Bad Faith Action Survives

We have all seen it too many times. Your client has legitimate medical expenses well in excess of policy limits. Liability is not clear but will go to the jury. The defendant’s insurer refuses to settle the case for policy limits.

That happened to defendant Johnson. His insurance company refused to settle an action against him. His $25,000/$50,000 in policy limits were to be of little help paying a judgment of $193,750. He sued his insurance company for bad faith failure to settle the case, and a jury agreed.

You know that Tennessee’s law on bad faith is, shall we say, undeveloped. Well, that is about to change. The verdict against the insurer was reversed, but all three judges found that a jury issue was present on the issue of bad faith. (Two of the three judges thought the verdict should be reversed on other grounds). Each judge wrote an opinion; Judge Inman wrote for the majority (if that is possible when each of three judges writes a seperate opinion). Read Judge Inman’s majority opinion here. You can also read Judge Franks’ opinion and Judge Lee’s opinion.

This case is going to the Tennessee Supreme Court, no ifs, ands or buts about it.

I will discuss this opinion in more detail in the Tennessee Tort Law Letter.