Plaintiff’s Bad-Faith Insurance Claim Allowed to Proceed after Dismissal Is Reversed on Appeal

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.

Smashed CarThe Facts of the Case

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.

State Farm denied Peden’s claim, citing evidence that she knew Graf was intoxicated when she got into the car. Peden then filed a lawsuit against State Farm, asking the court to compel the company to pay out on her claim. During this lawsuit, State Farm uncovered information that led the company to settle Peden’s claim. However, once she received payment for the claim, Peden argued that State Farm acted in bad faith during settlement negotiations. This bad-faith claim is a separate claim that can result in additional damages.

The trial court granted State Farm’s motion to dismiss Peden’s lawsuit, holding that State Farm did not unreasonably delay in settling the claim. However, on appeal, that decision was reversed. The appellate court explained that State Farm, as Peden’s insurance company, had a duty to investigate the claim thoroughly before making a decision. The court felt as though the company’s efforts were perhaps not as thorough as they could have been, and a jury might very well find in Peden’s favor. Since Peden’s case was found to be sufficient as a matter of law, it was inappropriate for the lower court to grant State Farm’s motion dismissing the case.

Have You Been Dealing with an Insurance Company after a Virginia Car Accident?

If you or a loved one has recently been involved in any kind of Virginia car accident, and if you have been dealing with a difficult insurance company as a result, you may benefit from discussing your case with a dedicated personal injury attorney. The skilled advocates at Charles B. Roberts & Associates have years of experience handling hundreds of cases involving hesitant or uncooperative insurance companies. Charles B. Roberts & Associates offers free consultations to accident victims with no obligation to retain their services. Call 703-491-7070 today to set up your free consultation.

See More Blog Posts:

Proving a Virginia Premises Liability Claim, Virginia Injury Lawyers Blog, November 16, 2016.

Government Immunity in Virginia Personal Injury Lawsuits, Virginia Injury Lawyers Blog, December 1, 2016.