Opinion ID: 1846468
Heading Depth: 1
Heading Rank: 5

Heading: National's Defense to Sockwell's Bad-Faith Claims

Text: Despite West's acknowledgment that upon reviewing the file she thought Hawthorne had improperly denied Sockwell's claim and that Sockwell's claim was ripe for payment and despite West's admission that Hawthorne had not properly evaluated Sockwell's claim, National defended the bad-faith claims at trial based upon the following events: Shortly before the trial of this matter began, National learned that, at the time it denied Sockwell's claim, Sockwell had not reached a final settlement with one of the other insurance carriers involved in this incident. National learned immediately before trial that Sockwell had not reached a final settlement with another insurance carrier until December 1998three months after the date of National's formal denial of Sockwell's UIM claim. National did not dispute the severity of Sockwell's losses, nor did National deny that her losses exceeded the other insurance available to her and that she would, at some point in time, have a viable claim under her National UIM coverage. National's defense was one of timing: Sockwell's claim against another insurance carrier had not been finalized at the time National denied the claim, and Sockwell's coverage with National did not ripen until she had exhausted the insurance coverage available to her through all other carriers. However, National did not make this failure to exhaust coverage a basis for its denials of Sockwell's UIM claim; this was not given as a reason in any of its letters to Sockwell denying coverage, and National never requested information from Sockwell regarding this exhaustion issue at any time during the course of adjusting her claim for UIM benefits. As of September 1998, National issued an outright denial of Sockwell's UIM claim; in doing so, it relied solely upon the workers' compensation limit-of-liability provision in the policy. The exhaustion-of-coverage issue was not discussed with Sockwell's attorneys until after the bad-faith action had been filed in 1999. Additionally, National did not plead this failure-to-exhaust-coverage defense as an affirmative defense to Sockwell's complaint, and Sockwell's attorneys filed a motion in limine to limit any reference to this issue at trial. National's attorney responded that it was not required to plead failure to exhaust coverage as an affirmative defense because, it argued, as part of Sockwell's prima facie case, she had the burden of establishing that the other coverages available to her had been exhausted. However, National attempted to amend its answer during the trial to assert this defense. Sockwell's attorneys objected to this motion to amend the pleadings, arguing that to allow the amendment at that stage of the litigation would prejudice Sockwell and would require additional discovery to rebut the defense. Sockwell's attorneys also challenged National's interpretation of the UIM provision contained in Sockwell's policy and the proper application of that provision in this case. [6] The trial court granted Sockwell's motion in limine; it denied National's motion to amend its pleadings.