Strategies, Challenges, and Answers

A Nevada Insurance Company Does Not Commit Bad Faith By Simply Denying A Claim

Montes ImageLuck was not with Jose Montes.  He was hurt in a very serious motor accident.  He was hospitalized for six weeks and spent 46 weeks at home recovering.  Lucky for Mr. Montes he had purchased an accident insurance policy through agent Bank of America from insurer National Union Fire Insurance Company.  Unlucky though because when he made claim for benefits under the policy his claim was denied.  He believed that the insurance should have paid and that the exceptions to coverage were fraudulently concealed.

He sued the insurance company National Union and agent Bank of America alleging a Breach of Covenant of Good Faith and Fair Dealing among other things.  The Defendants responded with a Motion to Dismiss.  In Montes v. Bank of Am. NA, Case No. 2:13-cv-660-RCJ-VCF (D. Nev., Oct. 30 2013) the court considered Plaintiff’s allegations and specifically spoke to the whether Mr. Montes had sufficiently stated a claim for Breach of the Implied Covenant of Good Faith and Fair Dealing.

The court rejected a claim for Bad Faith against Bank of America.  It acted as the insurance agent.  The court found that there could be no claim for bad faith against B of A because it was not a party to the insurance contract.

The court also found that Plaintiff failed to state a claim against National Union.  Plaintiff failed to allege that the denial was either “without any reasonable basis” or that the insurer had “knowledge or awareness of the lack of any reasonable basis to deny coverage.”  Neither of these subjective elements was plead nor were there any factual assertions that would back up such claims.  The court granted the insurance company’s Motion to Dismiss unlucky Mr. Montes’ Bad Faith Claim.

Lucky for Mr. Montes, the court gave him a chance to amend the complaint and perhaps overcome this fatal weakness.  Whether his luck will persist is yet to be seen.

If you have questions about whether the allegations that have been brought in a Bad Faith Complaint are sufficient, call Mike Mills at 702-240-6060×114.  He will be glad to speak with you about your company’s matter.