Opinion ID: 78397
Heading Depth: 2
Heading Rank: 2

Heading: Southeast's Theory of Auto-Owners' Bad Faith

Text: A bad faith settlement requires an improper motive on the part of Auto-Owners, which can be shown by Auto-Owners' unreasonable conduct coupled with a self-interested settlement. Southeast argued to the jury Auto-Owners paid Rivermar the full amount of the bond, after performing an inadequate and unreasonable investigation of Rivermar's claim, with the self-interested motive of releasing itself from Rivermar's bad faith claim. Southeast demonstrated that for more than three years Auto-Owners supported Southeast's defenses to Rivermar's claim that the concrete floating dock system was defective. Auto-Owners abruptly shifted its assessment of the dock system after an in-house attorney of Auto-Owners, who was previously unfamiliar with the case, became aware of Rivermar's bad faith claim against Auto-Owners. Auto-Owners then hired an attorney, who had previously represented Rivermar's parent company, to re-examine the Rivermar claim. With only an incomplete re-examination, Auto-Owners secretly met with Rivermar and settled the claim for the full amount of the bond. Auto-Owners received a release of all claims against it, including a withdrawal of Rivermar's bad faith claim, whereas the settlement (for which Auto-Owners seeks indemnification from Southeast) did not release Southeast from any of Rivermar's claims. Southeast argued this self-interested settlement, accompanied by an unreasonable handling of Rivermar's claim, is evidence Auto-Owners did not settle in good faith. Before turning to whether the jury reasonably could have inferred Auto-Owners settled the claim with Rivermar in bad faith, we will review the evidence presented at trial.