Bad faith is the unreasonable failure of an insurance company to honor the terms of an insurance policy and deal with a policyholder in good faith. Insurance companies who are found to have acted in bad faith can be liable for punitive damages in addition to contract damages. Some states have bad faith statutes called "Unfair Insurance Claims Practices Acts."
11-year-old Legal Feud Starts New Chapter with Lawsuit Against ACE Unit
June 24th, 2014 - The operator of an airport fuel service in Montana has sued ACE Property and Casualty Co. for allegedly refusing to defend a client in a long-running courtroom battle.
John Talmage, of Kalispell, Montana, owns Montana Diamond Aire Inc. and RJT Properties LLC. Diamond Aire sells fuel at Kalispell Municipal Airport and sells airplane modification kits and parts, while RJT owns the property from which Diamond Aire operates.
In late 2003, the City of Kalispell, which operates the airport, erected a gated fence between Talmage’s business and the airfield. This hindered access to his building, and in an effort to remove it, he sued the city and the Kalispell City Airport Authority Board, which oversees the airport. The city and airport board were insured by ACE beginning in 2007 according to the complaint.
Meanwhile, Talmage alleged that the airport manager “slandered and disparaged” him and his businesses by falsely representing to airport users that the plaintiff’s property was contaminated. As a result of these allegedly mistaken statements, Talmage said he was degraded and shunned and sustained significant loss of business.
Talmage said that the ACE insureds even went so far as to advise airport users that his businesses were in serious financial trouble and having solvency problems. Altogether, he estimated his financial and emotional losses in excess of $2.6 million.
In April, 2013, negotiations began to settle Talmage’s suit and ACE was notified. On May 3rd, 2013, it reportedly refused to defend and indemnify its clients.
A Kalispell newspaper reported that in June, 2013, the city and Talmage had resolved their dispute, and that the city was agreeing to a $1.5 million judgment that would set the stage for the businessman to file a bad faith claim against the ACE.
A Montana state court approved the settlement on December 4th, 2013, and entered a judgment in favor of Talmage. Now, he is suing ACE for breach of contract and dealing in bad faith. That action was filed in U.S. District Court in Missoula, Mont.
City settles legal dispute - Diamond Aire lawsuit was filed in 2004
- The Daily Inter Lake - http://www.dailyinterlake.com/news/local_montana/article_347110d8-d873-1...
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