Opinion ID: 744916
Heading Depth: 1
Heading Rank: 2

Heading: Insurer Bad Faith

Text: 19 An insurer is liable for bad faith when it fails to treat its insured fairly in evaluating and discharging its responsibilities. Deese v. State Farm Mutual Auto. Ins. Co., 838 P.2d 1265, 1268 (Ariz.1992) (en banc). Even when the insurer pays the full amount of the claim there still may be insurer bad faith: The core of the duty of good faith and fair dealing is that the insurer act reasonably towards its insured.... The implied covenant is breached, whether the carrier pays the claim or not, when its conduct damages the very security which the insured sought to gain by buying insurance. Id. at 1269. The insurer may not provide the promised protection with one hand while destroying the very objects of the relationship with the other. Rawlings v. Apocaca, 726 P.2d 565, 571 (Ariz.1986). 20 In Rawlings, the issue was whether an insurer violates the covenant of good faith and fair dealing when, for the purpose of protecting its own interests, it acts improperly to impede its insured's recovery of the uninsured portion of the loss. Id. at 569. The Arizona Supreme Court held that, even though the insurance company paid the full limits of the policy, it committed bad faith by withholding crucial information that would have assisted the insureds in recovering damages not covered by their policy. Id. at 573. As in Rawlings, based on the evidence presented at trial, this jury could have reasonably concluded that SFM caused a delay in TIE's payment under the Jim's Garage policy by failing to disclose evidence of the true ownership of the pickup. 21 SFM argues that Rawlings is inapplicable. First, SFM argues, the Ahrings offered no evidence that TIE would have admitted coverage under Jim's Garage's policy even if SFM had turned over to the Ahrings the notes in its possession. The Ahrings were not required to present a TIE representative who, because of their forthcoming appeal, would testify that it would not have paid the Ahrings even with the evidence. A juror may reasonably surmise that TIE's litigation position may not have been as entrenched if SFM had not concealed pertinent evidence at the outset. We will not upset the jury's reasonable factual determination. 22 Second, SFM argues that unlike the insurance company in Rawlings it was not acting in its own financial interest by withholding parts of its investigation. Although the insurer's conflict of interest is not as powerful here, it is certainly present. If the evidence came out that Jim's Garage owned the truck, it would be more likely that SFM could be found liable under the Rogers policy. That the jury ultimately held, and we agreed, that there was no liability under that policy does not change the fact that a reasonable juror may find that SFM was concerned about the possibility of liability. 23 The jury reasonably concluded that SFM contributed to the delay in TIE's satisfaction of the Jim's Garage policy. Had TIE immediately paid the limits of that policy, the Ahrings may not have suffered the damages specified by the district court including direct pecuniary losses, loss of credit reputation, emotional distress, humiliation, inconvenience and anxiety as well as burdensome litigation against TIE. SFM argues that these damages are a result of the underlying accident rather than any action by SFM. Although these damages would not have occurred in the absence of a devastating accident, a reasonable juror could find that they would not have occurred if SFM's actions did not impede the Ahrings' claim against TIE. 24 A reasonable factfinder could conclude that the Ahrings suffered damages as a result of SFM's acting in bad faith. We therefore affirm the district court's denial of SFM's Rule 50 motion.