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."
Contractor Claims Breach of Contract in Lawsuit Against ACE
March 2, 2015 - The general contractor on a billion-dollar timeshare development in Las Vegas had sued ACE American Insurance Co. to force it to pay damages incurred from a lawsuit over the building.
In or about February 2007, Tutor-Saliba Corp. was hired to serve as general contractor for a high-rise resort in Las Vegas that is attached to the Planet Hollywood-Miracle Mile complex. Its owner, Florida-based Westgate Resorts, Ltd., describes the 52-story tower as the world’s largest time-share development, with more than 1,200 rooms.
Tutor-Saliba secured at general liability and three layers of excess liability insurance on the project. ACE American issued the primary policy, which provided for coverage of $2 million per occurrence and $4 million aggregate. The first layer of excess coverage was issued by Everest National Insurance Co., which is the second defendant in the suit.
Westgate Planet Hollywood Las Vegas, LLC, which Westgate Resorts established to develop the project, declined to pay the remaining balance to Tutor-Saliba when the building was finished.
Tutor-Salibi sued Westgate in Nevada state court in May 2010. Westgate filed a counter claim, alleging that the contractor was negligent in construction of the building and responsible for $3.6 million worth of defects.
A bench trial was held on the suit, and Westgate prevailed on four defect claims totaling $2.58 million. Of that, the contractor believes that ACE and Everest are responsible for $2.40 million under terms of their respective policies.
Interest on the judgment pushes the total claim to more than $3 million.
In the lawsuit it has just filed in California state court, Tutor-Saliba said that ACE has withdrawn its reservation of rights to defend its client and has now accepted coverage. However, the contractor is requesting a judicial declaration that ACE and Everest have a duty to defend it, and that they are required to indemnify Tutor-Saliba.
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