News Brief

Butterfield and Buono Prevail in Ninth Circuit Appeal of Dismissal of Bad Faith Suit

March 4, 2022

Chad Butterfield (Partner-Las Vegas, NV) and Taylor Buono (Associate-Las Vegas, NV) obtained affirmation before the Ninth Circuit Court of Appeals of the district court's dismissal of an insurance bad faith suit arising out of the insurer's declination of defense and indemnity in an underlying wrongful death lawsuit. In the underlying wrongful death case, the decedent’s estate sued a nutritional supplement manufacturer for selling a supplement banned by the FDA, which allegedly contributed to the decedent’s death. The manufacturer tendered the claim to our client and was denied coverage due to the illegal products exclusion in the policy. The estate settled with the manufacturer and pursued claims against our client in the District of Nevada under an assignment of rights. The district court dismissed the case, finding the insured had failed to comply with the notice provisions under the claims-made policy at issue, and because the supplement at issue was excluded under the policy.  On appeal to the Ninth Circuit, Chad and Taylor argued the district court correctly dismissed the complaint, both under the notice provisions and because the estate had admitted the supplement at issue was deemed illegal by the FDA prior to the decedent's purchase and use, thereby implicating the illegal products exclusion.  The Ninth Circuit agreed, and affirmed the district court's dismissal of the complaint, finding there was no potential for coverage based on the illegal products exclusion.     

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