Extra-Contractual

The justification for the existence of an extra-contractual cause of action is this. When an insurer has not handled a claim - first-party or third - in “good faith,” and thus has caused damages or exposed the insured to damages in excess to the policy limits, or damages not covered by the policy, there ought to be a remedy. The insured ought to be able to sue for such “extra-contractual” damages. Sounds plausible. In practice though, “bad faith” law and litigation have turned out to be something quite different.

Let’s be frank. Although there is no perfect claim file, actual “bad faith” claim handling is exceedingly rare and never, in our experience, knowingly sanctioned by an insurer. So, naturally, the ever-resourceful plaintiffs’ bar has striven mightily, and with much success, refining myriad techniques intended to “trip up” the insurer, disrupt the claim and create the appearance of “bad faith” claim handling. For that reason, as we know, great battles often must be fought before the “bad faith” lawsuit is even filed. By which we mean vigilant and proactive countermeasures and responses to such “myriad techniques.”

It would be useless trying to list here all of the creative disruptions available to the plaintiffs’ bar. They are too numerous and various, in part because a “bad faith” lawsuit may be based on a first-party or a third-party claim—in part because the law of “bad faith” can be quite different from state to state. A few general examples of the kind of proactive representation we can provide will have to suffice, some pertinent to first party claims, some to third party claims, some to both. The point is our experience of such techniques, knowing how to combat and defuse them if possible, is what gives value to our guidance before there is a “bad faith” suit. For example:

• Responding to persistent unsupported allegations of improper claim handling, and demands for immediate rectification;
• Responding to official complaints such as civil remedy notices;
• Overseeing property loss appraisals;
• Settling multiple claimant liability exposures;
• Resolving claims against multiple insureds;
• Responding to confusingly complex or intentionally vague settlement demands meant to “trip up” the insurer;
• Handling proactive tenders of policy limits when there are difficult conditions such as hospital liens and deceased or incompetent claimants.

Notwithstanding such diligence, “bad faith” lawsuits will be filed whether counsel has been involved previously or not. Once filed, every “bad faith” lawsuit must immediately be subjected to an honest and frank evaluation. This we can do.

Then, of course, once it has been filed, litigating the “bad faith” lawsuit presents challenges not encountered in ordinary civil matters. For example we have deep experience:

• Removing cases to Federal court when possible and defeating motions to remand;
• Preparing adjusters and corporate representatives for deposition, and defending those depositions;
• Responding to discovery not normally allowed in ordinary civil matters, such as production of the claim file;
• Resisting abusive and extortionate discovery;
• Identifying appropriate claim handling experts.

To sum up, we at Butler have long labored to keep abreast of the law and one step ahead of every “bad faith” tactic. We can offer the results of those labors.