Court Opinion

ID: 9593993
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:26:09.017376+00
Date Added: 2024-06-11T13:05:19.544076
License: Public Domain

BISTLINE, Justice,
specially concurring.
My purpose in writing separately is not to attempt any enhancement of Justice Pro Tern Smith’s majority opinion, but to allay some of the fears, worries and trepidations of the two dissenting Justices.
Justice McFadden has written at length to illustrate his view that Reynolds never crossed his threshold obligation of establishing any duty on the part of American Mutual. Justice Bakes has agreed with that view, with two additional thoughts. One, he believes that “American Hardware’s duty to [Reynolds] was created by the contract,” and two, as a general proposition, he sees “great doubt [thrown] on all of our prior law relating to the concept of duty in tort.”
The answer to both of the Justices is that one need not become over excited if one would first pause to closely read the opinion authored by Justice Smith. After providing first a history of the transaction leading to the litigation, he delves into applicable precedential case law to a considerable extent. In particular, in footnote 2 he mentions White v. Unigard, 112 Idaho 94, 730 P.2d 1014 (1986) and thereafter in text mentions, Farmers Insurance Group, Inc. v. Trimble, 691 P.2d 1138 (Colo.1984), “where the quasi-fiduciary nature of the relationship between the insurer and the insured was acknowledged,” following which, he immediately discussed White v. Unigard in connection with an action “against an insurer which negligently fails to make a timely settlement of an insurance claim.”
A settlement which is not timely made, but unreasonably delayed, shows the element of being not reasonable action. One would prefer to believe that had the two dissenters paused long enough to become acquainted with the Trimble case, there would have been two less dissents. The Colorado Supreme Court to my knowledge is well respected, and its opinion in Trimble is unanimous, the type of an opinion which we in the legal business, on both sides of the bench, are delighted to utilize.
*368In White v. Unigard this Court relied upon and cited to (among other cases) Gruenberg v. Aetna Insurance Co., 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973) for the principle that an insurer’s duty:
[I]s beyond that which the policy imposes by itself — the duty to defend, settle, and pay — but is a duty imposed by law on an insurer to act fairly and in good faith in discharging its contractual responsibilities. Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973).
Contrary to some authority, this duty arises not only in the context of third party situations (actions brought as a result of the insurer’s failure to settle the claims of third parties within the policy limits of the insured), but also in first party actions (when the insured is personally filing a claim for benefits under the insurer under the policy). As the court in Gruenberg stated:
It is manifest that a common legal principle underlies all of the foregoing decisions; namely, that in every insurance contract there is an implied covenant of good faith and fair dealing. The duty to so act is imminent in the contract whether the company is attending to claims of third persons against the insured or the claims of the insured itself. Accordingly, when the insurer unreasonably and in bad faith withholds payment of the claim of its insured, it is subject to liability in tort. Gruenberg, supra, 108 Cal.Rptr. at 486, 510 P.2d at 1038 (emphasis added).
White v. Unigard, 112 Idaho 94, 96, 730 P.2d 1014, 1016 (1986) (emphasis in original, and emphasis added).
The Colorado Supreme Court in the Trimble case used much the same language:
The standard of conduct on the part of the insurer when dealing with claims arising under an insurance policy is shaped by, and must reflect, the quasi-fiduciary relationship that exists between the insurer and the insured by virtue of the insurance contract.
******
The question of whether an insurer has breached its duties of good faith and fair dealing with its insured is one of reasonableness under the circumstances. The relevant inquiry is whether the facts pleaded show the absence of any reasonable basis for denying the claim, ‘i.e., would a reasonable insurer under the circumstances have denied or delayed payment of the claim under the facts and circumstances.’ Anderson [v. Continental Ins. Co.] 84 [85] Wis.2d [675] at 692, 271 N.W.2d [368] at 377 [(1978)]; Noble [v. National American Life Ins. Co., 128 Ariz. 188] 624 P.2d [866] at 868 [1981].
The court of appeals characterized bad faith breach of an insurance contract as an ‘intentional tort,’ and stated that evidence of intent of a degree less than that necessary to prove punitive damages is required to prevail on the claim. We agree with the analysis of the Supreme Court of Arizona, however, that, while the conduct forming the basis of the claim will necessarily be an ‘intentional act’ by virtue of the necessity of a conscious decision on the part of the insurer to refuse to pay a claim, the standard applicable to establish the tort of bad faith remains one of reasonableness under the circumstances. Compare Noble, 624 P.2d at 868 with Sparks v. Republic Nat. Life Ins. Co., 132 Ariz. 529, 647 P.2d 1127 (1982). In our view, evidence of intent, such as intentional misconduct, actual dishonesty, fraud, or concealment is not a prerequisite to recovery on a claim of bad faith breach of an insurance contract.
Farmer’s Group Inc. v. Trimble, supra, 691 P.2d 1138, 1141.
A jury decided that payment of the claim was unreasonably delayed; and the Court’s opinion is on firm ground in upholding the judgment on that verdict.
HUNTLEY, J. and SMITH, J. Pro Tem., concur.