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Badillo v. Mid Century Insurance Co.6/21/2005
WANT OF GOOD FAITH IN HANDLING THE CLAIM
The standard of care whose non-fulfillment will give rise to an insured's actionable claim against the insurer for bad faith emanates from the latter's refusal to settle in good faith a covered loss. It falls neither under the common-law rubric of a willful delict nor into the category of claims in negligence. The bad-faith tort, which is to be regarded as sui generis, stands predicated on bad-faith breach of the insurer's contract-based fundamental duty to protect the insured in good faith against the liability consequences of a policy-covered loss.
Bad-faith is statutorily defined by the provisions of 25 O.S. 2001 ยง 9, where its meaning is explained in this language:
Good faith consists in an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of law, together with an absence of all information or belief of facts which would render the transaction unconscientious.
The standard of care for whose breach will arise a bad-faith claim is governed by the words of the quoted statute. It is utterly unnecessary and improper to force the Christian tort into imprisonment within either of the two traditional common-law rubrics for tort liability.
V. SUMMARY
The court's holding today expands the bad-faith tort beyond both its contemplated and previously pronounced boundaries. The requirement of "bad faith" now seems to exist solely in the shorthand title of the tort and not as an evidentiary requirement for imposition of liability. Insurers doubtless made an error. A jury found their actions unreasonable. Though deemed unreasonable, the insurers' actions were not shown to have been taken in bad faith. The court seems to indicate that the insurers were duty-bound to produce Mr. Badillo for a statement. If so, that action would likely have conferred a benefit solely upon the third party. If the step had been taken, the insurers would have ignored the risk of the insured's criminal prosecution solely for the sake of relieving themselves of potential civil liability. Today's message stands the bad-faith tort upon its head and leaves the insurance business in a quandary. This is so because the newly added bad-faith tort elements are applied retrospectively against two unsuspecting insurers.
Detrimental impact of unforeshadowed change in the applicable law must be given prospective effect to protect vanquished litigants against unforeseeable consequences from conduct (or omission) regarded as non-actionable at the time of its occurrence. If today's pronouncement is to serve as the effective common-law norm for an insurer's good-faith deportment, its application should be confined, at a minimum, to claims that will arise after the date mandate has issued in this case.
I shall have no part of the court's analysis. By application of the precedential standards of yesteryear the insurer's conduct did not, on this record, amount to bad faith. I must hence recede from the judgment and from the opinion by which it is pronounced.
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