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Insurance company sued for breach of faith, breach of contract 3

Thu Apr 25th, 2013 on     Bad Faith Insurance,    

We are continuing our series about an unusual bad faith insurance case. As we have said, the case does not directly involve Florida residents or insurance policies that were purchased here. We thought the case was worth some time because it is an unusual insurance coverage dispute that involves high-profile individuals and, of course, a whiff of scandal.

Actor Keith Carradine sued his ex-wife, Sandra Will Carradine, when he discovered that she had hired a private detective to spy on him and to tap his phones. He also claimed that his wife became romantically involved with the private detective, Anthony Pellicano. In 2006, Sandra admitted in court that she hired Pellicano, who is now in jail, and she pleaded guilty to two counts of perjury.

When she learned of the lawsuit against her, Sandra contacted her insurance company, believing it would provide a defense and coverage in the matter. She did not hear back until 2011, five years after she had filed the claim.

Although the insurer, State Farm, agreed to provide a defense, Sandra had already racked up attorney bills while she was waiting for State Farm to respond. She now wants State Farm to reimburse her the $412,240.13 she has paid out of her own pocket, but State Farm has so far refused. Sandra now sues for that money and damages, claiming breach of contract and breach of faith.

As we have discussed, an insurance company has a duty to defend its insured in a third-party action, with very few exceptions. Any failure to defend is a breach — a breach of contract and a breach of good faith. We do not know the details of Sandra’s dealings with the insurer, but it is difficult to imagine how an insurance company would justify a five year delay in responding to a policyholder’s claim.

That’s not the only question posed in this suit, though. We’ll finish this up in our next post.

Source: Courthouse News Service, “Insurer Sued for $400K in Pellicano Case,” April 1, 2013

Our firm’s clients are policyholders with insurance coverage disputes. If you’re interested in learning more about our Miami, Florida, practice, please visit our website.

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