Inspiration is where we find it. In a recent decision, the Idaho Supreme Court ruled that Good Faith and Fair Dealing does not require infallibility, and that Title Insurance Companies like all other Insurance Companies are held to Good Faith and Fair Dealing.
Taking the last point first, the Idaho Supreme Court recently joined a growing number of Courts and held that a Title Insurance Company is subject to a Duty of Good Faith and Fair Dealing:
Of course, Stewart Title had a duty to act in good faith when attempting to settle with a third party. An implied duty of good faith and fear dealing exists between insurers and insureds in every insurance policy.
Mortensen v. Stewart Title Guaranty Co., Download Mortensen v Stewart Title Guaranty Co. (Idaho, Case No. 35949, Opinion Filed April 26, 2010) also published as 2010 WL 1643997 *6 (Idaho April 26, 2010)(Westlaw subscription required to access Westlaw).
In that case, the Title Insurance Policy also required the Title Insurance Company to act "diligently" in protecting the Insured's interests, "but an insurance company can act diligently and in good faith but still be unsuccessful in its efforts to settle a dispute with a third party." Id.
The Idaho Supreme Court also joined the vast majority view of Courts outside of California, at least, to hold that Good Faith and Fair Dealing does not require perfection and does not import exposure to strict liability when unsuccessful:
Acting diligently does not require infallibility.
Id. at *7. In Mortensen, the Supreme Court affirmed a Trial Court's entry of Summary Judgment in favor of the Title Insurance Company Defendant.
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Postscript of Friday, January 14, 2011:
The Mortensen decision was withdrawn and replaced by the Idaho Supreme Court in order to change its ruling from a denial of Appellate Attorney Fees to Stewart Title, to awarding Appellate Attorney Fees to Stewart Title: Mortensen v. Stewart Title Guaranty Co., 149 Idaho 437, 235 P.3d 387 (2010). Otherwise, the quoted language from that decision in this post was left unchanged by the Idaho Supreme Court when it re-issued its Opinion in this case: 235 P.3d at 395 & n.1.--Dennis J. Wall.
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