Earlier this month, a federal appellate court issued an opinion that reversed a lower court’s holding that dismissed a plaintiff’s bad-faith claim against her own insurance company. In the case, Peden v. State Farm, the court determined that the insurance company’s failure to conduct a thorough investigation before denying the plaintiff’s claim potentially could give rise to a bad-faith claim. Since the lower court dismissed the plaintiff’s claim, claiming it was insufficient as a matter of law, the appellate court reversed the decision, allowing the plaintiff’s case to proceed toward trial or a settlement.
The plaintiff, Peden, was with a group celebrating a friend’s birthday. Her friend had received a new van for her birthday from her fiancé, Mr. Graf. At some point in the evening, the group piled into the new van for a photo. By this point, most of the group, including Graf, was intoxicated. Once the group was in the van, Graf hopped into the driver’s seat and took the van for a cruise.
Graf crashed the van while driving under the influence, injuring several inside, including Peden. Both Peden and Graf were insured by State Farm. Peden initially filed a claim with Graf’s insurance. However, since the total policy limit had to be split among all injured parties, the amount Peden received was insufficient to cover her damages. She decided to file a claim under her own insurance policy to recoup the difference.