Bills v. Arizona Property & Casualty Insurance Guaranty Fund
In Bills v. Arizona Property & Casualty Insurance Guaranty Fund, 194 Ariz. 488, 984 P.2d 574 (Ariz. Ct. App. 1999), the insolvent insurer's assignee initiated an action against the guaranty association for negligence, breach of contract, and bad faith alleging that the association had refused to settle a wrongful death claim. See 984 P.2d at 576.
The trial court entered a partial summary judgment dismissing the causes of action "sounding in tort," which included only the negligence and bad faith claims. In affirming that decision, the Arizona appellate court noted that the majority view rejects the viability of bad faith claims against insurance guaranty associations. See id. at 581 (citing T&N PLC, Fernandez, Veillon, Schreffler, Vaughn, and Isaacson).
The Bills court specifically determined that the decision in Washington Insurance Guaranty Ass'n v. Ramsey, 922 P.2d 237 (Alaska 1996) was inapposite to determining the viability of bad faith claims because the plaintiff in that case, (Ramsey) "sued merely to enforce the guaranty fund's statutory obligations." Id.
While the Bills court did not need to adopt the Ramsey court's analysis that an association's refusal to settle a claim is not an action taken pursuant to its statutory duties, it acknowledged that such reasoning was nonetheless inapplicable in a case where the plaintiff sought "noncontractual and nonstatutory damages under a common law bad faith theory." Id.