• Insurer's Summary Judgment Reversed in Breach of Contract and Tortious Bad Faith Lawsuit
  • February 20, 2006
  • Law Firm: Duane Morris LLP - Philadelphia Office
  • Wilson v. 21st Century Insurance Company
    California Court of Appeal
    Second District, Division Seven
    Case No. B180323
    Filed January 30, 2006

    The California Court of Appeal held that summary judgment in favor of the insurer on breach of contract and tortious bad faith in adjusting the claim should be reversed because triable issues of fact exist as to whether the insurer failed to investigate and evaluate the plaintiff's claim thoroughly.

    This case arose in November 2000, after the insured was injured in an automobile accident with an intoxicated underinsured motorist. The insured had a policy with 21st Century which provided underinsured motorist coverage (UIM) up to $100,000. The insured demanded the $100,000 policy limits from 21st Century and accompanied her request with a police report, photos of her demolished vehicle and medical reports from the emergency room and her treating physician. Initially 21st Century rejected the insured's policy limit demand based on a review of the medical reports submitted by the insured and her physical activities following the accident. 21st Century at first concluded that the $15,000 that the insured received from the other driver, plus $5,000 from medical payments coverage, fully compensated the insured. However, more than two years later, in June 2003, 21st Century had the insured examined by its own neurosurgeon, who recommended surgery. After this exam and recommendation, 21st Century paid the insured the remaining amount of her UIM coverage. After receiving full payment, the insured brought this action for breach of contract and bad faith. Both of the insured's causes of action arose from an allegedly unreasonable delay in paying the policy limits and the alleged failure to conduct an adequate investigation.

    The Court of Appeal found that there were triable issues of fact as to whether 21st Century failed to investigate and evaluate the plaintiff's claim thoroughly and that summary judgment was therefore improper. The court also found that the plaintiff should have had the opportunity to conduct discovery into 21st Century's use of a computer software program known as Colossus in the evaluation of bodily injury claims.

    For the full opinion, see: http://www.courtinfo.ca.gov/opinions/documents/B180323.PDF