INSURER'S PERMISSIBLE VENUE DECISIONS CANNOT GIVE RISE TO BAD FAITH CLAIM
Litigants often disagree about where their dispute should be resolved -- Arbitration or court? And if court, in state court or federal court?
In McCoy v. Liberty Mutual Insurance Company (December 29, 2009) (.pdf), the insured argued that Liberty Mutual's refusal to arbitrate and subsequent removal of the case to federal court gave rise to claims for bad faith and violations of Washington's Consumer Protection Act and Insurance Fair Conduct Act. United States District Court Judge Benjamin Settle rejected the argument and dismissed the claims on summary judgment because the policy underlying dispute provided for arbitration only by mutual agreement and there was diversity of citizenship such that the insurer had the right to remove the case from state to federal court. Judge Settle's decision did not address whether an insured might have a bad faith, CPA and/or IFCA claim when an insurer fails to comply with a mandatory ADR provision or removes a case that is later remanded.
