Court Opinion

ID: 9648376
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:16:53.093515+00
Date Added: 2024-06-11T18:11:59.538343
License: Public Domain

RIDGELY, Justice,
concurring in part, dissenting in part.
I agree with and, therefore, concur in, the majority’s conclusion that the Superior Court correctly dismissed the Dunlaps’ bad faith claim against State Farm under Tackett v. State Farm, Fire & Cas. Ins. Co.48 The majority’s opinion, however, ultimately describes a cause of action for the breach of the implied covenant of good faith and fair dealing that is semantically different but not substantively different from a Tackett claim, reverses the dismissal to the extent it is “with prejudice,” and remands this case to allow the Dunlaps to amend their complaint. I disagree with the reversal and remand because the implied covenant does not come into play given the undisputed facts before us.
This Court has held that “implying obligations based on the covenant of good faith and fair dealing is a cautious enterprise.”49 We have said that in deference to the principle that, absent grounds for reformation, courts should not rewrite contracts.50 The bottom line here is that the Dunlaps *446wanted UIM coverage even though DART still had primary insurance coverage. If State Farm agreed to this, the policy would be rewritten and changed from uninsured/underinsured motorist coverage to a policy for primary insurance coverage. Because State Farm had no obligation to change the scope of the coverage under the policy, it did not breach the implied covenant when it refused the Dunlaps’ request that it do so.
In Tackett, we held that a first-party claim against an insurer for bad faith denial or delay in claim payments sounds in contract, rather than tort.51 We recognized that first-party insurance contracts, like any other contract, include an implied covenant of good faith and fair dealing.52 We held that the implied covenant of good faith and fair dealing is breached when “an insurer fails to investigate or process a claim or delays payment in bad faith....”53 We went on to state that “[a] lack of good faith, or the presence of bad faith, is actionable where the insured can show that the insurer’s denial of benefits was ‘clearly without any reasonable justification.’ ”54
The undisputed facts of this case show that State Farm was asked to consent to a settlement for less than the policy limits without prejudice to the Dunlaps’ UIM claim.55 The statute that provides for UIM insurance relieves State Farm of any obligation to pay “until after the limits of liability under all bodily injury bonds and insurance policies available to the insured at the time of the accident have been exhausted by payment of settlement or judgments.”56 In almost identical language, the Dunlaps’ insurance policy stipulates that UIM coverage cannot be exercised by the insured until the limits of “all bodily injury liability bonds or policies that apply have been used up by payments of judgments or settlements.”57
While the Dunlaps are not claiming that State Farm failed to investigate, process or delay payment on a claim, an analysis under Tackett of the alleged breach may be made on the premise that the Tackett list is merely representative and not exhaustive-.58 Thus, the Dunlaps have to show that State Farm’s refusal to agree to a settlement with DART for less than policy limits clearly lacked any reasonable justification. In this case, the Dunlaps own agreement with State Farm prevents them from doing so. State Farm was reasonably justified in refusing the Dunlaps’ request because the subject at issue was expressly covered by the contract. The DART policy had to be “used up” in order for the Dunlaps to have a UIM claim.
Tackett addresses the implied covenant of good faith and fair dealing in the context of an insurance contract. The case does so with a focus upon whether there is a reasonable justification for the insurer’s position. Reasonable conduct is at the *447core of whether there has been a breach of the implied covenant of good faith and fair dealing. The implied covenant requires “ ‘a party in a contractual relationship to refrain from arbitrary or unreasonable conduct which has the effect of preventing the other party to the contract from receiving the fruits’ of the bargain.”59 Here, the bargain was for uninsured/underin-sured motorist coverage. The fruit of the bargain is payment under the terms of the UIM policy when no other insurance is available to the Dunlaps, not a settlement with DART.
We have stressed that the implied covenant of good faith and fair dealing exists to protect the “parties’ reasonable expectations.” 60 Under the statute and insurance policy at issue here, there could be no reasonable expectation that State Farm would provide uninsured motorist coverage for a motorist that was still insured. To the contrary, the expectations of the parties were that unless DART’s policy was exhausted by settlement or judgment there could be no UIM claim. We should honor that bargained for expectation. The majority’s point that DART’s liability was “questionable” makes no difference. Disputes over liability are to be expected and a trial exists to resolve them. Because the undisputed nature of the Dunlaps request shows that the implied covenant of good faith and fair dealing does not come into play, it is my opinion that a remand to allow an amendment to the complaint is unwarranted. I respectfully dissent from the decision to reverse in part and remand.

. 653 A.2d 254 (Del.1995).

. Cincinnati SMSA Ltd. P’ship v. Cincinnati Bell Cellular Sys. Co., 708 A.2d 989, 992 (Del. 1998).

. Gertrude L.Q. v. Stephen P.Q., 466 A.2d 1213, 1217 (Del. 1983).

. Tackett, 653 A.2d at 265-66.

. Id. at 264.

. Id.

. Id. (quoting Casson v. Nationwide Ins. Co., 455 A.2d 361, 369 (Del.Super.Ct.1982)).

. The Dunlaps attached to their complaint and incorporated within it by reference their counsel’s and State Farm’s correspondence on their request.

. Del. Code Ann. tit. 18, § 3902(b)(3) (2005) (emphasis added).

. State Farm Car Policy, 9808.4, Section III — Uninsured Motor Vehicle Coverage (emphasis added).

. "A complete catalogue of types of bad faith is impossible.” Restatement (Second) of Contracts § 205 comment d. (1981).

. Majority Opinion at-(quoting Wilgus v. Salt Pond Inv. Co., 498 A.2d 151, 159 (Del.Ch. 1985)).

. Cincinnati, 708 A.2d at 992.