Miller v. Elite Insurance

Respondent Gary Miller (Miller) sued his motorcycle liability insurance carrier, appellant Elite Insurance Company (Elite), for breach of the implied covenant of good faith and fair dealing in Elite’s handling of a claim brought against respondent by Warren and Margaret Johnsrude (Johnsrude claim). The Johnsrude claim was for damages resulting from a fire which Miller accidently caused while using his motorcycle. The court below directed a verdict for Miller on the issue of compensatory damages and the jury awarded Miller $150,000 in punitive damages.

In 1972, respondent Miller lived in a house owned by the Johnsrudes. Respondent shared the house with two other persons, William LaBelle and Stephen Kalla.

On June 24, 1972, respondent was working on his motorcycle in the garage which was beneath the house. There was a gas water heater a short distance away from where he was working. Gasoline fumes from his motorcycle were ignited by the pilot light of the water heater and a fire erupted causing damage to the garage and to the dining room above in the approximate amount of $11,000.

At the time of the fire, respondent carried liability insurance on his motorcycle with…