Court Opinion

ID: 9614541
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:26:21.850717+00
Date Added: 2024-06-11T18:03:37.014568
License: Public Domain

Dore, J.
(concurring in part, dissenting in part) — I concur in the disposition of the third party claimant actions. I dissent to the majority's dismissal of the insured's action for breach of the enhanced duty of good faith by the insurer.
The majority opinion holds that an insurer has an enhanced obligation of good faith in conducting a reservation of rights defense. This enhanced obligation is fulfilled by (1) a thorough investigation of the cause of the insured's accident and the nature and severity of the plaintiff's injuries; (2) retaining competent defense counsel for the insured with the understanding that only the insured is the client; (3) fully informing the insured of all developments relevant to policy coverage and progress of the lawsuit, including disclosure of all settlement offers made by the insurer; and (4) refraining from engaging in any action which would demonstrate a greater concern of the insurer's monetary interest than for the insured's financial risk.
*396The majority has set forth the correct legal standard to be applied to determine whether the insurer has fulfilled its obligation of good faith in a reservation of rights defense. The determination itself, however, should normally be left to the trier of fact. The question thus is whether the insured presents an issue of material fact upon which reasonable minds could disagree.
The majority finds the evidence insufficient to support a finding that a question of fact exists regarding whether State Farm breached any of these obligations to James Tank. I disagree. Viewing the evidence in a light most favorable to Tank, as we are required to do, I find questions of fact exist concerning these obligations of good faith.
In Tank's affidavit he states that he was (1) not advised of the amount of his potential liability exposure, (2) not advised of possible avenues of settlement, including what amount the plaintiff would consider, and that State Farm was willing to contribute $5,000 to an eventual settlement, and (3) not informed that his counsel considered State Farm a coclient and supplied all information concerning the lawsuit to the insurer. Clerk's Papers, at 169-70.
Contrary to the findings of the majority, consideration of the Tank affidavit alone raises questions of fact regarding (1) the insurer's understanding that retained defense counsel should represent only Tank, (2) whether the insurer informed Tank of all developments regarding the progress of the insured's lawsuit, (3) whether the insurer engaged in actions which demonstrated greater concern for its own interests than for the interests of insured and (4) whether State Farm failed to disclose settlement offers.
Failure to disclose the offer of $5,000 as a contribution toward settlement prevented the insured from potentially avoiding the $16,000 judgment. The majority concedes that the record is unclear as to whether the insured had the financial ability to take advantage of this offer of contribution. Evidence resolving this question should be developed at trial.
The majority appears to have further erred in rejecting *397any consideration of the deposition of retained defense counsel. Although this deposition was not formally filed with the trial court until after the summary judgment was entered, the contents of the deposition were argued before the trial judge in the hearing on the motion for summary judgment and the trial judge specifically stated that he would consider the contents of the deposition assuming that counsel correctly stated its contents. Report of Proceedings, at 5-11. The argument made in summary judgment hearing and supported by the deposition of retained defense counsel was that counsel represented both State Farm and the insured in the lawsuit and counsel was required by his contract with State Farm to keep the insurer apprised of the status of the case and his evaluation. The deposition supports the allegations that the insurer demonstrated greater concern for its financial interests than for the insured's financial risk. The deposition also supports the allegations that State Farm failed to communicate to Tank the offer of a $5,000 contribution toward a settlement.
I would hold that there are unresolved factual issues regarding State Farm's violation of its duty to exercise good faith in its defense under reservation of rights, and whether Tank was damaged by his inability to take advantage of the potential for settlement. I would remand for trial.
Goodloe, J., concurs with Dore, J.