Commercial Union Insurance v. Liberty Mutual Insurance

Comm Union COMMERCIALUNION INSURANCE v LIBERTY COMPANY MUTUAL INSURANCE COMPANY (Calendar 75089, 15, Argued January Docket Nos. 75090. No. 15). 17, 1986. September Decided Company, Commercial Union Insurance an excess insurance carrier, brought equitable subrogation an action in the Oakland Company, against Liberty Circuit Court Mutual Insurance carrier, alleging Liberty’s primary liability insurance fail- against an amount ure to settle a case a mutual insured for required pay eventually much less than Commercial was exposed to constituted bad faith and caused Commercial to be court, J., Templin, judgment on a risk. The L. entered Robert plaintiffs motion verdict for the defendant and denied the judgment notwithstanding for or for a new trial. the verdict Shep- Kelly, P.J., Appeals, The Court of M. J. and Hood herd, JJ., trial, holding that reversed and remanded for a new were, part, prejudi- the trial court’s instructions on bad faith (Docket 68242). 67250, cial and Nos. The defendant erroneous plaintiff cross-appeals. appeals and the opinion by joined by Chief Justice Archer, In an Justice Boyle, Riley, Brickley, Cavanagh, Williams and Justices Supreme Court held: court, alleging A trial in an action an insured bad insurer, jury that faith is the should instruct reckless, indifferent, disregard arbitrary, or intentional duty. interests of the owed a denials, compromise, 1. or other honest Good-faith offers of References 2d, 1399, 1400, 1403, seq. seq., Am Jur Insurance 1674 et 2028 et §§ part rendering it liable for What constitutes bad faith on of insurer delay statutory penalty imposed in pay, or for bad faith in failure to paying, insured’s claim. 33 ALR4th 579. on, of, affecting rejection Reliance advice of counsel as factor liability settle claim. 63 ALR3d 725. against liability wrongful refusal to in action insurer for negligence conducting Liability as defense insurer’s bad faith ground to insured. 34 ALR3d 533. Quick Index under See also the annotations in the ALR3d/4th Insurance. 426 Mich 127 errors of are not sufficient to establish bad faith. Nor upon negligence can claims of bad faith be based or bad judgment, long honestly so as the actions were made However, without concealment. bad faith can exist without dishonesty actual or fraud. Supplemental may 2. factors which be considered in deter- mining liability whether for bad faith exists are as follows. vary, Because the facts in each case will the trial court has the option factors, determining any, which if are to be included jury exclusive, in instructions. The factors are not and no single factor is decisive. — keep fully develop- Failure to the insured informed of all reasonably ments in a claim or suit that could affect the interests of the excess insurer. — Failure to inform the insured of all settlement offers that policy do not fall within limits. — Failure to solicit a settlement offer or initiate settlement negotiations by when warranted the circumstances. — accept compromise Failure to a reasonable offer of settle- ment when the facts of the case or claim indicate obvious liability injury. and serious — Rejection policy of a reasonable offer of settlement within limits. — delay accepting Undue in a reasonable offer to settle a potentially dangerous policy case within limits where the potential high. verdict — attempt by An the insurer to coerce or obtain an involun- tary contribution from the insured in order to settle policy within limits. — proper investigation Failure prior to make a of the claim refusing policy an offer of settlement within limits. — Disregarding adjuster advice or recommendations of an or attorney. — negligence Serious and recurrent the insurer. — Refusal following settle a case within limits an excessive appeal verdict when the chances of reversal on slight are or doubtful. — appeal following Failure to take an a verdict in excess of grounds limits where there are reasonable for such appeal, especially where recommended trial counsel. applying factors, scrutiny the conduct under must be light considered existing of the circumstances at the time of upon the conduct. Bad faith arises the occurrence of certain Comm Union v acts, day not at a later date as a result an unsuccessful court. case, 3. In this the trial court’s that instruction bad faith is equated duplicity to be with deceitful or conduct or conceal- plaintiff’s proof, ment was error which increased burden of requiring reversal a and new trial. Levin, concurring, arbitrary, Justice stated the terms reckless, varying meanings depending and indifferent have arbitrary To context. instruct in the abstract faith, indifferent conduct would tend to show bad without circumstances, regard particular readily reference could jury misunderstanding cause lead to erroneous results. disregard duty Intentional interests owed a always equate prop- does not faith. insurer An erly put insured, its ahead interests of the interests of the disregard insured, intentionally thus the interests of the so long as it does not in bad act faith. supplemental A list factors to be considered determin- ing whether there is for bad which were devel- oped Supreme cases which Court has not examined ruled the record and for which there has been briefing adversary jury should not be offered for inclusion in jury upon specific factors, instructions. If the is to be instructed merely the trial court should add that because there is evidence tending presence necessarily to show the of a factor not does Further, jury mean there bad that was faith. if a is instructed on factors that tend to bad show it should also be finding, that instructed factors tend to countervail such a required incorporate trial court should be to into the concept expressed opinion instruction the in the of the Court inappropriate reviewing that it the conduct of the insurer twenty-twenty to hindsight, utilize the conduct under scrutiny light must be considered in of the circumstances existing time, given at the that if bad a faith exists in situation upon question, it arose the occurrence of the acts in and that may bad faith not arise at later some date as a of an result day unsuccessful in court. Affirmed. (1984) App 381;

137 Mich 357 NW2d 861 affirmed. Opinion of the Court Jury— — 1. Insurance Instructions Bad Faith. court, by A alleging by trial in an action an insured bad faith an insurer, arbitrary, should instruct the that bad faith reckless, indifferent, disregard of the interests of or intentional duty. a owed — — — Bad Faith Fraud. 2. Settlement of Claims Insurance denials, compromise, other honest errors of offers of or Good-faith attempts claim are insurer to settle a an made respect insured; an sufficient to establish bad faith with to bad the insurer be based nor can claims of faith long judgment, negligence were so as the actions made or bad however, concealment; honestly bad can exist faith and without dishonesty or fraud. without actual — — Faith. of Claims Bad 3. Settlement Insurance liability determining in an at- exists for whether claim, tempt by a a trial court an insurer to settle given jury, applicable supplementally in a instruct where case, keep to the insurer failed insured to consider whether developments fully suit all in the claim or informed of insured, reasonably have the interests of the could affected that did not to the insured of all settlement offers failed inform limits, policy offer failed to a settlement or fall within solicit negotiations by the circum- settlement when warranted initiate stances, compromise accept offer to a reasonable failed the facts of case claim indicated settlement where injury, rejected a reasonable offer and serious obvious limits, delayed policy unduly accepting within of settlement dangerous potentially case within reasonable offer to settle a a potential high, attempted policy was where verdict limits involuntary contribution from the insured coerce or obtain limits, policy to make order to within the failed settle prior investigation refusing proper an offer of the claim limits, policy disregarded advice or recom- within settlement adjuster attorney, seriously and recur- mendations of an was rently negligent, settle a within limits refused to case following when chances reversal on an excessive verdict doubtful, appeal slight appeal were and failed take an following where there verdict excess limits grounds appeal, especially were reasonable for such an where by trial counsel. recommended Bigler, Berry Franklin, Petrulis, Law Offices of (by Franklin, Johnston, & P.C. Bruce W. J. Steven Danforth), plain- Johnston, Richard R. for the and tiff. Hampton Lynch,

Kohl, Secrest, Wardle, Clark & Liberty Comm 131 Union v Mutual Opinion op the Court Konrad D. Kohl L. and Michael (by Updike) for the defendant.

Archer, Plaintiff, carrier-, J. insurance excess filed an equitable subrogation action the Oak defendant, land Circuit against Court a primary alleged insurance carrier. Plaintiff defen negotiate dant’s failure to a settlement in a case against their mutual insured constituted of Wakefield v Globe City Indemnity pursuant Co, 645; (1929), 246 643 Mich 225 NW2d thereby causing A plaintiff exposed be to risk. against found no cause of action Liberty Mutual. plaintiff’s The circuit court denied motion for judg ment notwithstanding the verdict or for a new reversed, trial. The Court of ordering a trial, finding new the trial court’s "bad were, faith” in part, prejudicial instructions erroneous. Commercial Union Ins v Liberty Co Mutual Ins 381; 137 Mich 357 861 App NW2d (1984).

We affirm the Court Appeals. decision

i Mutual, carrier, Liberty insurance primary provided coverage insurance for primary liability wxyz single coverage with a limit of injury $100,000. Edith Webster suffered a fall slip and wxyz-tv. working while at Ms. Webster and her husband, Forrest, brought damages, suit for Liberty Mutual assumed the defense on behalf of wxyz. trial, Following the Websters were awarded $100,000. appealed. The Court of Appeals reversed and remanded the case for new WXYZ, Webster v trial. 229 App 375; Mich (1975). (1975), NW2d lv den continued, negotiations parties Settlement yet 426 Mich Opinion op the Court The case agreement. to come to an unable were time, re- the jury trial second where went to $700,000 in the Web- a verdict of favor of turned $100,000 policy its tendered Liberty sters. Mutual the de- limits, Union took over and Commercial efforts unsuccess- the case. were appeal fense of Its to eventually required Union was ful. Commercial $854,131.61 to the Websters. pay Liberty subsequently sued Commercial Union for failure the Webster action Mutual for to settle has much than Commercial Union an amount less Union’s required pay. to Commercial since been status as premised in this suit are its rights wxyz. alleging equitable subrogee faith,” Mutual in "bad Commercial Liberty acted (1) to failed complained Liberty Union Mutual set- ignored and numerous make settlement offers 1971, and the May, demands tlement between first Webster trial Octo- commencement the (2) ber, 1973, failed to communicate each made the throughout settlement demand every (3) claim, to of the failed Websters’ pendency figures at respond properly to settlement offers first while first Webster below the award (4) pending ignore chose to appeal, case was make advice of its to efforts to settle attorney of the following case Court of reversal case, trial, first Webster but before second (5) develop- failed to all communicate material throughout they pendency ments as occurred claim. Websters’ Mutual Un- Liberty responded Commercial contending allegations ion’s that Commercial (1) its Liberty pay Union never Mutual suggested (2) claim, limits settle Websters’ (3) counsel, partici- its never retained own never (4) pated in inde- negotiations, settlement never the value the Websters’ pendently evaluated Liberty Mutual Union v Comm op the Court (5) Mutual’s claim, objected never case. trial of the a second proceeding at the Commercial presented was After evidence trial, gave the trial court Union/Liberty instruction, which reads faith” following "bad part: in pertinent instructions used these term bad faith as The insincerity, involving dishon as may be defined conduct; it duplicity, or deceitful disloyalty, esty, An mis or honest dishonesty concealment.

implies of itself bad judgment is not and take of necessarily decisive single no fact is and [Emphasis issue. supplied.][1]_ entirety, instruction reads: "bad faith” in its the Provided faith, Now, said bad a lot has been about as to bad Plaintiff, course, the that the here of is the claim in of faith. acted Defendant Now, good is mind. bad faith a state of instructions be as used these term bad faith The disloyalty, duplic- insincerity, dishonesty, involving defined as conduct; implies dishonesty ity, An honest mistake of or concealment. it or deceitful judgment is in and of itself bad faith not necessarily of single decisive the issue. no fact is Now, bad faith if it refuses does not act in the insurer chance of it has a fair the honest settlement victory, belief or, policy keeping limit the the verdict within of grounds compromise amount exces- that the reasonable sive. Now, but are not limited of bad faith include indicators following: the First, primary if it treated the case as were that the insurer responsible for the entire amount. the insured the is failure inform Also indicator legal signifi- their of all offers and demands and excess carrier cance. notify adequately failure to Also another indicator is of the claim and its nature. or the excess carrier assured [sic] amount, arbitrary a refusal to settle for reasonable The judgment apparent suit in a that the would result where limit, policy to the effect of or indifference excess of carrier, fairly a or failure to consider refusal on the excess compromise thereon, pass presented honest and facts upon grounds depart from which or refusal to settle grant power, purpose tend of of would and the the contract to show bad faith. 426 Mich 127 op the Court finding part In this of the instruction to be City erroneous, the Court of relied on Indemnity supra. Co, Wakefield v Globe Wake- City operated field, insured, Wakefield, injured an automobile line. Frank bus Borski was city damages. one of the vehicles and sued for Indemnity provided city Co., Globe which $10,000 insurance, assumed the along city attorney, defense the case with the attorney trial, who was of record. Near the end of having attorney, testimony the carrier’s heard the having of medical witnesses and talked with wit defense, for nesses hopeless concluded that the case was Camp and recommended settlement. Mr. representative bell, carrier, of the insurance although given oppor and, refused settlement full tunity refusal, at trial to disclose his reasons for against failed to do so. The returned a verdict Indemnity $15,000, Globe for over in excess of the amount of the limit. The insured was re quired pay judgment. the excess amount of the liability The insured sued its insurance carriers on theory guilty negli the gence that the carriers were of refusing accept

and bad faith in to a com promise offer of settlement for less than their by attorney. as recommended the carriers’ The Wakefield Court held that the insurers were Now, primary duty the carrier owes the same to the excess primary

carrier as the carrier would owe to its insured. 2 Wakefield, opinion acquire In majority signa the lead did not the Sharp concurring opinion tures. The acquired written Justice five signatures. majority quoted approval minority’s The the state ment settlement under that is not bad faith if counsel for "[i]t the insurer refuse they might the bona fide belief that defeat the action, or, event, any probably keep can the verdict within the policy majority similarly approved minority limit.” The statement judgment that majority language mistake of is not bad faith.” Wakefield at 656. "[a] The approved did not indicate whether it of some additional 652-653, in Wakefield at which was used in the trial court quoted instruction in footnote 1. v Comm Union op the Court compromise to to for refusal liable the insured was in bad the refusal claim unless his stating that if it refuses not act in bad faith insurer does it fair that has a in the honest belief settlement keeping of the verdict within victory, or chance limit, compromise . or . . that excessive, legal if has amount defenses fusal hand, re- arbitrary .... On other amount, it is for a reasonable where settle judgment in a would result apparent excess of the that suit limit, the effect indifference to insured, to fairly failure consider refusal on the of a pass honest compromise presented facts grounds thereon, which refusal purpose of the contract and the depart from the power, to show bad faith. grant of would tend [246 Mich 652-653.] Wakefield, the Court of relying instant held case for a company faith” insurance "[b]ad something more than duty to settle is breach Wakefield, negligence. supra; Commercial Union 412; 356 App Mich

Medical Protective [136 (1985)]. (1984), gtd 422 Mich 939 NW2d 648 However, lv Medley implication unlike the [v (1983)] App 739; 337 NW2d 909 Canady, 126 Mich definition, pursuant faith” Wakeñeld "bad something .... less than fraud instructing be By jury "duplicity equated with or deceitful defined as or conduct,” "concealment,” the trial errone- court ously Commercial Union’s burden increased language defining faith” in Wake- proof. The "bad in the sub- is sufficient. We find the errors ñeld prejudicial stantive instructions reversible. App 391-392.] [137 Appeals. instruct- agree By the Court of We with 136 426 Mich 127 op the Court ing equated "duplic- that bad faith is with ity conduct,” "concealment,” deceitful erroneously plaintiffs trial court increased burden proof. Appeals, However, unlike the Court of we language defining find the faith” in "bad Wake- lacking field because it defines "bad faith” example only. limited

Contrary holdings jurisdictions, in some other interchangeably bad faith should not be used "negligence” Michigan either or "fraud.”3 has past.4 Accordingly, reached this conclusion in the we define "bad faith” for instructional use in trial arbitrary, courts as reckless, indifferent, or inten disregard tional of the interests of the owed duty.5 a compromise, denials,

Good-faith offers of 3 simple negligence Jurisdictions which favor just and standards short of fraud are collected at 40 ALR2d 168 and 34 ALR3d 533. 4 Wakefield, City supra, See Bentley Exchange, v Farmers’ Ins (CA 6, 1961), 289 King, App 152; F2d 59 Rutter v 57 Mich 226 NW2d (1974), Co, 79 supra, Commercial Union v Medical Protective Jones v v Co, (ED Supp Mich, 1977), Nat’l Emblem Ins 436 F McCoy 1119 Co, 1106, (ED Supp Mich, 1981), Zurich Ins 509 F 1108 aff'd 703 F2d (CA 6, 1982), 564 Paul-Mercury Co, Indemnity and Jackson v St 339 (CA 1964). 6, F2d 40 5Although right generally to recover on a bad-faith claim is upon proving conditioned we opinion, "bad faith” as it is defined in this agree with the definition, Court of the "bad faith” doing wrong "conscious purpose of a because of dishonest or moral obliquity,” Medley Canady, 739, as (1983), App 748; used in v 126 Mich 337 NW2d 909 is correct involving when limited to bad-faith cases Act, 6 of § the Uniform 500.2006(4); Trade Practices MCL MSA 24.12006(4). The differentiation in definitions arises because 6 of the § Uniform Trade penalize statutory Practices Act penalty, is a intended to who, recalcitrant dilatory paying insurers in bad are Casualty Co, claims. 445; Surety Fletcher v Aetna App 439, & 80 Mich (1978), (1980); DAIIE, NW2d 19 Sharpe aff'd 409 Mich 1 App 144, 150; (1983); Michigan NW2d 12 Sederholm v Co, 372, (1985). App 394; Mutual Ins 142 Mich 370 NW2d 357 Since statutory provision having is a punitive §6 purpose, higher Virtually standard of penalties authority is warranted. sanctioning all punitive-type damages require and other higher stan dard of 3d 46; Co, malice or fraud. See Hoskins v Aetna Life Ins St Ohio 272; (1983); 44, 452 NE2d 1315 Kirk v Safeco Ins 28 Ohio Misc (1970). 273 NE2d 919 Liberty 137 v Mutual Comm Union Opinion of the Court judgment not sufficient of are

other honest errors to Further, of faith faith. claims bad establish judgment, upon negligence or bad based cannot be honestly long made as actions were so the However, bad faith because without concealment. faith without mind,6 there can be bad is a of state dishonesty If the insurer is moti or fraud. actual protect purpose a desire selfish vated expense its insured’s its at the own interests though interest, exists, the insurer’s bad faith even actually or fraudulent.7 dishonest actions were not pre Although here articulated the Court has pur for instructional cise poses, of "bad faith” definition may supplemental factors which there are determining liability in whether be considered clarify the "indi factors for bad faith. These exists pronounced trial bad-faith in the court’s cators” They case.8 also embrace the instant instruction language.9 the facts of each Because Wakefield any given vary situation, will individual case the trial discretion, court, will have its any, determining option factors, if are which jury. The to the recom in instructions be included single factor are not exclusive. No mended factors shall be decisive. Among the factors which together account, with all factfinder take into deciding whether other evidence in bad faith defendant acted are:10_ 6 state of mind.” 246 "Good or bad is a As stated Wakeñeld: Mich 653. 7 (CA 1980); 6, Ins 620 F2d 583 See Valentine (1981). Reed, Super 188; A2d Pa 428 635 Shearer v 286 8See n 1. n 2. See represent composite twelve recommended factors These dispositive faith” cases in other issues in numerous "bad discussed 168, 10 jurisdictions. 40 ALR2d The are collected in authorities Sutterfield, 879, 725, 1211, Rela 85 ALR3d ALR4th ALR3d primary excess tionships insurors: The between excess and (1985). 638, problem, J 640-641 52 Ins Counsel 426 Mich 127 Opinion of the Court 1) of all fully informed keep the insured failure to reasonably that could developments in the claim suit insured,11 affect interests 2) of all settlement failure to inform insured limits,12 fall offers do not within 3) offer or initiate failure solicit a settlement under the cir- negotiations when warranted settlement cumstances,13

4) compromise accept a reasonable offer failure to or claim indicate the facts of the case when settlement obvious injury,14 serious 5) settlement within rejection of a reasonable offer of limits,15 policy 6) to accepting a’ reasonable offer delay undue dangerous policy potentially case within the settle a potential high,16 verdict is limits where the

7) coerce or an attempt by an the insurer obtain involuntary from the insured order contribution limits,17 settle within the 8) proper investigation of failure make a the claim refusing within the prior to an offer settlement limits,18_ 11 (Fla Co, Ranger Indemnity 389 So 2d 272 See Ins Co v Travelers (CA Co, 5, 1957); 1980); App, Springer Casualty F2d 123 246 v Citizens Last, Co, supra; n 4 Meirthew v 376 Mich

Jones v Nat’l Emblem Ins (1965). 33; 135 NW2d 353 12 1983). (Minn, Co, Dairyland v Ins 334 NW2d 384 See Short 13 Exchange, King, supra; Farmers See Rutter n 4 Glendale v Ins v (1980); 118; Ranger Ariz 278 Ins Co v Travelers Indem 126 613 P2d Resort, Co, Reed, supra; nity supra; n 11 v n 7 Rova Shearer Farms (1974). Co, 474; 495 Inc v Investors Ins 65 NJ 323 A2d 14 Co, Paul-Mercury Indemnity supra; 4 See Jackson v St n Short v supra. Dairyland, n 12 15 Co, 220; Rptr Ins 3d See Samson v Transamerica 30 Cal 178 Cal Resort, Co, 343; (1981); n 636 P2d 32 Rova Farms Inc v Investors Ins 1974). (CD Co, Cal, supra; Supp 13 Peter Travelers Ins 375 F 1347 v 16 Co, App Phelan Farm Ins Ill See v State Mutual Automobile 114 Bros, 96; 861; (1983); Hayes 69 Ill 448 NE2d 579 Inc v 3d Dec (CA 8, Co, 1980); Economy Casualty Fire & 634 F2d 1119 Maine Co, 97; Bonding Casualty App & Co v Centennial Ins 64 Or 667 P2d (1983), 514; (1985); 548 aff'd 298 Or 693 P2d 1296 Rova Farms en banc Co, Resort, supra. Inc n 13 v Investors Ins 17 Co, Resort, supra. n 13 See Rova Farms Inc v Investors Ins (La 1983), App, Ins 439 So 2d 531 See Fertitta v Allstate (La 1983), clarified, App, 2d 462 So 2d motion den 441 So aff'd Comm Union Opinion of the Court

9) of an disregarding or recommendations advice attorney,19 adjuster insurer,

10) negligence by the serious and recurrent 11) policy limits within the a case to settle refusal the chances verdict when following an excessive doubtful,20 slight appeal are reversal

12) following verdict in appeal take an failure to are reasonable policy limits where there excess especially where trial coun- appeal, grounds for such so recommended.21 sel factors, inappropriate any

In applying to utilize "20- of the insurer reviewing the conduct scrutiny under vision.” The conduct hindsight light the circumstances must be considered examination, microscopic the time. A existing at fact, luxury made with after years original pro- the outcome of the knowing actually It must be remembered ceeding appropriate. situation, it arose given in a if faith exists bad in question; of the acts the occurrence later date as a result faith does not arise at some day court. of an unsuccessful

ii unnecessary this makes holding The case raised on remaining for us to issue address our affirmance of decision cross-appeal because the issue moot. of the Court of renders Co, (La, 1985); Dyke St Paul Fire & Marine Ins 388 Mass Van 159 (1983). 671; 448 NE2d 357 19 (CA 9, 1981); Co, Rova v Allstate Ins See Allen 656 F2d 478 Co, Ranger Resort, supra; Ins Co v Ins Farms Inc v Investors n 13 Co, supra; Employers Indemnity Ferris v Travelers n 11 Co, (1963). 511; Casualty 122 263 255 Iowa NW2d 20 Co, supra; Phelan v State Transamerica Ins See Samson v n 15 Co, supra. Farm Mutual Automobile Ins n 16 21 Co, (La 1974), App, Ins 2d See Reichart v Continental 290 So 730 1974). (La, 294 2d 545 cert den So 426 Mich Opinion by Levin, J. We therefore affirm the decision of the Court of Appeals. C.J.,

Williams, Brickley, Cavanagh, Riley, JJ., Boyle, J. Archer, concurred with Levin, J. (concurring). agree I with the majority the trial court erred in instructing the jury over objection "that bad faith equated 'duplicity conduct,’ deceitful . 'concealment . . .1

I write separately I because am unable agree with the definition of bad faith set forth in the opinion of the Court and other observations in the opinion.

The opinion states: "we define 'bad faith’ for instructional use trial court as arbitrary, reck- less, indifferent, or intentional disregard interests of the owed a duty.”2 The reckless, terms "arbitrary, indifferent” have varying meanings depending on the context.

It has been said that some authorities hold that the term "reckless” means "no more 'negli- than gent,’ while others hold that term [the means] 'wantonness willful,’ bordering on and there is also a meaning between these two extremes.” CJS, p 63. The same encyclopedia states that term has been held in particular cases to "imply mere inattention to duty; thoughtlessness; indiffer- ence; heedlessness; carelessness; and nothing more than mere negligence.” Id. City Wakefield v Globe Indemnity 645, 653; 225 (1929), NW 643 this Court said

that an "arbitrary refusal to settle for a reason- amount, able where it apparent that suit would result in a judgment limit, excess of the policy

1Ante, pp 135-136.

2Id., p 136. Comm Union v Levin, J. of on the

indifference to effect refusal (Em- . . . to show bad faith.” insured phasis supplied.) would tend thereby what The Court indicated "arbitrary” or would kind of "indifferent” conduct jury in the to faith. To instruct a tend show bad arbitrary conduct abstract indifferent without reference would tend to show bad readily regard particular circumstances, to could misunderstanding to errone- cause lead ous results. agree disregard of I that "intentional

Nor can may duty” owed a the interests of always equated with faith. An insurer be properly put of ahead the interests its interests intentionally disregard insured, and thus may act out of a "selfish insured; interests of the it purpose protect interests desire its own long expense interest,”3 as as of its insured’s at it does not in bad If an insurer could not act faith. place any its interests ahead circumstance obliged insured, if in all circum- those its it is interests its interests stances to subordinate obliged insured, would of its then insurer be expose pay limits lest all cases to any of a insured to risk whatsoever limits. excess question cataloging

I list of devel- also factors oped has in which this Court cases record upon; neces- ruled the factors are not examined or sarily may not ade- taken out of context and particu- quately explain implicit in the limitations factor held lar circumstances which the was adversary Also, be relevant. there has been briefing question all in this Court on the whether opinion Court in the the factors enumerated evidence bad faith.

[3] Id., p!37. Levin, J. opinion If the Court of the that it is appropri- is factors, concerning ate to instruct a it jury specific should, believe, I the to add require judge that merely tending because there is evidence to show presence necessarily of a factor does not mean Further, there was bad faith. if the jury is it instructed on factors that tend to show bad faith on should also be instructed factors that tend to finding specific countervail such a factors —the tend to show an absence of bad faith. factors, if the is instructed Finally, judge required encouraged incorpo- should be para- rate into the instruction the last gist of Court, graph part opinion i of the viz.: factors, applying any inappropriate reviewing the conduct of the insurer to utilize "20- hindsight scrutiny vision.” The conduct under light must existing be considered of the circumstances examination, microscopic at the A time. fact, years luxury after the made with the actually knowing ceeding original pro- the outcome of the appropriate. not It must be remembered given situation, if that upon bad faith exists in a it arose question; of the occurrence acts faith does not arise at some later date as a result day of an unsuccessful in court.

Absent a statement opinion of the Court requiring encouraging the judge to so balance the instruction to the jury, judge may understand that he should in- incorporate struction the gist foregoing language quoted from the opinion of the Court.

Case Details

Case Name: Commercial Union Insurance v. Liberty Mutual Insurance

Court Name: Michigan Supreme Court

Date Published: Sep 17, 1986

Citation: 393 N.W.2d 161

Docket Number: Docket Nos. 75089, 75090, (Calendar No. 15)

Court Abbreviation: Mich.