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An Auto Insurance Company’s Refusal To Pay Claim, Standing Alone, Is Not Bad Faith

refusal to pay is not bad faithAshley Aiello filed suit against her auto carrier Geico General Insurance Company.  She alleged that she was hurt when an unidentified driver struck her car and fled the scene.

She said that she filed an uninsured motorist claim with Geico.  She filed suit when as she alleged Geico refused to pay her UM benefits.  Aiello’s suit included causes of action for breach of contract and bad faith.

In Aiello v. Geico Gen. Ins. Co., No. 2:19-cv-00610-APG-VCF, 2019 U.S. Dist. LEXIS 84191 (D. Nev. May 20, 2019), the court ruled on Geico’s motion to dismiss the bad faith claim.  In her complaint Aiello alleged that Geico “performed in a manner that was unfaithful to the purpose of the contract formed by the Geico Policy.”  Id. at 5.

In its Order dismissing the bad faith claim, the court recited the elements of a cause of action for bad faith.  The court said:

Under Nevada law, “[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and execution.” “The implied covenants of good faith and fair dealing impose a burden that requires each party to a contract to refrain from doing anything to injure the right of the other to receive the benefits of the agreement.” “An insurer breaches the duty of good faith when it refuses ‘without proper cause to compensate its insured for a loss covered by the policy.'” To constitute a denial “without proper cause,” an insurer must have an “actual or implied awareness of the absence of a reasonable basis for denying the benefits of the policy.” In other words, an insurer’s incorrect determination that coverage does not exist under a particular policy is not an actional tort unless there was no reasonable basis for that determination

Id. at 4.

The court pointed out that Ms. Aiello’s complaint did not state the proper elements of a cause of action for bad faith and did not identify facts that supported those allegations. Of the Plaintiff’s complaint, the court said “Her formulaic recitation of the elements of this cause of action is insufficient to state a claim. I, therefore, dismiss Aiello’s second cause of action without prejudice.”  Id. at 5.

If you have further questions about Insurance Bad Faith claims in Nevada, please contact Mike Mills at Bauman Loewe Witt & Maxwell.  He can be reached at 702.240.6060×114.  You can also send him an email at mmills@blwmlawfirm.com.

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