Defense Verdict for Insurance Company in Breach of Contract and Bad Faith Case

June 8, 2012

Michael J. Nunez represented Nevada Direct Insurance Company in a suit brought by a claimant after she was involved in an automobile accident with one of Nevada Direct’s insureds. After a two day bench trial, the District Court found for the defense on all counts.

Following the accident, the claimant had engaged in pre-suit negotiations with Nevada Direct and then ultimately filed a personal injury suit. After initiation of the personal injury suit, Nevada Direct filed and prevailed in a declaratory relief action based on lack of cooperation from its insureds. Nevada Direct was also represented by Murchison & Cumming in the declaratory relief action. The plaintiff then proceeded to obtain default judgments against the insureds in the personal injury lawsuit and initiated the current lawsuit under theories of breach of contract, promissory estoppel and third party bad faith.

The basis for the claims were that Nevada Direct did not disclose to the claimant that it was not receiving cooperation from its insureds and that it did not disclose that it had any reservations of rights. The claimant asserted that the pre-suit negotiations misled the claimant and gave rise to the various claims. The claimant also asserted she was a judgment creditor of Nevada Direct after obtaining default judgments against the insureds based on the recent Nevada Supreme Court case of Gallegos v. Malco Enterprises of Nevada.

The third party bad faith claim was dismissed prior to trial by way of a Motion to Dismiss and a defense verdict was obtained on the remaining claims at trial.