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Dismissal of bad-faith suit against Zurich American affirmed

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A federal appeals court has affirmed dismissal of a lawsuit filed by a plaintiff against his former employer’s liability insurer, Zurich American Insurance Co., who claimed he was not given a good-faith settlement offer in his dismissed discrimination lawsuit.

Steven LeBoon was hired by Marcus Hook, Pennsylvania-based Alan McIlvain Co. as a human resources manager in September, 2008 and terminated in May, 2009, according to Tuesday’s ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Steven LeBoon v. Zurich American Insurance Co.

Mr. LeBoon filed suit, charging violations of the Americans with Disabilities Act and state law, alleging he had been terminated just after he had suffered a workplace injury. His case was dismissed after he did not appear on the second day of trial and the judge declared a mistrial, according to the ruling.

In October 2015, Mr. LeBoon filed suit against Schaumburg, Illinois-based Zurich American on charges including bad faith because he said the insurer had failed to make any good-faith offers to settle the litigation. He subsequently filed motions seeking sanctions against Zurich and a $1 million default judgment. 

The U.S. District Court in Philadelphia dismissed the case, which a three-judge appeals court panel unanimously affirmed.

“Under the unambiguous terms of the liability policy, Zurich’s only obligation was to provide for the defense and indemnity of covered claims against (Alan McIlvain Co.),” said the appellate court ruling.

“It had no obligation to LeBoon as (the company’s) adversary, to settle the employment litigation, and thus his bad faith claims cannot survive Zurich’s motion to dismiss, just as the District Court concluded,” said the ruling, which also affirmed denial of Mr. LeBoon’s request for sanctions.