Ohio Cas. Ins. Co. v. Twin City Fire Ins. Co., No. 14-CV-858, 2019 U.S. Dist. LEXIS 50504 (E.D.N.Y. Mar. 26, 2019).
An excess liability insurer sued a primary insurer, alleging that the primary insurer breached its duty of good faith and fair dealing by failing to settle an underlying personal injury action within the US$1 million primary policy limits. Before trial in the underlying action, the primary insurer prepared pretrial reports valuing the tort action at or around US$2.5 million; however, it rejected an US$850,000 settlement offer. Ultimately, the case settled for US$5 million. The excess insurer then sued the primary insurer.
The primary insurer filed a motion in limine seeking to introduce evidence that the excess insurer did not notify its reinsurer of the possibility of an excess verdict. The primary insurer argued that this evidence could be used to undermine the excess insurer’s attempt to use at trial the pretrial reports to show the primary insurer’s lack of good faith because the excess insurer did not rely on those valuations. The excess insurer raised several arguments in response, including that the primary insurer’s duty to the excess insurer is different from the excess insurer’s duty to its reinsurer. The court determined that the primary insurer had met the “very low” threshold for relevance and granted the motion in limine without prejudice.