Opinion ID: 774243
Heading Depth: 3
Heading Rank: 2

Heading: Subrogated Bad-faith Claim

Text: 63 Arizona recognizes the right of an excess insurer to bring a subrogated claim against a primary carrier for bad-faith failure to settle within the primary carrier's policy limits. Hartford Accident, 792 P.2d at 749. No such claim exists between two equal-level insurers. 64 Equal-level insurers have an identical duty of good faith toward the insured. A complete failure to settle is necessarily a failure by both insurers. It follows that RRG cannot refuse to settle the Beery litigation on the one hand and, on the other, contend that MICA's refusal to settle was made in bad faith. Because RRG and MICA had equivalent obligations to the insured, the proper approach to resolving their dispute is not a suit for bad faith, but one for contribution. See St. Paul Fire & Marine Ins. v. Allstate Ins. Co., 543 P.2d 147 (Ariz. Ct. App. 1976) (co-primary insurer can bring equitable contribution claim); Mut. Ins. Co. of Ariz. v. Am. Cas. Co. of Reading, Pa., 938 P.2d 71, 75-76 (Ariz. Ct. App. 1996). 65 No Arizona court has recognized the right of an insurer to bring a subrogated bad-faith claim against an equal-level insurer. The rationale for recognizing an excess insurer's right to bring such an action against a primary insurer does not apply in an action between equal-level insurers. As MICA and RRG were equal-level insurers, they had the same duty to enter a good-faith settlement. The district court, therefore, correctly dismissed RRG's subrogated bad-faith claim against MICA.