American Transit Insurance Co. acted in bad faith by refusing to settle a lawsuit brought by a taxi passenger injured in an accident, and exposing the cab driver to a liability of more than $2 million, a state judge has ruled.

In a decision yesterday in Taveras v. American Transit, 24794/10, Brooklyn Supreme Court Justice Arthur M. Schack (See Profile) sharply rebuked the insurance company with a quote from the 1991 film “A Few Good Men,” in which a marine played by Jack Nicholson tells an attorney, played by Tom Cruise, that he “can’t handle the truth.”

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