Obtained Writ of Prohibition form the West Virginia Supreme Court Dismissing Insurance Bad Faith Claims for Lack of Subject Matter Jurisdiction

Client: An Insurance Carrier

We represented an insurance carrier accused of acting in bad faith in violation of West Virginia common law and the West Virginia Unfair Trade Practices Act in connection with the defense of an ongoing personal injury lawsuit and related declaratory judgment action concerning the scope of insurance coverage applicable to the personal injury lawsuit. The insurance carrier had offered what it considered the limits of the applicable coverage in order to settle the personal injury lawsuit, but this was insufficient to resolve the matter and the underlying plaintiff initiated a declaratory judgment action to seek an expansion of the amount of applicable coverage. Because the insureds wanted as much coverage afforded to them as possible for the personal injury lawsuit they asserted bad faith claims against the insurance carrier for taking the position it had offered its limits. The West Virginia Supreme Court found the insureds’ bad faith claims were not ripe because the question of what coverage applied to the personal injury lawsuit had not been resolved. The West Virginia Supreme Court further noted there is basis for a bad faith cause of action when an insurance carrier retains independent counsel to defend an insured and separate counsel to prosecute a declaratory judgment action concerning the scope of coverage afforded to the insured.