Voluntary dismissal of a breach of contract claim against an insurer does not preclude the filing of a bad faith claim.

The plaintiff filed suit against Allstate alleging breach of contract and uninsured/underinsured motorist coverage stemming from a motor vehicle accident involving the plaintiff and Sean Ryon. Also, the plaintiff alleged negligence against Mr. Ryon. The plaintiff voluntarily dismissed his claims against Allstate without prejudice; however, Allstate remained in the case based upon its cross-claim against Mr. Ryon. Eventually, the plaintiff settled his case with Mr. Ryon. Shortly thereafter, the plaintiff filed a case against Allstate alleging bad faith. Allstate sought summary judgment, which was denied. The court ultimately determined that, despite the dismissal of the breach of contract action against Allstate, the plaintiff could maintain a bad faith suit because it is ultimately the insurer's breach of the duty of good faith that gives rise to a cause of action in tort, regardless of any liability arising from an alleged breach of the underlying insurance contract.

Case Law Alert - 3rd Qtr 2012