If an insurance company provided a defense to its insured and they waited two years to settle a legitimate, obvious case, can I sue them for bad faith? After the settlement was made, the insured breached the agreement. Will I need to repay the money if I sue the defendant again for breach of contract (the settlement agreement)?
Under California law, an insurance company does not owe a duty of good faith and fair dealing to anyone other than its insured. An opposing party in litigation has no claim for bad faith against the insurance company.
There is no third party bad faith in California since the late 1980s. You can sue your own insurere for bad faither, but not a defendant's insurer. If there is a breach of the settlement agreement, you can sue for breach of contract without returning the money, but if the agreement is set aside as a result of the lawsuit, you may then have to repay the funds.
No, but a local insurance lawyer can investigate the breach of contract. Avvo has a great lawyer finder tool to locate an attorney close to your home. Good luck.
There is no third party bad faith, in other words you cannot sue the negligent party's insurance company for bad faith. I am not sure to what you are referring when you said the insured breached the settlement agreement. In what way? Were you damaged? Need more facts.
It is important to review the Settlement Agreement. As a reminder, the insurer may be forced to defend the claim if their insured is re-served with a Complaint. You may want to enforce the settlement via your existing Agreement if the case has not been closed too long. Some courts retain jurisdiction. It appear the insured and insurer both paid on the settlement? You have the answer on third party bad faith claim already, but if the insurer and the insured both paid in the settlement, the insurer may not be entirely off the hook to defend and indemnify. They may be required to fund the entire indemnity and go after their own insured. Of course, if this is injunctive relief, that is a different scenario. It really depends on the breach of the agreement. As for refunding the money settlement? Again, it depends on your Settlement Agreement, but sounds like there is a breach, so your commencement of a suit may not trigger the default provisions in the agreement. Most Settlement Agreements also have a prevailing party clause as well. Its best to spend an hour to get a consultation.
Tim Broussard, Esq
Kring & Chung, LLP
949-261-7700, ext. 345
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