Punitive Damages Award Not Recoverable in Subsequent “Bad Faith Failure to Settle” Case Against Insurer

A judgment which included punitive damages was assessed against an insured.  The insured sued the insurance company for a bad-faith failure to settle the libel and slander claims within policy limits.  The First Department determined the insurance company was entitled to summary judgment because public policy precludes the insured from recovering the punitive damages portion of any judgment resulting from the insurer’s bad faith.  The Court also noted that the public policy argument could be raised for the first time on appeal because no new facts were alleged and only purely legal arguments were made.  Seldon v Allstate Ins. Co., 2013 NY Slip Op 01628, 9542, 116217/08, 1st Dept. 3-14-13