Insurance Law

In action alleging that defendant breached insurance contract and denied in bad faith plaintiff’s claim for long-term disability benefits, Dist. Ct. did not err in granting defendant’s motion for summary judgment. Plaintiff’s contract claim was moot where defendant had previously paid plaintiff all benefits due under contract after agreeing with plaintiff that defendant had used wrong standard in initially denying plaintiff’s application for said benefits. Moreover, plaintiff failed to present sufficient evidence with respect to plaintiff’s bad-faith claim where: (1) Wisconsin law required demonstration of defendant’s knowledge or reckless disregard of lack of reasonable basis for denying claim; (2) plaintiff failed to show that defendant knew it was applying wrong standard at time it denied plaintiff’s claim; and (3) defendant’s use of wrong standard was mere honest mistake.

Dist. Ct. did not err in granting defendant-insured's motion for summary judgment in action by plaintiff-insurance company seeking declaration that defendant was not entitled to any underinsured motorist (UIM) coverage where defendant, who was named insured on said policy, incurred uncompensated injuries while riding as passenger in vehicle which was not covered under policy. While plaintiff argued that defendant was not entitled to any coverage because she was injured while using non-covered vehicle, Appellate Court noted that UIM endorsement of policy included defendant as insured and found that defendant was entitled to UIM coverage where UIM endorsement did not contain language limiting coverage to insureds traveling in covered vehicles at time of accident.

Dist. Ct. did not err in dismissing for lack of standing plaintiffs’ breach of contract and other related actions alleging that defendant-insurance company’s failure to make timely and adequate payments required by insurance policy issued to insured arising out of property damages incurred to insured’s plant caused plaintiffs, who either did business with insured or who operated insured, to incur financial losses stemming from loss of business with insured. Plaintiffs lacked standing to pursue instant lawsuit since it essentially sought damages based on defendant’s alleged failure to fulfill duties owed to insured rather than failure to fulfill alleged duties owed to plaintiffs, and thus plaintiffs were not real parties in interest to bring instant lawsuit. Moreover, fact that certain plaintiffs were named as additional insureds in policy did not otherwise confer standing to bring instant lawsuit where plaintiffs were not alleging any failure of defendant to fulfill obligations owed to them under policy.

Dist. Ct. erred in granting defendant-title insurance company's motion for summary judgment in action by plaintiff-insured alleging that defendant acted in bad faith and breached it duties to defend and indemnify plaintiff in underlying counterclaim by third-party alleging that third-party's mechanic's lien had priority over plaintiff's mortgage in plaintiff's action seeking to enforce mortgage. Duty to defend arose where plaintiff had purchased endorsement in policy that required defendant to defend against any enforcement of mechanic's lien claim where said claim alleged priority or sharing of parity with plaintiff's mortgage, and where defendant had otherwise acknowledged during course of proceedings that third-party's counterclaim was attempt to seek declaration that mechanic's lien was superior to plaintiff's mortgage. Fact that third-party's counterclaim lacked merit under Indiana law did not excuse defendant from assuming defense of counterclaim. Moreover, while policy contained exclusion for claims "created, suffered or assumed" by plaintiff, said exclusion did not apply since defendant did not argue that third-party's lien resulted from intentional misconduct on part of plaintiff.