Hoang Do. v. Liberty Insurance Corporation (Case No. 13-1063)
This case arose out of a motor vehicle accident between two parties, one of which was both at fault and uninsured. Mr. Do filed a claim for uninsured (UM) benefits with his own carrier, Liberty Insurance Corp., which Liberty eventually rejected. Subsequent to filing his UM claim, but prior to Liberty's decision to deny the UM claim, Mr. Do reached a settlement with the at fault driver. By the time this occurred, the statute of limitations in which to bring a tort claim for this occurrence had lapsed.
Mr. Do subsequently filed a lawsuit against Liberty, alleging bad faith by delaying their rejection of Mr. Do's UM claim. The trial court dismissed Mr. Do's complaint for failure to state a claim against Liberty because he had not secured any judgment against the at-fault party and because he did not successfully state a claim for bad faith against Liberty since the insurance company was his adversary with regard to the UM claim. As such, Liberty owed no duty to act in good faith.
The United States Court of Appeals, 4th Circuit, held that once an insured files a UM claim with his or her own insurer, an adversarial relationship is assumed and the insurer no longer has an obligation to share information with the insured. Therefore, Liberty had no duty to inform Mr. Do that he had to secure a judgment against the uninsured motorist or that Liberty would rely on his settlement with the at-fault driver when choosing to deny the UM claim. Since Liberty did not owe any duty of good faith, the Court of Appeals affirmed the trial court's decision finding that the complaint failed to state a claim for bad faith.