Fall 2005

If an insured does not think that his insurer handled his claim properly, he may have some recourse. Every contract contains an implied covenant of good faith and fair dealing that neither party will hinder the right of the other to receive the benefits of the contract. The duty imposed by this covenant applies to insurers and insureds. Some courts go so far as to hold the insurer to be a fiduciary to the insured.

Duties of insurer

An insurer is required to exercise good faith and fair dealing in handling its own insured's claims properly, defending the insured in a third-party action, and settling a third-party action when necessary.

Who owes the duty

Generally, the duty of good faith and fair dealing is imposed only on a party to a contract. Thus, it mainly applies to the insurer and the insured. However, the duty may also apply to a separate management organization that handles an insurer's administrative functions, such as claims adjusting, even though it is not a party to the insurance contract.

Who receives the benefit of the duty

Determining who is entitled to the benefit of the duty does not depend on whether a person or entity is a party to the insurance contract. Therefore, those who may receive the benefit include the insurer, the named insureds, and unnamed insureds. For example, automobile insurance policies often provide that family members of the named insured or drivers using the insured vehicle with the permission of the named insured are covered under the policy. All such persons are owed the duty of good faith and fair dealing.

Breach of duty

A breach of the duty of good faith and fair dealing is considered bad faith. An insured must show that the insurer consciously committed a wrong because of a dishonest purpose, moral obliquity, or ill will. Bad faith is not proven by showing that the insurer merely exercised bad judgment or acted negligently.

An insured may bring an action against an insurer if it breaches the duty of good faith and fair dealing in handling the following types of actions:

• first-party cases, involving the insurer's conduct in handling claims by its insured
• third-party cases, involving the insurer's handling of claims filed by third parties against its insured

To determine if the insurer breached its duty to properly handle its own insured's claim, courts will consider whether the insurer acted reasonably.

To determine if the insurer breached its duty to settle a third party's claim against the insured, most courts consider whether the insurer acted in bad faith and failed to sufficiently consider the insured's interests. Other courts determine whether the insurer acted negligently and failed to exercise a standard of care at least equal to what a reasonable person would exercise in managing his own affairs.

To determine if the insurer breached its duty to defend the insured against a third party's claim, courts will look to the language of the policy and the language of the complaint to ascertain whether the facts alleged fall within the scope of coverage of the policy.

Depending on the jurisdiction, a breach of the duty of good faith and fair dealing may be a tort action, a contract action, or both. Characterizing the action as falling under either tort or contract may affect the remedies available for the insured, the statute of limitations that is applicable to the action, and the insurer's defenses to the action.

Because state laws regarding bad faith claims differ greatly, an insured should contact an attorney about how to pursue such a claim.

Golfers, spectators, and even third parties may be injured by a golf ball or other object on or off the golf course. The owner of the golf course or the golfer who causes the injury may be held liable in a negligence action to the injured party.

Owner's liability

An owner of a golf course must exercise reasonable care in operating the premises in a reasonably safe condition for the safety of golfers and spectators. However, the owner obviously can not guarantee their safety from errant hits by golfers. The owner may be liable for injuries caused by errant shots only under certain circumstances. For example, if the owner designates a portion of the fairway from which spectators are to view a professional golf game, negligence may be found if a spectator is injured by a bill hit in that portion of the fairway. The owner may also be liable to golfers if defects in the premises or golf carts cause injuries to the golfers. The owner may incur liability if a spectator or golfer is injured due to the owner's failure to enforce his own safety rules.

Third parties may also be injured during the course of a golf game. Pedestrians around the course or drivers on highways next to the course may be struck by golfers' errant golf balls. In such cases, the owner may be liable in a negligence action if the injury was caused due to the fact that the course was designed so that golfers had to hit the ball across a highway or that the owner failed to construct proper fencing between the golf course and other areas, such as the highway or parking lots.

An owner may further be liable in some jurisdictions due to the negligence of a course professional who works at the course. The owner's liability will depend on the employment relationship with the professional, and the owner is more likely to be liable if the professional is an employee rather than an independent contractor. The owner may also be liable for any negligent acts by a caddy who is employed on the course.

Generally, municipalities that own golf courses may be sued in tort actions for negligence because the operation of a golf course is considered a proprietary, business-like function. Because it is not a governmental function, the doctrine of governmental tort immunity usually does not apply.

Golfer's liability

A golfer must exercise reasonable care while on a golf course. However, he cannot ensure that each of his shots will travel on its intended path. Thus, his negligence may be found if he fails to give adequate and timely warning of his ball's path by shouting "fore" to those in the range of danger of being struck. A golfer may also be liable if he causes injuries to another due to his reckless conduct while on the golf course, including the manner in which he operates a golf cart.

Defenses

Golfers and spectators generally assume the ordinary risks inherent in the game of golf when they venture onto the course. The most obvious danger is the risk of being hit by an errant golf ball, and an injured party may be denied recovery for an injury arising from such a situation unless the owner or golfer was negligent. An injured party may also be contributorily negligent if he is injured while driving a golf cart in a reckless manner or if a golfer's club strikes him due to the fact that he was standing directly behind the golfer.

Under the common law, a person commits a tort when he or she fails to provide a public utility or a public facility to a member of the public. In order to be liable for this tort, the person must have a non-contractual duty to provide the public utility or the public facility to the public. A denial of the public utility or the public facility constitutes a breach of that duty.

If a person has a contractual duty to provide a public utility or a public facility to a member of the public, the person would not be liable in tort. The person would only be liable for a breach of his or her contractual duties. For example, if a person has made a reservation at a hotel, which reservation a hotelkeeper refuses to honor, the hotelkeeper would only be liable for a breach of contract action. If the person did not have a reservation at the hotel and the hotelkeeper refused to provide a hotel room to the person, the hotelkeeper would be liable for a tort action. However, the hotelkeeper's refusal to provide the hotel room must have been unreasonable.

A person who violates a statute or an ordinance, which statute or ordinance requires the person to provide public facilities, may be liable for a tort action. A violation of a criminal statute may also be grounds for the tort action.

A person who has a duty to provide public facilities is liable for the tort of failure to provide the public facilities. The person's employees may also be liable for the tort. The person's employees may be liable for the tort, even if the person is not liable.

Examples of a failure to provide a public utility include a carrier's refusal to carry goods, to deliver goods, or to carry passengers. Examples also include a utility's failure to provide telephone, electric, or gas services. Examples of a failure to provide a public facility include a hotel's wrongful ejection of a guest or the hotel's refusal to rent a room to the guest or a restaurant's wrongful ejection of a customer or the restaurant's refusal to serve the customer.

Although there are federal and state statutes that prohibit discrimination with regard to a public utility or a public facility, such as the Civil Rights Act of 1871, the common law tort of failure to provide a public utility or a public facility may also apply.

The federal Volunteer Protection Act (VPA) grants civil immunity to a volunteer who harms a person while performing services for a nonprofit organization or governmental entity. However, the VPA does not grant immunity to the nonprofit organization or governmental entity. Therefore, the VPA does not prohibit the person who has been harmed by the volunteer from filing a lawsuit against the organization or entity.

Liability of Volunteers to Nonprofit Organizations and Governmental Entities

The VPA does not prohibit a lawsuit against a volunteer by a nonprofit organization or governmental entity. The VPA only applies to lawsuits against a volunteer by a person who has been harmed by the volunteer while the volunteer was performing services for a nonprofit organization or governmental entity.

Injuries are common in snow sports because of the dangerous nature of the sports. Under certain circumstances, an injured party may be able to recover for his injuries caused by improperly maintained conditions or equipment.

Skiing

Negligence action

The owner of a ski lodge or ski lift has a duty to use reasonable care to maintain the mountain and other premises available to skiers in a reasonably safe condition. This does not require the owner to ensure the safety of skiers on dangerous slopes. However, the owner may not increase the hazards of skiing on his premises. For example, an owner may be found negligent in an action by an injured skier if he left foreign obstacles on the slope, used pointed poles as gate markers, improperly labeled a dangerous mountain as a beginner slope, failed to repair a broken ski lift, or provided rental skis with defective bindings.

Defenses to negligence action

A skier assumes the ordinary risks inherent in skiing, including the risk of injury due to rough terrain, hitting objects such as a tree stump covered by natural or man-made snow, and being knocked down by other skiers. However, a skier does not assume extraordinary risks that are unexpected, such as being injured by the negligent operation of a ski tow. Contributory negligence may also bar a skier's recovery if, for example, he loses control of his skis and strikes an object or other skier.

An owner may rely on the language of agreements signed by skiers for equipment rental and lift tickets that insulates the owner from liability for injuries arising out of the inherent risks of skiing.

Products liability action

A skier may assert a products liability action against a manufacturer or supplier if he is injured by ski equipment. While some courts permit such an action, other courts are reluctant to allow recovery based on the inherent danger in skiing and the skier's responsibility for his own injuries.

Snowmobiles

Negligence action

The driver of a snowmobile owes to certain types of passengers a duty of reasonable care in driving the vehicle. If the passenger is injured due to the driver's negligent operation, he may bring an action against him.

Defenses to negligence action

A driver may assert that an injured passenger assumed the risks of riding in a snowmobile. However, courts may not accept such a defense on the ground that riding in a snowmobile that is properly driven may not pose any more hazard than that encountered while riding on other modes of transportation, including a train or taxi. The driver may also contend that the passenger was contributorily negligent in failing to warn the driver of dangerous terrain of which the passenger is aware if the driver is not aware of such conditions.

Products liability action

An injured driver may bring a products liability action arising from a snowmobile accident against its manufacturer or supplier of its parts, contending that the snowmobile was defectively designed or assembled. The driver may recover under such theory unless his injury was caused by the dangerous manner of his use, such as speeding over large embankments.