Strategies, Challenges, and Answers

A Policyholder Cannot Prevail Under NRS 686A.310(f) Unless There Has Been An “Ultimate Recovery”

Mueller ImageHartford’s policyholder was hurt in two separate accidents, once in 2009 and then again in 2010.  She collected policy limit settlements from each tortfeasor.  She then turned to Hartford, her UIM carrier. She demanded a policy limit settlement for each accident. When the parties could not agree on the value of either claim, the policyholder sued Hartford for breach of contract, bad faith and violations of Nevada’s Unfair Claims Settlement Practices Act. (UCSPA). Mueller v. Prop. and Cas. Ins. Co. of Hartford, Case No.: 2:12-cv-01589-GMN-VCF (D. Nev. July 6, 2013).

The policyholder alleged a violation NRS 686A.310(f) of the UCSPA. That section provides:

1.  Engaging in any of the following activities is considered to be an unfair practice:

*  *  *

            (f) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered.

Confirming what Mills & Associates has believed for some time, the U.S. District Court for Nevada found that an insurance company could not be caused to answer for a violation of this UCSPA section unless the policyholder had previously obtained an “ultimate recovery”.  Granting the insurance company’s Motion to Dismiss this allegation, the Court pointed out what seems glaringly obvious.  The Complaint noted that the final value of the Plaintiff’s UIM claims had yet to be decided.  Therefore, since no final resolution had been reached, there could be “no ultimate recovery by Plaintiff. Plaintiff has not—and cannot—plead any facts showing that Hartford offered her substantially less than she ultimately recovered, or that she ultimately recovered an amount reasonably similar to her claim.” Id. at 5-6.

The court dismissed this particular allegation under the Iqbal and Twombly standard.  The court acknowledged but was not obligated to answer the question of whether there would need to be proof of a pattern or practice of “compelling litigation” in two or more instances before a violation of this provision would survive.

If you are wondering whether your policyholder’s complaint could withstand a Motion to Dismiss, contact Mike Mills at Mills & Associates for a consultation. He can be reached at 702-240-6060×114 or email him at mike@mcmillslaw.com.

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