October 12, 2016

Pennsylvania High Court To Address State’s Definition Of Bad Faith
In Rancosky v. Wash. Nat’l Ins. Co., No. 124 WAL 2016 (Pa. Aug. 30, 2016) , the Pennsylvania Supreme Court granted allocator to answer the following question: “Whether this Court should ratify the requirements of Terletsky v. Prudential Property & Casualty Insurance Co., 437 Pa. Super. 108, 649 A.2d 680 (Pa. Super. 1994), appeal denied, 540 Pa. 641, 659 A.2d 560 (1995), for establishing insurer bad faith under 42 Pa.C.S. § 8371, and assuming the answer to be in the affirmative, whether the Superior Court erred in holding that Terletsky factor of a ‘motive of self-interest or ill-will’ is merely a discretionary consideration rather than a mandatory prerequisite to proving bad faith?”

West Virginia High Court: Constitutional Right To Jury Trial Does Not Trump Policy Language
Richard Gravely disagreed with the decision of his auto insurer to settle a claim on his behalf. Gravely dismissed the attorney hired by his insurer and demanded a jury trial. The insurer settled nonetheless. Gravely filed suit against the insurer for violating his right to a jury trial under the West Virginia Constitution. Gravely lost and appealed to West Virginia’s highest court, which characterized Gravely as “unsatisfied with being relieved of liability.” Gravely lost again. The court, calling Gravely’s complaint baseless, noted that the insurance policy gave the insurer the right to investigate and settle any claim and does not require the insured to consent.

Held: “Petitioner contends that the right to a jury trial under the West Virginia Constitution ‘trumps’ the clear and unambiguous language of his policy. We disagree and find that the constitutional right to a jury trial is not implicated in this case. . . . [A] violation of a constitutional right generally occurs when there has been unlawful ‘state action’ by a ‘state actor.’ We find that petitioner’s complaint contains no allegation that respondent is a state actor or that its settlement of the claim against petitioner constitutes state action.”

New York Federal Court Allows For Reimbursement Of Defense Costs
This from a New York federal court following a no duty to defend determination: “In its January 30, 2014 letter, Maxum informed VLK that it ‘as a courtesy, will appoint defense counsel to defend VLK in the third-party action,’ but that it ‘reserves all of its rights to withdraw the defense upon a declaration of non-coverage and to recoup defense costs incurred in defending the third-party action despite there being no contractual obligation to do so.’ VLK never objected to the reservation. Accordingly, Maxum has established that it is entitled to recoup its defense costs from VLK in the amount of $12,289.12.”

Labels Beware: Court Rejects Continuous Trigger Because Policy Language Does Not Support It
Labels are sometimes used to describe policy language: trigger of coverage, hammer letter, four corners, innocent co-insured and many more. But as Columbia Casualty Co. v. Plantation Pipe Line, No. A16A0705 (Ga. App. Ct. August 31, 2016) demonstrates, labels are not controlling. Policy language is still king. The court rejected the applicability of the continuous trigger, to an environmental claim, because the policy language could not support it: “In this case, then, the Columbia policy expressly ‘applies to occurrences taking place during [the] policy period.’ Columbia could have drafted the substitution clause to provide that, if the underlying policy insures occurrences taking place during the policy period, then the Columbia policy applies to occurrences taking place during the policy period to the extent of injury taking place during the policy period.” (emphasis in original”)

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