The issue before us is whether an insurer may meet its duty to equally consider settlement offers, when presented with multiple claims in excess of policy limits, by promptly and in good faith interpleading its policy limits and continuing to provide a defense to its insured. Holding this is so, we affirm the summary judgment entered.
McReynolds v. American Commerce Insurance Co., Download McReynolds v. American Commerce Insurance Co. FREE PUB LIC ACCESS (Ariz. Ct. App. Div. 1, Dep't A, Case No. 09.0017, Opinion Filed July 13, 2010) also published as 2010 WL 2749641 *1 ¶ 1 (Ariz. Ct. App. July 13, 2010)(Westlaw subscription required to access Westlaw).
"McReynolds ... filed a complaint alleging ACIC acted in bad faith and violated its duty of good faith and fair dealing by failing to give equal consideration to the insured's interests. ACIC filed a successful motion for summary judgment and was awarded attorneys' fees." McReynolds v. ACIC, 2010 WL 2749641 at *1 ¶ 6. In the eyes of the Arizona Court of Appeals, the thrust of McReynolds' Bad Faith suit against ACIC was "about whether the insurer had a duty to properly manage the policy limits, and, if so, whether the good faith filing of a prompt interpleader satisfies that duty." Id. at *2 ¶ 9. [Emphasis added.]
This case presented an open issue of Arizona law. The Court of Appeals never directly answered the above-italicized question, which it saw as central to McReynolds' Bad Faith Case. Instead, even assuming there is such a duty, and pointedly noting that this was a case in which "an insurer is faced with multiple claims in excess of its policy limits," the Court said, "we consider it (as did McReynolds' expert) to be part of the duty to equally consider settlement offers. Infra ¶ 18." Id. at *3 ¶ 10. [Boldface added; italics by the Court.]
The Court of Appeals did answer another question, however, very loudly and very clearly:
We think the favored approach to managing multiple claims in excess of the policy limits must include some provision for certainty to insureds, insurers, and litigants short of submitting each case to a jury. In that regard, as a matter of Arizona law, we hold that (1) the prompt, good faith filing of an interpleader as to all known claimants with (2) payment of the policy proceeds into the court and (3) the continued provision of a defense for the insured as to each pending claim, acts as a safe harbor for an insurer against a bad faith claim for failure to properly manage the policy limits (or give equal consideration to settlement offers) when multiple claimants are involved and the expected claims are in excess of the applicable policy limits.
Id. at *8 ¶ 26. In reaching this conclusion, the Court broke new ground or, continuing with the Court's own "safe harbor" metaphor, charted a new course. See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 3:40 & n. 320, "Multiple Claimants" (Shepard's/McGraw-Hill First Edition; West Publishing Co. Second Edition and 2010 Supplement).
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