Dodge v. Fidelity & Deposit Co. of Maryland
In Dodge v. Fidelity & Deposit Co. of Maryland, 161 Ariz. 344, 778 P.2d 1240 (Ariz. 1989), the Supreme Court of Arizona recognized that a surety has the same duty to act in good faith as any other insuror. The two factors most important to its conclusion were:
"(1) whether the plaintiff contracted for security or protection rather than for profit or commercial advantage, and (2) whether permitting tort damages will 'provide a substantial deterrence against breach by the party who derives a commercial benefit from the relationship.'" Id. at 1242
The Court went on to observe that, "permitting a surety to withhold performance of its obligations without reason would defeat the purpose for which surety insurance is intended." Id. at 1243.