Lincoln Property Co., N.C., Inc. v. Travelers Indemnity Co.

May an insured bring separate actions against its insurer for breaching its obligation to defend a claim against the insured and for breach of the implied covenant of good faith and fair dealing in the handling of the claim? We hold that it may not, because the two claims involve breach of the same primary right, precluding the insured from splitting the cause of action. Hence, we affirm the ruling of the trial court sustaining a demurrer to the insured’s complaint in the second of the two actions.

Plaintiff Lincoln Property Company, N.C., Inc. (Lincoln), appeals from the judgment dismissing its complaint against The Travelers Indemnity Company and The Travelers Indemnity Company of Illinois (Travelers). Lincoln’s complaint alleges, among other things, that Travelers breached the covenant of good faith and fair dealing implied in its insurance policy by acting in an unreasonable and untimely manner in responding to Lincoln’s demand for a defense in an underlying personal injury action. The trial court sustained Travelers’s demurrer without leave to amend on the ground that the present action is barred by the judgment entered on a cross-complaint in the underlying action,…