Thursday, December 26, 2013

Beck v. Farmers Insurance Exchange case brief

Beck v. Farmers Insurance Exchange case brief summary
701 P.2d 795 (1985)

CASE SYNOPSIS
Plaintiff insured appealed from an order of a lower court (Utah), which granted summary judgment in favor of defendant insurer on plaintiff's allegations that defendant had refused in bad faith to settle a claim for uninsured motorist benefits.

CASE FACTS
After a car accident, plaintiff insurer filed a claim and settlement offer for uninsured motorist benefits under a policy with defendant insurer, which defendant denied one week later without explanation. Plaintiff filed a suit alleging bad faith in refusing to investigate, bargain, and settle the claim, and the lower court granted summary judgment in favor of defendant. Plaintiff appealed, and the court reversed and remanded the summary judgment.

DISCUSSION

  • Summary judgment was inappropriate because facts suggested that defendant's unexplained delay after plaintiff's claim, together with a flat rejection of plaintiff's settlement offer was sufficient to prove breach of an implied obligation of good faith performance to diligently investigate and evaluate plaintiff's claim. 
  • The action was one in contract and not tort because plaintiff and defendant were in a first-party situation in which there was no relationship of trust or reliance or an indicia of agency so as to have rendered the parties' duties and obligations fiduciary rather than merely contractual.
CONCLUSION
Summary judgment in favor of defendant insurer on plaintiff insured's allegations of breach of implied duty of good faith in denying plaintiff's recovery under a policy was reversed and remanded on the grounds that defendant's unexplained delay in considering plaintiff's claim and flat rejection of plaintiff's settlement offer was a sufficient factual basis to survive summary judgment as to a contractual breach by defendant.

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