Plaintiff, a utility company, filed a lawsuit against the defendant insurance company alleging breach of contract, breach of fiduciary duty, and breath of its duty to deal in good faith after the insurer refused to defend the plaintiff at a mediation by finding the plaintiff was not an “additional insured” under the terms of an excess liability insurance policy. The Seventh Circuit concluded that the plaintiff was an additional insured under the excess policy but affirmed the district court’s dismissal the contract and fiduciary duty claims because the defendant did not owe a duty to the insured until after the primary policy was exhausted. The appellate court also affirmed the dismissal of the bad faith claim by finding that an incorrect denial, without more, is not a basis for bad faith and the subsequent dismissal of the breach of fiduciary duty claim because it was premised on the insurer having acted in bad faith. (ST. EVE and JACKSON-AKIWUMI, concurring)
Federal 7th Circuit Court
Civil Court
Insurance Coverage