Extra-Contractual Litigation Against Insurers

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Edited by Michael R. Nelson, Robert T. Horst, Mark H. Rosenberg

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Claims against insurers have multiplied over the past few decades, as have the strategies of plaintiffs. Extra-Contractual Litigation Against Insurers is a comprehensive guide to new theories used in insurance litigation. It examines both the legal underpinnings of novel causes of action and the practical aspects of bringing claims and defending against them.

Topics covered include: the insurer's third-party bad faith in refusing to settle; first-party bad faith in refusing to pay benefits; bad faith claims involving specific lines of insurance; common law claims; unfair claims settlement practices; alternative theories of liability, such as unjust enrichment; and more.

The authors provide a detailed discussion of trial tactics, covering each phase of trial from commencing an action through discovery, evidentiary rulings, jury instructions, verdict and damages. Extra-Contractual Litigation Against Insurers provides insights on strategies that will benefit all practitioners in this area. No matter which side you're on, this book will help you assess the viability of a claim and represent your clients effectively.

Book #00700; looseleaf, one volume, approximately 512 pages; published in 2009, to be updated as needed; no additional charge for updates during your subscription. Looseleaf print subscribers receive supplements. The online edition is updated automatically. ISBN: 978-1-58852-162-0

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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Edition: 0
  • Page Count: 512
  • ISBN: 978-1-58852-162-0
  • Pub#/SKU#: 700
  • Volume(s): 1

Author Image
  • Michael R. Nelson
Michael R. Nelson (Co-editor and Author of Chapter 2), a partner with Sutherland Asbill and Brennan in New York, New York, has served the interests of insurers for his entire professional career. Prior to his law career, Mr. Nelson was employed by what was then known as the Metropolitan Property and Casualty Insurance Company in Philadelphia from 1981 through 1992, becoming its Field Claim Manager with responsibility for a several-state region. He is a graduate of Temple University School of Law. Mr. Nelson is admitted to practice in New York, Pennsylvania, Ohio, and New Jersey, as well as the District of Columbia. He is an active member of the Federation of Defense and Corporate Counsel (FDCC) and the Lawyers for Civil Justice (LCJ). He has testified before the Federal Rules Advisory Committee and the Standing Committee on Civil Rules on matters such as the Class Action Fairness Act, Federal Rules of Civil Procedure reforms concerning E-discovery, Federal Rule of Evidence 502, and Amendments to Federal Rule of Civil Procedure 56. Mr. Nelson also holds a B.S. from the New York State University at Cortland.

Author Image
  • Robert T. Horst
Robert T. Horst (Co-editor and Co-author of Chapters 1, 9, and 10), is a partner with Timoney Knox in Fort Washington, Pennsylvania, and graduated from Pennsylvania State University with a B.S. in Finance and from Villanova University School of Law. Mr. Horst specializes in the representation of insurers in class action and insurance fraud cases, complex coverage disputes, civil RICO, and "bad faith" litigation. Admitted to practice in Pennsylvania, New Jersey and New York, Mr. Horst has tried numerous cases to verdict and is proud to serve as General Counsel to the International Association of Special Investigative Units (IASIU). A frequent speaker and lecturer to trade associations and industry groups, Mr. Horst regularly presents regarding trial tactics, legal ethics, and emerging issues in the insurance industry. He was NLdH’s Managing Partner from 2003 through 2008.

Author Image
  • Mark H. Rosenberg

Mark H. Rosenberg (Co-editor, Author of Chapters 5 and 12, and Co-author of Chapters 1 and 6), is an associate attorney with Clark & Fox, and graduated from the University of Notre Dame with a B.A. and from Notre Dame Law School, where he was an Honors student and served as articles editor for the Notre Dame Law Review. Mr. Rosenberg specializes in the defense of complicated insurance practice and bad faith disputes. He frequently advises insurance clients regarding insurance bad faith, antitrust law, and class action law.

Mr. Rosenberg has written numerous articles regarding topics such as insurance bad faith, antitrust law, computer animation evidence, and class action law. A frequent contributor to For the Defense and Metropolitan Corporate Counsel, Mr. Rosenberg has also assisted the Lawyers for Civil Justice in preparing comments to the Civil Rules Advisory Committee of the United States Judicial Conference regarding proposed revisions to the Federal Rules of Civil Procedure concerning electronic discovery.


§1.01 Extra-Contractual Claims Against Insurance Companies: A Primer
§1.02 Theories of Extra-Contractual Liability
§1.03 Parties
§1.04 Pleadings and Defenses
§1.05 Damages and Other Remedies
§1.06 Discovery, Evidence, and Experts
§1.07 Summary Judgment, Trial, and Appellate Proceedings

Theories of Extra-Contractual Liability Frequently Litigated

§2.01 Third-Party Bad Faith
[1] History and Purpose
[2] Standard of Conduct
[3] Procedural Prerequisites
[4] Third-Party Direct Actions/Assignment of Rights
[5] Breach of Duty to Defend and Indemnify
§2.02 First-Party Bad Faith
[1] Recognition of Cause of Action
[2] Standard of Conduct
§2.03 Statutory Bad Faith Claims
[1] Procedural Standards
[2] Legal Standards
[3] Statutory Damages
§2.04 Unfair Claims Settlement Practices Statutes and Regulations
§2.05 Consumer Protection Statutes
§2.06 Fair Credit Reporting Act
§2.07 Defamation
§2.08 Fraud
§2.09 Unjust Enrichment/Constructive Trust
§2.10 Antitrust Violations
§2.11 Institutional Bad Faith
§2.12 Furtherance of Bad Faith Conduct During Post-Litigation Conduct

Bad Faith Claims

§3.01 Bad Faith Claims Asserted by the Policyholder
[1] Introduction and Overview
[2] Existence of a Contract
[3] Extension of Coverage
[4] Policy Conditions and Duties After Loss
§3.02 Representative Bad Faith Issues by Line of Coverage
[1] Motor Vehicle Insurance
[2] Life, Health, and Disability Insurance
[3] Property Insurance
[4] Directors and Officers Insurance
§3.03 Comparative Bad Faith
[1] Legal Theories Underlying Comparative Bad Faith
[2] Negative Treatment of the Comparative Bad Faith Defense
[3] Positive Treatment of the Comparative Bad Faith Defense
§3.04 Reverse Bad Faith
[1] Recognition of Reverse Bad Faith
[2] Rejection of Reverse Bad Faith
[3] Third-Party Liability Claims
[4] Statutory Remedies for Insured’s Bad Faith Conduct
[5] Bad Faith Conduct by Insured’s Representatives


§4.01 The Complaint
[1] Factual and Substantive Content
[2] Procedural Considerations
§4.02 The Answer
[1] Reasonableness/Fairly Debatable Defenses
[2] Affirmative Defenses
§4.03 Rule 11 Considerations

Damages and Other Remedies

§5.01 Statutory Bad Faith Claims
[1] Bad Faith Statutes
[2] Consumer Protection Private Right of Action
§5.02 Excess Verdict
§5.03 Punitive Damages
[1] Standards for Awarding Punitive Damages
[2] Standards for Measuring Punitive Damages
§5.04 Attorney’s Fees
[1] Standards for Awarding Attorney’s Fees
[2] Standards for Determining Attorney’s Fees
§5.05 Intentional Infliction of Emotional Distress/Mental Anguish
[1] Intentional Infliction of Emotional Distress or “Outrage”
[2] Negligent Infliction of Emotional Distress
[3] Emotional Distress as an Element of Bad Faith Damages
§5.06 Interest
[1] Standards for Awarding Pre-Judgment Interest
[2] Determination of When Pre-Judgment Interest Begins to Accrue
[3] Obligation to Pay Pre-Judgment Interest in Excess of the Policy Limits
[4] Pre-Judgment Interest on Liability Claim
[5] Pre-Judgment Interest on Uninsured/Underinsured Motorist Claim
§5.07 Declaratory/Injunctive Relief
[1] Declaratory Relief
[2] Injunctive Relief
[3] Declaratory or Injunctive Relief in the Context of a Class Action

Defenses to Extra-Contractual Claims: Theories, Parties, and Witnesses

§6.01 The Insurance Company Acted Reasonably
§6.02 The Claim Is “Fairly Debatable”
§6.03 Statute of Limitations
§6.04 Advice of Counsel
§6.05 Waiver and Estoppel
§6.06 Collateral Estoppel, Res Judicata, and Related Defenses
§6.07 The Timely Tender of Policy Limits
§6.08 The Plaintiff’s Contributory or Comparative Negligence
§6.09 The Policyholder’s Breach of Contract
§6.10 Filed Rate Doctrine
§6.11 Claims Personnel
§6.12 Underwriters
§6.13 Insurance Agent
§6.14 Outside Third Parties
[1] Third-Party Administrators
[2] Third-Party Consultants/Vendors
[3] Outside Counsel
[4] Independent Sales Force
[5] Independent Adjusters
[6] Risk Control/Assessment
[7] Recommended Contractor/Vendor
§6.15 Insurance Entity Defendants


§7.01 Discovery by Plaintiffs: Scope
[1] Wealth of Corporate Defendant
[2] Executive Conduct
[3] Board Conduct
[4] Human Resources Material
[5] Other Insurers Within the Same Trade Organization
[6] Defendant’s Conduct
[7] Audits of Defendant
§7.02 Discovery by Plaintiffs: Interrogatories and Requests for Production of Documents
[1] Instructions and Definitions
[2] Continuing Nature/Duty to Update
§7.03 Objections to Discovery
[1] Standard/Form Objections: Benefits/Detriments
[2] Burden Arguments
[3] Overly Broad
[4] Proprietary/Trade Secret
[5] Privilege
[6] Prior Agreements
§7.04 Duty to Preserve Evidence
[1] Regulatory Requirements
[2] What Constitutes a Claim File
[3] Kinds of Evidence
§7.05 Plaintiffs’ Duty to Maintain Confidentiality
[1] Current Litigation
[2] Prior Litigation
[3] Sealing of Record
§7.06 Depositions
[1] Depositions Taken by Plaintiffs
[2] Depositions Taken by Defendants
§7.07 Other Discovery Issues
[1] Rule 26 Disclosures
[2] Department of Insurance
[3] Attorney General Investigations


§8.01 Introduction
§8.02 Internal Procedures
[1] Claims Files and Claims Manuals
[2] Other Guidelines, Best Practices, and Course of Conduct
§8.03 Unfair Insurance Practices Act and Other State Statutes
[1] Model Acts
[2] The Pennsylvania Experience
[3] Additional Liability Concerns
§8.04 Pattern and Practice Evidence
§8.05 Expert Testimony
[1] Standards for Admission
[2] Bad Faith Case Expert Testimony


§9.01 Types of Experts
[1] Bad Faith and Insurer Misconduct Experts
[2] Class Action Experts
[3] Other Experts
§9.02 Standard of Reasonableness
[1] Learned Treatises Generally
[2] Admissibility of Learned Treatises
[3] Other Publications
[4] Scope of Insurer’s Investigation
§9.03 Motions in Limine: Daubert/Frye
[1] Overview
[2] Daubert and Frye Standards
[3] Daubert and Non-Scientific Expert Evidence

Summary Judgment

§10.01 Summary Judgment in the Federal Courts
[1] Federal Rule of Civil Procedure 56(c)
[2] Prevailing Federal Summary Judgment Case Law
§10.02 Summary Judgment Standards in the State Courts
§10.03 Statements of Undisputed Facts
§10.04 Use of Affidavits
§10.05 Summary Judgment Prior to the Completion of Discovery
§10.06 Policyholders and Summary Judgment
[1] Policyholder Attempts to Defeat Summary Judgment
[2] Motion for Summary Judgment by Policyholder


§11.01 Jury versus Non-jury
[1] When a Demand for Jury Trial Should Be Made
[2] When to Risk a Jury Verdict
§11.02 Bifurcation
[1] Right to Bifurcation in State and Federal Courts
[2] When to Seek Bifurcation
§11.03 Parties Present at Trial
§11.04 Jury Selection
[1] Introducing Evidence During Voir Dire
[2] Juror versus Policyholder Attitudes: Bias and Prejudice
[3] Policyholders of Mutual versus Stock Companies
§11.05 Special Jury Considerations
[1] Effect of State Court Ban on Juries in Bad Faith Cases
[2] Risk of Punitive Damage Awards of Juries
§11.06 Opening Argument
§11.07 Order of Presentation: Burden of Proof
§11.08 Directed Verdicts and Non-Suits
§11.09 Charging Conference
[1] Legal Arguments
[2] Drafting Points for Charge
[3] Jury Interrogatories
§11.10 Settlement Negotiations
[1] Statistical Facts
[2] Settlement Factors
[3] Limiting Access to Settlement Documents or Judicial Record
[4] Taxability of Punitive Damage Awards

Appellate Standard of Review

§12.01 Introduction
§12.02 Summary Judgment
[1] De Novo Review
[2] Interpretation of the Policy
[3] Reasonable Basis for Claims-Handling Decisions
§12.03 Directed Verdict/Judgment Notwithstanding the Verdict/Judgment as a Matter of Law
[1] Standard of Review
[2] Greater Than De Novo Review
[3] Reasonable Basis
[4] When Reasonable Basis Is Inadequate
§12.04 Motion for a New Trial
[1] Traditional Standard of Review
[2] Material Evidence Standard
[3] Hybrid Standard of Review
[4] Abuse of Discretion
[5] No Evidence Challenges
§12.05 Jury Instructions
[1] Faulty Jury Instructions
[2] Instructions Supported by the Evidence
§12.06 Evidentiary Rulings
§12.07 Bifurcation/Severance
§12.08 Verdict
[1] Grounds for Modification
[2] Punitive Damages

Table of Abbreviations