St. Paul Fire & Marine Ins. Co. v. Liberty Mut. Ins. Co.
Annotate this CasePlaintiff, the excess insurer, and Defendant, the primary insurer, issued insurance policies to a travel service company. The company was sued for damages resulting from an accidental death. The case was settled in an amount in excess of Defendant’s policy limit. Plaintiff filed a complaint against Defendant, alleging that Defendant acted in bad faith by rejecting multiple settlement offers within the limit of its primary liability policy. Defendant moved for judgment on the pleadings, arguing that Plaintiff lacked standing to assert a claim for insurer bad faith and that Plaintiff had no claim against Defendant for equitable subrogation. The federal district court certified a question to the Hawaii Supreme Court. The Supreme Court held that an excess liability insurer can bring a cause of action under the doctrine of equitable subrogation against a primary liability insurer who, in bad faith, fails to settle a claim within the limits of the primary liability policy when the primary insurer has paid its policy limit toward settlement.
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