The Virginia Supreme Court recently held that a judge, not a jury, must determine whether an insurer acted in bad faith in denying coverage or refusing payment. Revi, LLC v. Chicago Title Insurance Company, No. 141562 (Va. Sept. 17, 2015).
The plaintiff sued its title insurer for breach of contract and bad faith after the insurer denied a claim under its policy for damages and attorney’s fees. The insurer filed a motion to have the trial judge, rather than the jury, decide the issues of bad faith and attorney’s fees. The judge allowed the jury to determine whether the insurer had engaged in bad faith and to award attorney’s fees. However, after the jury verdict finding bad faith and awarding attorney’s fees, the judge vacated the attorney’s fees award and held that Virginia law required the trial judge, not the jury, to determine whether an insurer had engaged in bad faith warranting an award of attorney’s fees.
On appeal, the Virginia Supreme Court examined the question of whether Virginia Code Section 38.2-209(A) requires that a judge determine whether an insurer acted in bad faith warranting an award of attorney’s fees. That statute provides that an, “individual insured shall be entitled to recover from the insurer costs and such reasonable attorney’s fees as the court may award.” The Supreme Court held that the term “court” used in the statute means “judge” and thus found that, “the judge, not the jury, must determine whether the insurer breached the insurance contract in bad faith before it may award attorney’s fees and costs to the insured pursuant to Code § 38.2-209(A).”