“[T]he fact that Farmers previously paid an earlier, similar claim, without more, does not demonstrate bad faith or a breach of good faith. An insurer may withhold payment and litigate any claim as to which the insurer has a reasonable defense. An insurer’s failure to dispute a claim when it has the opportunity to do so, does not usually foreclose its right to dispute a later, similar claim, nor does such conduct constitute a breach of its duty of good faith. Insurers are free to make legitimate business decisions (and mistakes) regarding payment ... ”
How later courts described this case
- “[T]he fact that Farmers previously paid an earlier, similar claim, without more, does not demonstrate bad faith or a breach of good faith. An insurer may withhold payment and litigate any claim as to which the insurer has a reasonable defense. An insurer’s failure to dispute a claim when it has the opportunity to do so, does not usually foreclose its right to dispute a later, similar claim, nor does such conduct constitute a breach of its duty of good faith. Insurers are free to make legitimate business decisions (and mistakes) regarding payment ... ”
- “Insurers are free to make legitimate business decisions (and mistakes) regarding payment, as long as they act reasonably and deal fairly and in good faith with their insureds.”
Written by the judges who cited it.
The opinion
RAPP, V.C.J.,
concurring in part and dissenting in part:
T 1 I concur as to the Majority's holding on the breach of contract claim, but dissent relative to the Majority's holding on the bad faith claim. I would hold there is sufficient evidence upon which reasonable men could disagree concerning the bad faith claim and, therefore, this is an issue for the trier of fact and not subject to summary judgment. I do agree that an insurer has a right to dispute any claim without fear of bad faith when the insurer's dispute is made in good faith and upon solid evidence, and not upon the shifting sands foundation on which the refusal here was based. Accordingly, I would hold the trial court erred in its grant of summary Judgment in the bad faith matter.