Bad Faith Water-Damage Case Settles at Mediation for $485,000

SAN ANTONIO - A water damage case, in which the insurers cancelled the homeowners' insurance coverage immediately upon report of the loss, recently settled at mediation for $485,000. Badtke v. CU Lloyds of Texas and Guaranty Ins. Services, No. 2001-CI-16949 (Texas Dist. Ct., 225th Jud. Dist., Bexar Cty.).

The settlement was reached Aug. 18 after the insurer began a fraud investigation of the homeowners, and the homeowners counter-sued for breach of contract and bad faith.

The homeowners' attorney, Kevin M. Young of Prichard, Hawkins & Young, L.L.P., in San Antonio, stated that $385,000 of the settlement amount was paid by …