Western Polymer Technology, Inc. v. Reliance Insurance

Western Polymer Technology, Inc. (Western), and its president and principal shareholder, William D. Wright, appeal following summary judgment of their insurance bad faith action against Reliance Insurance Company and United Pacific Insurance Company (collectively Reliance). Western contends that Reliance acted in bad faith by unreasonably settling a suit by third parties in a manner contrary to Western’s interests, although the policy gave Reliance the right to “make such investigation and settlement of any claim or suit as it deems expedient. . . .” Western and Wright alleged that the $425,000 settlement, which was less than Western’s policy’s limits, injured their reputations and damaged Western’s ability to recover on its cross-complaint against the third parties.

We find that Reliance did not breach the implied covenant of good faith and fair dealing when it settled the suit against Western despite Western’s protests. Under the circumstances of this case and the terms of the insurance policy, Reliance’s actions impaired neither the policy’s benefits and purposes nor Western’s interests under the policy. We affirm the judgment.

Facts

Western was a manufacturer and…