Millenium Inorganic Chemicals v. National Union Fire Insurance Company of Pittsburgh, 893 F.Supp.2d 715 (2012): "The law that governs a bad faith claim is the same law that governs the insurance contract from which the claim of bad faith arises."

December 23, 2014

Another obscure decision on Maryland's bad faith regime: Millenium  Inorganic Chemicals v. National Union Fire Insurance Company of Pittsburgh, 893 F.Supp.2d 715 (2012). It's even reported!

 

Insured has an insurance policy governed by either New York or New Jersey law. (Which law governed was at issue, but irrelevant to the bad faith part of this. What matters is that Maryland law definitely did not apply.) Since the District Court of Maryland holds that "the law that governs a bad faith claim is the same law that governs the insurance contract from which the claim of bad faith arises" 893 F.Supp.2d at 740, Maryland law did not apply.

 

After determining that Maryland law did not apply, the Court then granted summary judgment on the merits. Since I am primarily concerned with Maryland law, that part is outside the discussion.

 

Practically, this decision clarifies an important point that rarely comes up. If you buy insurance that uses a choice of law to pick a non-Maryland jurisdiction or you buy it out of state --however you wind up with Insurance in Maryland governed by foreign law-- Maryland will apply local law. Considering the state of Maryland bad faith jurisprudence, that is more often than not a good thing.

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