Opinion ID: 2455341
Heading Depth: 3
Heading Rank: 1

Heading: The Superior Court's Order Exceeded The Scope Of State Farm's Motion For Partial Summary Judgment.

Text: Every insurance contract contains within it the implied covenant of good faith and fair dealing, which requires the contracting parties to avoid behavior that will injure the right of the other to receive the benefits of the agreement. [7] As part of its duty to act in good faith, an insurer has a duty to settlethat is, an obligation[ ] under a contract of liability insurance ... to settle a claim that has been brought against the insured when it is appropriate to do so. [8] An insurer must investigate claims and inform the insured of all settlement offers and the possibility of excess recovery by the injured claimant. [9] In addition, when a plaintiff makes a policy limits demand, the insurer must tender maximum policy limits to settle a plaintiff's demand when there is a substantial likelihood of an excess verdict against the insured. [10] In such a situation, the insurance company is obligated to determine the amount of a money judgment which might be rendered against its insured, and to tender in settlement its contractual share of the judgment. [11] Should the insurer breach its duty to tender its full policy limits, the insured may sue for damages. [12] In its motion for partial summary judgment, State Farm moved for judgment on one component of the duty to settlean insurance company's duty under Jackson to tender policy limits in response to a policy limits demand. Confusingly, the motion could have been interpreted as asking for a dismissal of all of Whitney's duty to settle claims. However, State Farm's attorney subsequently clarified to the superior court that he was not seeking a dismissal of Whitney's bad faith claims altogether, but rather an acknowledgment that in the case of a policy limits offer, ... an insurance company's obligation [is] to quantify and tender the amount of policy limits. State Farm's attorney then confirmed that he was limiting [the] motion here to a request that the Court say that State Farm complied with that precise legal duty. The superior court granted State Farm's motion. The order State Farm had drafted, however, used language much broader than the scope of its motion, stating that State Farm satisfied its duty to settle by its May 2, 2007 offer, and dismissing all of Whitney's duty to settle claims. The superior court nevertheless signed the order as drafted, with no edits and with no explanation of the court's legal reasoning. In oral argument before us, State Farm conceded that its draft order was overly broad for the narrow question in its motion. Based on this concession, we reverse the superior court's grant of partial summary judgment and remand for further proceedings. But on the narrow issue that was validly before the superior courtwhether State Farm breached its duty to settle by failing to accept Libbey's April 2007 offer we affirm, as discussed below.