Best Place, Inc. v. Penn. America Ins. Co

In Best Place, Inc. v. Penn. America Ins. Co., 82 Hawai'i 120, at 133, 920 P.2d 334 at 347 (1996) a case dealing with a fire insurance policy, the Hawai'i Supreme Court concluded, in relevant part, as follows: (1) "every contract contains an implied covenant of good faith and fair dealing that neither party will do anything that will deprive the other of the benefits of the agreement." Id. at 123-24, 920 P.2d at 337-38 ; (2) "Hawaii now recognizes a bad faith cause of action in the first-party insurance context." Id. at 127, 920 P.2d at 341; (3) "Hawaii law imposes a duty of good faith and fair dealing in all contracts, not only those in which there is an agency relationship. Whether a breach of this duty will give rise to a cause of action in tort, then, depends upon the duty or duties inherent in a particular type of contract." Id. at 129, 920 P.2d at 343; (4) "we hold that there is a legal duty, implied in a first- and third-party insurance contract, that the insurer must act in good faith in dealing with its insured, and a breach of that duty of good faith gives rise to an independent tort cause of action." Id. at 132, 920 P.2d at 346. The Hawai'i Supreme Court reviewed the transcripts of a hearing conducted by the first judge and held that, by implication, the first judge had created the circumstances under which the second judge could modify the first judge's ruling. 82 Hawaii at 135, 920 P.2d at 349. In that case, the first judge ruled that if the defendant did not get the discovery cut-off extended by the judge who had initially denied the motion, the defendant's naming of witnesses would be cut off. 82 Hawai'i at 134-35, 920 P.2d at 348-49. From this, the supreme court implied that if the discovery cut-off did get extended, the defendant would be allowed to name witnesses. 82 Hawai'i at 135, 920 P.2d at 349. The supreme court held, therefore, that the second judge had cogent reasons for modifying the first judge's order. I82 Hawai'i at 135-36, 920 P.2d at 349-50.