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Badillo v. Mid Century Insurance Co.6/21/2005
uired to take reasonable actions in handling the Smith claim; 2) the actions of insurers were unreasonable under the circumstances; 3) insurers failed to deal fairly and act in good faith toward him in their handling of the Smith claim; and 4) the breach or violation of the duty of good faith and fair dealing was the direct cause of any damages sustained by insured. See OUJI - Civ (2d) 22.3. In one form or another insurers posit a failure of sufficient proof for jury submission as to the unreasonableness of their conduct, as to breach of their duty of good faith and fair dealing and as to whether any breach on their part could rightfully be considered the direct or proximate cause of insured's damages. We hold the trial court correctly decided proof was presented as to each element sufficient to warrant submission to the jury for its consideration.
A. UNREASONABLENESS AND BREACH
An insurer has an "implied-in-law duty to act in good faith and deal fairly with the insured to ensure that the policy benefits are received." Christian v. American Home Assurance Co., 1977 OK 141, 577 P.2d 899, 901. "An insurer may not treat its own insured in the manner in which an insurer may treat third-party claimants to whom no duty of good faith and fair dealing is owed." Newport v. USAA, 2000 OK 59, 15, 11 P.3d 190, 196. In dealing with third parties, however, the insured's interests must be given faithful consideration and the insurer must treat a claim being made by a third party against its insured's liability policy "as if the insurer alone were liable for the entire amount" of the claim. See American Fidelity & Casualty Co. v. L. C. Jones Trucking Co., 1957 OK 287, 321 P.2d 685, 687.
In other words, insurers were required to approach settlement as if the $10,000.00 policy limits did not exist and to ignore the policy limits during settlement negotiations. See Berglund v. State Farm Mutual Auto. Ins. Co., 121 F.3d 1225, 1227-1228 (8th Cir. 1997). The reason for the rule is that an insurance company, in dealing with a third-party claim against its insured, is acting in a fiduciary capacity toward its insured by virtue of the terms of the insurance policy which give the insurer the authority to determine whether an offer of compromise or settlement should be accepted or rejected [American Fidelity & Casualty Co. v. G. A. Nichols Co., 173 F.2d 830, 832 (10th Cir. 1949)], or the insurer is acting as an agent of the insured, the carrier being in control of disposition of the claim. See American Fidelity & Casualty Co. v. L. C. Jones Trucking Co., 321 P.2d at 687.
The essence of an action for breach of the duty of good faith and fair dealing "is the insurer's unreasonable, bad-faith conduct . . . and if there is conflicting evidence from which different inferences may be drawn regarding the reasonableness of insurer's conduct, then what is reasonable is always a question to be determined by the trier of fact by a consideration of the circumstances in each case." McCorkle v. Great Atlantic Ins. Co., 1981 OK 128, 637 P.2d 583, 587. A central issue in any analysis to determine whether breach has occurred is gauging whether the insurer had a good faith belief in some justifiable reason for the actions it took or omitted to take that are claimed violative of the duty of good faith and fair dealing. See Buzzard v. McDanel, 1987 OK 28, 736 P.2d 157, 159. To the extent American Fidelity & Casualty Co. v. L. C. Jones Trucking Co., 321 P.2d at 687, may have implied that a simple negligence standard was approved or adopted as to the level of culpability necessary to be shown for liability to attach to an insurer for breach of the duty of good faith and fair dealing in relation t
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