Represent Insurer in Third Party Bad Faith Claim

The firm represented the insurer of a foundation repair company that was hired to repair the foundation of Plaintiffs’ home. The home was built on an Eastern Kentucky mountaintop, which had previously been the site of a surface mine. The deed to the property declined any warranty for the condition of the soils on the property. Subsidence began to cause cracking inside and outside the home. The Plaintiff ultimately sued the insured repair company and the insurer denied the claim based on the “subsidence” and “contract” exclusions in the policy. The court ultimately concluded there was coverage under the policy. Thereafter, the insurer defended the claim against the insured and that claim was subsequently settled. The plaintiffs thereafter filed a third party bad faith claim against the insurer. The insurer defended the claim on several grounds, including that the insured’s liability for causing the damage to the home was not “reasonably clear” or “beyond dispute” and as such no bad faith claim could lie against them. The case was settled prior to trial.