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Date: 04-04-2024

Case Style:

Charna Williams, et al. v. State Farm Fire & Casualty

Case Number: 1:22-cv-00112

Judge: Kristi K. DuBose

Court: United States District Court for the Southern District of Alabama (Mobile County)

Plaintiff's Attorney: Steven Wright Mullins, Sr. - 228-218-3543

Defendant's Attorney: Joseph P. H. Babington, Samantha Nicole Gunnoe and Thomas Ryan Luna

Description: Mobile, Alabama insurance law lawyer represented the Plaintiffs who sued on a bad faith breach of insurance contract theory.

Bad Faith
Coverage of the underlying claim is an absolute prerequisite to a claim for bad faith. An insured who cannot prove it
is entitled to benefits under an insurance policy cannot recover on a bad faith claim. Insurers have a broad range of
freedom to thoroughly evaluate claims and decline payment in non-meritorious cases. Bad faith is limited to those
instances where the insurer, without debatable excuse, either fails to process a claim or, on processing, fails to pay
a claim for benefits as provided by the policy.
Burden of Proof
The plaintiff asserting a bad faith claim bears a heavy burden. An insurer is not liable for bad faith simply because it
exercised poor judgment or was negligent. Rather, bad faith must be supported by evidence showing the insurer
had no reasonably arguable ground for disputing the insured’s claim or it acted with an intent to injure.
Elements of Proof
The elements of a bad faith refusal case are: (1) an insurance contract between the parties and a breach thereof by
the defendant; (2) an intentional refusal to pay the insured’s claim; (3) the absence of any reasonably legitimate or
arguable reason for refusal; (4) the insurer’s actual knowledge of the absence of any legitimate or arguable reason;
and (5) if the intentional failure to determine the existence of a lawful basis is relied upon, the plaintiff must prove the
insurer’s intentional failure to determine whether there is a legitimate or arguable reason to refuse to pay the claim.
First-Party Bad Faith
Alabama does not recognize a right of an underlying third party to assert a claim for bad faith in the handling of
a third-party insurance claim. The tort of bad faith refusal to pay is that refusal to pay valid claims made by the
insured of his insurance carrier. Once a third party obtains a judgment against the insured, however, the third
party stands in the shoes of the insured and may bring an action against the insurer as a judgment creditor under
Alabama’s direct action statute.
Statute of Limitations
A bad faith failure to pay action is governed by a two-year statute of limitations.

Outcome: Settled and dismissed with prejudice.

Plaintiff's Experts:

Defendant's Experts:


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