Dennis J. Wall

 

Uncontradicted testimony from an underwriter established the materiality of an answer to a foreclosure question in Hiscox Dedicated Corp. Member, Ltd. v. Taylor, ___ F.4th ___, No. 24-1161, 2025 WL 3639282 (8th Cir. Dec. 16, 2025).   The case was determined under Arkansas law.  It involved a property insurance policy and a claimed fire loss.

 

Applying Arkansas law, the Eighth Circuit held that the District Court properly ruled that the policy was rescinded so that there was no coverage under the policy at the time of loss.  The Eighth Circuit held in pertinent part as follows:

 

     "Under Arkansas law, materiality is a question of fact "so long as the matter is debatable" but a question of law "when so obvious that a contrary inference is not permissible." [Citation omitted.]   A misrepresentation is material if the insurer shows that "had it known of the misrepresented facts, the circumstances were such that it would not have issued the present coverage." Id. (emphasis added, cleaned up). Uncontroverted testimony from underwriters that the misrepresentation is material may be conclusive at summary judgment. [Citations omitted.].

 

     Here, there was uncontradicted testimony from B&W and Hiscox underwriters that they would not have issued the policy had Taylor properly disclosed the Fairfield Bay Property foreclosure."

Taylor,  2025 WL 3639282, at *6.

 

Case law on issues related to Reasonable Expectations of the Insured, which are sufficiently similar to the issues discussed in this article to be considered together with them, is collected in Volume 1 of the most recent Edition of CATASTROPHE CLAIMS / INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS § 7:2 (Thomson Reuters West Publishing Co.).

 

Please read the disclaimer.  ©2025 Dennis J. Wall.  All rights reserved.  Interested in many things including Claims and Bad Faith Law?  There's more on my Substack newsletter, claimsandissues.substack.com. 

 

  

In Acosta v. Citizens Prop. Ins. Corp., 421 So. 3d 716 (Fla. 4th DCA 2025), the issue on this claim for loss from Hurricane Irma was whether the cause of the loss was because of a covered peril (wind) or whether the cause was due to an exclusion (wear and tear).

 

The policyholders put on evidence from their expert, whose testimony was "based on NOAA and National Weather Service data, drone photography, thermal imaging, and two physical inspections" of the property.  Acosta, 421 So. 3d at 720.

 

In the Acosta case (no, not what you might call "the Epstein Acosta" in this case from South Florida, but a different Acosta here), the dispute was between competing versions of an agreed fact:  There was a loss caused by water intrusion through the homeowners' roof, but the parties disputed whether it was caused by the covered winds of Hurricane Irma or by excluded wear and tear.  "They simply disagreed as to what had caused the damage -- Hurricane Irma's wind force versus wear and tear."  Acosta, 421 So. 3d at 719-20.

 

The jury went with wind, but the trial judge set the jury's verdict aside and granted the carrier's motion for JNOV or judgement notwithstanding the verdict.  The appellate court reversed.

 

On this record, the jury was the one to decide the issue, not the judge. 

 

I do not find anywhere in the opinion that "wear and tear" became an issue because it was an exclusion in the policy at bar.  However, the jury effectively said so in their verdict which was partially reproduced in the appellate court's opinion.  See Acosta, 421 So. 3d at 718.

 

The jury decided in answering an interrogatory verdict in the case that "No," the defendant carrier did not "prove, by the greater weight of the evidence, that the damage is consistent with wear, tear and/or deterioration[.]" The defendant carrier of course bore the burden of proof on that issue because "wear, tear and/or deterioration" was an exclusion, an affirmative defense in this coverage case.

 

Case law on the issues discussed in this article is collected in Volume 1 of the most recent Edition of CATASTROPHE CLAIMS / INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS Chapter 7, Property Insurance Coverage Issues:  Exclusions (Thomson Reuters West Publishing Co.).

 

Please read the disclaimer.  ©2025 Dennis J. Wall.  All rights reserved.  Interested in many things including Claims and Bad Faith Law?  There's more on my Substack newsletter, claimsandissues.substack.com. 

 

 

 

In Hancock v. Fla. Farm Bureau Gen. Ins. Co., 421 So. 3d 459, 464 (Fla. 2d DCA 2025), a Florida intermediate appellate court reiterated the burden of proving "'the existence of a causal connection'" in a third-party bad faith case:

 

Put differently, "the existence of a causal connection is a prerequisite" in a third-party bad faith case, and "there must be a causal connection between the damages claimed and the insurer's bad faith." Perera [v. U.S. Fid. & Guar. Co.], 35 So. 3d [893] at 901, 902 [(Fla. 2010)}.

 

Case law on the burdens of proof in a third-party bad faith case is collected in Volume 1 of the Third Edition of LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:95 (Thomson Reuters West Publishing Co., with 2025 Supplements).

 

Please read the disclaimer.  ©2025 Dennis J. Wall.  All rights reserved.  Interested in many things including Claims and Bad Faith Law?  There's more on my Substack newsletter, claimsandissues.substack.com. 

 

 

In Tudor v. State Farm Gen. Ins. Co., No. 22-cv-01113-RFL (PHK), a U.S. Magistrate Judge was confronted with a complicated situation and he responded with a very long Order.

 

In part here pertinent, the parties presented what is apparently a new tactic in litigation against insurance carriers:  the undisclosed "consulting attorney."

 

The parties and the Magistrate Judge argued about the different kinds of Model Protective Orders available to them under the Local Rules of the Northern District of California.  They apparently did not mention the Federal Rules of Civil Procedure, but the Rules provide context and almost certainly were the reason that the Model Protective Orders were written.

 

Under the Federal Rules of Civil Procedure, a party does not need to disclose the identity of a consulting expert witness who is not expected to testify at trial.  See Fed. R. Civ. P. 26(b)(4)(D).  The Northern District of California Model Protective Orders reflect this.  "Under the Model PO, the term 'Expert' is defined to include both an 'expert witness' and a 'consultant.'  Model PO at ¶ 2.6."  Tudor, 2025 WL 3628060, at *4.

 

In this case, the policyholder retained several consulting attorneys who made no appearance as counsel in her case and who were not expected to testify at trial.

The carrier in this case, State Farm, objected to providing the plaintiff's counsel of record with "confidential" information in discovery unless the plaintiff's "consulting attorneys" were identified; State Farm was particularly concerned that the consulting attorneys would turn around and use the information against State Farm in other cases.  The plaintiff contended that it was enough if the consulting attorneys agreed to be bound by the terms of the Protective Order which essentially applied to the use of "confidential" information in the case at bar.

 

Both parties apparently worked from the Local Rules of the District Court where the action was pending, the Northern District of California.  State Farm based its submission also on the District Court's Model Protective Order titled, "STIPULATED PROTECTIVE ORDER FOR LITIGATION INVOLVING PATENTS, HIGHLY SENSITIVE CONFIDENTIAL INFORMATION AND/OR TRADE SECRETS."  Although the Magistrate did not refer to it by its full title, this is the  Model Highly Confidential Protective Order which was designed particularly for patent cases.

 

State Farm apparently tried to engraft edits onto the District's Model PO in Standard Cases insofar as the model patent order,or what the Court called the "Model Highly Confidential PO," requires "two levels of confidentiality designations for documents/information ('Confidential' and 'Highly Confidential')," but without also incorporating the "procedure [in that Model Order] for approving or objecting to disclosure of highly confidential information ... to experts."  Tudor, 2025 WL 3268060, at *4.  The Magistrate found this to be objectionable.

 

After considering and discussing many contentions and issues, the Magistrate Judge entered this ruling;

 

"Accordingly, the Court modifies the proposed Protective Order, first, by rejecting the edits proposed by both Parties directed to this dispute over consulting attorneys (e.g., edits to Paragraphs 2.6, 2.10, 7.3, and 7.4). The Court resolves this dispute by adopting the provisions of the Model Highly Confidential PO relevant to creating two tiers of confidentiality ("Confidential" and "Highly Confidential") and providing that disclosure of "Confidential" information to consultants (which includes consulting attorneys) is allowed without identifying them, whereas disclosure of "Highly Confidential" information to consultants (including consulting attorneys) is subject to and may only be done after the identification and objection procedures in the Model Highly Confidential PO. As noted above, the Court is separately issuing the final Protective Order in this case, which reflects the Court's resolution of these disputes as discussed herein."

Tudor, 2025 WL 3628060, at *6.

 

If you are confused by this case, so was I.  It's a legitimate response to this case, I think.  My own confusion increased because I could not find a definition of "Highly Confidential Information" in the Model Protective Order for patent cases.  Please feel free to read it for yourself at _https://cand.uscourts.gov/sites/default/files/documents/ND_Cal_Patent_Highly_Sensitive_Model_Prot_Ord_Revised.pdf.  I ask only that you share your discovery if you find a definition of "Highly Confidential Information" or any direction to counsel and parties as to when they can ethically designate something as "" HIGHLY SENSITIVE CONFIDENTIAL INFORMATION."  Your discovery will be gratefully appreciated.

 

Case law on the issues discussed in this article is collected regarding third-party insurance in Volume 1 of the Third Edition of LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:107.50, Stipulated Protective Orders:  How and Why, and Possible Use in Concealing Third-Party Bad Faith Claims (Thomson Reuters West Publishing Co., with 2025 Supplements).   Case law on these issues in first-party insurance cases is collected in Volume 2 of id., § 9:28.50, Stipulated Protective Orders:  How and Why, and Best Practices to Honor Public Access and Avoid Possible Use in Concealing First-Party Bad Faith Claims.

 

Please read the disclaimer.  ©2025 Dennis J. Wall.  All rights reserved.  Interested in many things including Claims and Bad Faith Law?  There's more on my Substack newsletter, claimsandissues.substack.com. 

 

In Baldwin v. Standard Fire Ins. Co., 269 N.E.3d 1197 (Ind. 2025), a third-party bad faith case, the Supreme Court of Indiana adopted the "safe harbor" of Section 26 of the Restatement of the Law of Liability Insurance (2019).  The Court was using the October 2024 Update on Westlaw, which it erroneously referred to as the "Second" Restatement of the Law of Liability Insurance.  Baldwin, 269 N.E.3d at 1206-07.

 

"[I]nsurers may rely on an interpleader action as a 'safe harbor' that shields insurers from liability to their insureds."  Baldwin, 269 N.E.3d at 1207.

 

The liability insurer at bar filed an interpleader action, deposited its policy limits with the Court, and continued to provide its policyholder with a defense in the underlying liability case, all in the face of its evaluation that one claim among multiple claims against its policyholder would alone likely exceed its policy limits.  The Supreme Court affirmed the lower courts' grant of the liability carrier's motion for summary judgment, holding that the carrier cannot be liable for bad faith under these facts.  Baldwin, 268 N.E.3d at 1207-08.

 

The case law is still scanty, but available case law on the Restatement's journey through the Courts is discussed in Volume 1 of the Third Edition of LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:1 (Thomson Reuters West Publishing Co., with 2025 Supplements).  Case law involving insurer bad faith issues and Multiple Claimants including the role of interpleader, is collected in id., § 3:45.

 

Please read the disclaimer.  ©2025 Dennis J. Wall.  All rights reserved.  Interested in many things including Claims and Bad Faith Law?  There's more on my Substack newsletter at claimsandissues.substack.com.