Tucson Airport Authority v. Certain Underwriters at Lloyd's, London
In Tucson Airport Authority v. Certain Underwriters at Lloyd's, London, 186 Ariz. 45, 918 P.2d 1063 (Ariz. App. 1996), a class action was filed against the insured for harm caused when it released a toxic chemical into groundwater.
The insured subsequently filed a declaratory judgment action against its insurers to determine coverage in the underlying action.
During the course of the litigation in the declaratory judgment action, the insured amended its complaint to state a bad faith claim against the insurers for engaging in misconduct during the declaratory judgment action.
"The insurers moved to dismiss, arguing that the alleged misconduct did not constitute bad faith and that, if it did, it was absolutely privileged under Arizona law." Tucson Airport, 918 P.2d at 1065.
The trial court granted the motion and dismissed the bad faith claim.
On appeal, the court of appeals found that the litigation privilege did not bar the bad faith claim.