Temple v. Hartford Insurance
40 F. Supp. 3d 1156
D. Ariz.2014Background
- Temple, a Stanley Steemer employee, sues her employer’s workers’ compensation insurer for bad faith and other claims.
- Hartford insured Temple; Gallagher Bassett served as Hartford’s claims handler and denied disability benefits.
- Murray, the adjuster for Gallagher Bassett, conducted investigations and initially denied Temple’s disability claim.
- Medical records and physician restrictions were obtained late, with conflicting assessments on work capability.
- An IME confirmed work-related injuries, after which Temple’s disability benefits were ultimately paid; timing is central to alleged bad faith.
- Court denied defendants’ motions for summary judgment and to strike the plaintiffs’ expert, and set trial planning dates.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the insurer’s denial/processing of the claim was bad faith | Temple contends the insurer failed to investigate and acted biased | Gallagher Bassett asserts proper investigation and denial pending IME | No summary judgment; triable issue on bad faith |
| Whether Gallagher Bassett and Murray can be liable for aiding and abetting the insurer’s bad faith | Agents can be liable for aiding and abetting insurer’s bad faith | Aiding and abetting requires a primary tortfeasor’s violation and awareness | Not entitled to summary judgment; jury may determine aiding and abetting liability |
| Whether punitive damages are warranted given the insurer’s conduct | Evidence shows evil mind and conscious disregard | Need more than tort to award punitive damages; conduct disputed | Summary judgment denied; jury could find requisite evil mind |
Key Cases Cited
- Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 234 (Ariz. 2000) (insurer’s duty of good faith and fair dealing; standards of investigation and fairness)
- Nardelli v. Metro. Group Prop. & Cas. Ins. Co., 230 Ariz. 592 (Ariz. App. 2012) (objective/subjective tests for bad faith; knowledge and recklessness)
- Rawlings v. Apodaca, 151 Ariz. 149 (Ariz. 1986) (punitive damages require evil mind; substantial and unjustifiable risk)
- Trus Joist Corp. v. Safeco Ins. Co. of Am., 153 Ariz. 95 (Ariz. App. 1986) (negligence standard for fair debatability in coverage decisions)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (U.S. 1999) (Daubert standard extended to all expert testimony)
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (U.S. 1993) (gatekeeping reliability and relevance of expert testimony)
- Desert Mountain Prop. Ltd. P’ship v. Liberty Mut. Fire Ins. Co., 225 Ariz. 194 (Ariz. App. 2010) (insurer not liable for bad faith merely for valid defenses)