Chapter 10 - § 10.5 • RELATIONSHIP BETWEEN BAD FAITH AND OTHER TORTS

• Jurisdiction: Colorado

§ 10.5 • RELATIONSHIP BETWEEN BAD FAITH AND OTHER TORTS

Plaintiffs in bad faith cases often allege other torts in addition to bad faith. As discussed in previous chapters, no legal basis exists for an insured to sue an insurer for negligence or breach of fiduciary duty. However, another tort frequently alleged is outrageous conduct, also known as intentional infliction of emotional distress. Such claims are generally not successful because outrageous conduct requires proof of much more serious misconduct than bad faith.

This was one of the issues addressed in Schultz v. Allstate Insurance Co., 764 F. Supp. 1404 (D. Colo. 1991). The plaintiffs alleged that Allstate's denial of PIP benefits constituted outrageous conduct, as well as bad faith. However, the court granted Allstate's motion for summary judgment on the outrageous conduct claim. The court noted that for such a claim to exist, the defendant must be guilty of conduct that is "'so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.'" Id. at 1411 (citations omitted). The court held that as a matter of law, the plaintiffs' claim failed to meet the "minimum threshold level of outrageousness." Id. The court remarked that the "most which any fact-finder might reasonably conclude on this record is that Allstate may have dealt unfairly with plaintiffs and that some of the circumstances support a finding of bad faith." Id. The court held that even if a fact finder determined that Allstate's conduct was bad faith, it did not satisfy the more extreme standard for outrageous conduct.

On the other hand, in Munoz v. State Farm Mutual Automobile Insurance Co., 968 P.2d 126 (Colo. App. 1998), an insurance bad faith case arising...