Morrell Construction, Inc., an Idaho Corporation v. Home Insurance Company, a Foreign Corporation

Morrell Construction, Inc. appeals the district court’s decision granting summary judgment in favor of Home Insurance Co. on Morrell’s claim that Home Insurance Co. exercised bad faith by refusing to investigate and pursue settlement negotiations before suit was filed against Morrell by a third party. Because this case involves issues of first impression under Idaho tort law, we certify two questions to the Idaho Supreme Court.

I

On August 21, 1981 a grain storage tank, owned by Pomeroy Grain Growers and built by Morrell, collapsed, killing one individual and causing extensive property damage. Morrell alleges that its potential exposure for the property damage exceeded $500,000. Morrell immediately notified its insurer, Home Insurance Co., of the collapse. It then hired an engineer as well as an attorney to investigate and provide representation. Home Insurance did not investigate the claim, nor did it initiate settlement negotiations with Pomeroy Grain Growers. On March 3, 1982, Home Insurance informed Morrell that property damage liability was excluded under Morrell’s policy.

Pomeroy Grain Growers brought suit against Morrell in August of 1983, and Home Insurance retained an…