Professional Negligence Law Reporter

Harsh v. GEICO Gen. Ins. Co., 2018 WL 4521934 (S.D. Ohio Sept. 21, 2018).

A federal district court held that an insurer may be liable for the bad faith handling of a negligence suit against a policyholder arising out an auto accident involving one of the policyholder’s intoxicated workers.

Charles Harsh, who owned multiple residential and commercial properties, hired Marc Kraft to perform maintenance work. In November 2012, Harsh loaned Kraft his pickup truck—which was covered by a GEICO policy that insured both Harsh and anyone using his vehicle with his permission—so that Kraft could drive to work the next morning. That night, Kraft became severely intoxicated and rear-ended Brad Weaver’s vehicle. Weaver’s partner was killed in the crash, and Weaver and the couple’s child were injured. Weaver and his partner’s estate sued Harsh, alleging negligence, negligent entrustment, and negligent hiring. GEICO hired an attorney to represent Harsh and separate counsel to represent Kraft.

The insurer offered policy limits on Kraft’s behalf two years after the incident, following an unsuccessful motion for summary judgment. The Weaver plaintiffs rejected the offer and proceeded to trial against Harsh and Kraft. The jury awarded more than $2.62 million plus interest. After payment of policy limits, Harsh remained liable for approximately $2.2 million.

Harsh sued GEICO, alleging bad faith and other claims. The insurer moved for judgment on the pleadings, arguing that, among other things, Harsh’s bad faith claim was time-barred.

Denying in part, the district court noted that under Ohio law, an insurer owes a duty of good faith to its insured regarding claims processing, payment, satisfaction, and settlement. Citing case law, the court found that an insurer does not exercise good faith when it, for example, refuses to pay a claim based on an unreasonable justification. The court rejected GEICO’s argument that Harsh’s bad faith claim was time-barred under the applicable four-year period, noting that the parties had an ongoing relationship after the crash and the insurer did not tender a settlement offer to the Weaver plaintiffs for approximately two years.

Accordingly, the court concluded that Harsh had plausibly alleged bad faith claims against GEICO within an actionable time period.

Plaintiff counsel: Mark Ropchock, Akron, Ohio.