No Good Deed by an Insurer Goes Unpunished

Bad Faith Requires Vexatious, Arbitrary, Capricious, Or Without Probable Cause Conduct

Barry Zalma

Jan 10, 2025

Transcript

BACKGROUND

This case arose out of damage to plaintiff Gentilly, LLC’s (“Gentilly) insured commercial development, the Gentilly Shopping Center (“GSC”).

GSC submitted claims to State Farm for damage to its property caused by Hurricane Ida. State Farm and Gentilly, over a long period of time mutually inspected the property with more paid after each inspection until GSC sought an unsupported claim of multiple millions. State Farm did not pay the last demand and Gentilly sued.

THE MOTION

State Farm moved to dismiss plaintiff’s bad faith claims.

DISCUSSION OF BAD FAITH

Louisiana Statute Sections 22:1892 and 22:1973 govern bad faith insurance claims under Louisiana law. To establish a cause of action a claimant must show that:

1. an insurer has received satisfactory proof of loss,

2, the insurer failed to tender payment within thirty days of receipt thereof, and

3. the insurer’s failure to pay is arbitrary, capricious or without probable cause.

There was no evidence that State Farm engaged in vexatious conduct since the timeline played out because of limitations on both sides’ availability.

When State Farm's inspector returned an estimate, State Farm paid the amount due within thirty days. The USDC refused to evaluate a bad faith claims by hindsight.

Although the payout process was protracted plaintiff failed to raise a genuine issue of material facts. The Court granted summary judgment on plaintiffs bad faith claims.

ZALMA OPINION

This claim grew like Topsy. Each inspection found damage which, when discovered, State Farm immediately paid after a prompt inspection. After the claims were paid in different months the insured decided to increase their claims in multiple million dollar amounts that were not capable of being established. State Farm paid what it though it owed and refused further. State Farm’s proper claims handling and prompt payments was honored with a bad faith suit.