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Case Briefs

By ALM Staff | Law Journal Newsletters |

Insurer That Complies with Policy Obligations Still Liable for Bad Faith

In Archdale v. American Inter- national Specialty Lines Insurance Co. (Cal. Ct. App. Aug. 22, 2007), American International Specialty ('AIS') paid for the insured's defense in underlying litigation, but ignored multiple settlement offers within policy limits. The underlying trial resulted in a judgment in excess of policy limits. Subsequently, AIS paid its policy limit toward a post-judgment settlement. Regardless, the insured sued for both contractual and tortious bad faith and sought to recover the amount of the excess judgment. AIS moved for summary judgment, claiming that the tort claim was barred by a two-year statute of limitations, and that it was not liable for breach of contract because it defended the insured in the underlying action and paid out its policy limit in settlement. The court agreed regarding the tort claim, but disagreed regarding the contractual bad faith claim.

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