Court Opinion

ID: 9795494
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:30:09.766628+00
Date Added: 2024-06-11T08:30:09.574545
License: Public Domain

FRY, Judge (specially concurring). {25} I concur in the result of the majority opinion. I also agree with the rationale supporting the result, except that portion of the opinion discussing Plaintiffs’ claims against FIE for bad faith. I write separately to explain how I would use a different analysis to reverse the dismissal of Plaintiffs’ bad faith claims. {26} I have two problems with the majority’s approach. First, because there is already an established legal theory that would permit Plaintiffs to sue FIE for bad faith, the majority has unnecessarily created a new cause of action. Second, the new cause of action is too amorphous, and the majority provides no practical guidance to practitioners and the district courts as to how the new claim is to be pleaded and proved. I briefly address each issue in turn. {27} Instead of resorting to cases from other jurisdictions that have fashioned a totally new cause of action, we need search no further than the common law legal theory of delegability of performance. See generally E. Allan Farnsworth, Contracts §§ 11.10-11.11 (2d ed.1990). The Restatement (Second) of Contracts sets out the framework for the cause of action that arises from this theory, where, for example, the insurer has delegated to another entity some of its obligations under the insurance contract. Under those circumstances, the cause of action consists of two elements: (1) the existence of a “delegation agreement” between the insurer and another entity whereby one delegates to the other obligations owed to the insured under the contract of insurance; and (2) evidence that the insured is an intended beneficiary of the delegation agreement. See Restatement (Second) of Contracts § 318 (1981) (outlining the requirements for a delegation agreement); § 302 (defining an intended beneficiary); § 304 (explaining that a promise in a delegation agreement can create a duty in the delegate). If both elements are proven, the insured may assert a bad faith claim against either entity that is party to the delegation agreement. See Jessen, 108 N.M. at 629, 776 P.2d at 1248 (explaining that the duty of good faith is a non-delegable duty). {28} This brings me to my second point: the new cause of action created by the majority has only vague perimeters. It seems to require that the target entity have some sort of undefined relationship with an insurer and some indefinite ability to control and determine the resolution of the insured’s claim. Majority Opinion, ¶ 14. The entity may or may not have some financial incentive to act contrary to the insured’s best interests. Id. The majority does not clarify what precisely a plaintiff has to prove about the target entity in order to prevail. The majority has painted a new cause of action with the broadest of brush strokes and left it to litigants and district courts to struggle to define the cause of action while worrying that they might be guessing wrong. {29} In reversing the dismissal of Plaintiffs’ bad faith claims, I would simply rely on the common law theory of delegability of performance and point the litigants and the district court to the Restatement for clear guidance on the requirements for proving such a claim.