Insurance litigation can take on a life of its own. While pointed exchanges between attorneys is not altogether uncommon, judges typically stay above the fray, even when they believe a claim or defense has little chance of prevailing. This is not always the case, however, as noted in a recent appellate court ruling.1
2000 Island Boulevard Condominium Association filed an insurance claim with Great American Insurance Company over damage to the concrete slab of its parking garage. When the claim was not resolved by April of 2014, the association filed suit to compel payment. Great American countered that it had not been able to finalize its coverage position based on the association’s alleged failure to provide documents and an examination under oath.
While no substantial evidence had apparently been collected, the trial court judge took issue with Great American’s defenses and attempts to limit discovery. Below are a few of the exchanges between the judge and counsel for the insurer.
Regarding Great American’s claim that it has not made a final coverage decision:
THE COURT: Well it doesn’t feel like we’re in an abandonment situation. We’ve got a lawsuit filed. We’ve got an insurance company that’s not paying a claim. We’ve got them basing that decision, in part, upon this expert that went out there, and I imagine he was perhaps even involved in putting together the list of things they still need. You said we would give them a report when they got all of that information to you. It strains all credulity for me to believe that your carrier has not denied coverage based on the information they know now.
DEFENSE COUNSEL: But they have not [denied coverage].
THE COURT: Then fork over the money.
Regarding the insurer’s claim that the association should not be allowed to depose the engineer hired to investigate the claim:
THE COURT: You can’t read the June 26, 2012 letter without saying this is a denial letter. “We’re not sure,” you can “we’re not sure” until the cows come home. And, in fact, you won’t be sure until the jury speaks, and then you won’t be sure until the Appellate Court rules, and then you won’t be sure until the Supreme Court rules after that. Then even if they rule against you, you won’t be sure that they’re right. You’ll claim that they’re wrong. That’s just the nature of litigation. That’s how it works.
Listen, if it were - - if I were being asked, I would sanction you for making a specious argument that [the engineer] shouldn’t be deposed and opinions fully addressed. You’ve taken a position, you’re involved in litigation, you’ve denied coverage, you’ve stated and specified things. It’s doggone concrete spalling, up or down. This is not rocket science. This is something that construction’s been dealing with for many, many, many years. Ever since they put a piece of steel inside concrete they’ve been having these issues. It’s not a big deal . . .
The court continued in expressing its displeasure when told that Great American’s engineer had not yet completed a report relating to the damages:
THE COURT: And maybe it is for a lawyer, but I can tell you for an expert it’s not. This guy was sent out as an expert. The claim was, for all intents and purposes, denied. Assurances were given once, we get all of these records we will give you his report. But now we know that he was probably told “don’t do a report”, because otherwise [experts] do reports.
So I would instruct that he prepare a report in anticipation of his deposition and answer all questions that he has - - you can’t keep claiming you’re going to hire new experts to keep the claim alive and a claim from being paid.
These comments highlight what the appellate court summarized as a “contemptuous view” of the positions taken by Great American and its attorneys. After the hearings concluded, Great American moved to have the judge disqualify himself arguing that his comments evidenced bias and impartiality in favor of the condominium association. While the trial judge denied the request to disqualify himself from the case, the appellate court disagreed. In light of the comments above, and the record itself, the three judge panel decided that he should not continue to hear the case.
Many attorneys and judges involved in insurance litigation understand the frustration felt by the judge in this case. The claim process should be simple in most instances and a coverage decision should be made as soon as possible so both sides know how to proceed. Likewise, when litigation arises it is supposed to be a search for the truth. The jury is provided information from both sides, and a decision is made.
Unfortunately the claim process has increasingly become more about eliminating ways to deny the claim, instead of looking for ways to provide coverage. It is not uncommon for an insurance companies to “investigate” for years, only to claim it needs more time and information to complete its analysis. Litigation is no longer about a search of the truth in many cases. Instead insurance companies hire experienced litigators skilled at hiding the ball. Many carriers are more concerned with “winning” than paying what is owed. Not entirely convinced? Check out the Chip Merlin’s post, Fraudulent Superstorm Sandy Flood Expert Reports, and the lengths that the insurer’s counsel went to hide the draft report from the policyholders and even the court.
Our judicial system is built on the fundamental tenant of a fair and impartial judge. I wasn’t there to hear the context of the judge’s comments and can’t say if he was right or wrong. All I can say is that the way things are going, this won’t be the last time we hear of a judge calling someone on the carpet for what they perceive as playing games.
Although the case will continue with a different judge, it appears that Santa came early for Great American and left them with another bite at the apple.