In Lewis & Clark Bank v. Stewart Title Guar. Co., 2012 WL 2946717 (D. Or. July 17, 2012)(Acosta, U.S.M.J.), Download Lewis & Clark Bank v. Stewart Title Guaranty Co. (D. Or. Opinion and Order of USMJ by consent to jurisdiction, 07.17.12) PUBLIC ACCESS, a Federal District Court applied a rule similar in its consequences to the rule applied by Courts holding that where there is no Coverage, there can be no Bad Faith.
In the Lewis & Clark Bank case, the Bank sued its Title Insurance Company for alleged Breach of Contract, and for Attorney's Fees. The Bank filed a motion to amend its complaint to include a claim "to allege a claim for breach of the contractual duty of good faith and fair dealing in addition to" those alleged claims. Lewis & Clark Bank v. Stewart Title Guar. Co., 2012 WL 2946717 *10 (D. Or. July 17, 2012). [Emphasis added.]
The Federal District Court viewed the alleged contractual duty of Good Faith and Fair Dealing under Oregon State law as potentially an independent claim of alleged Breach of Contract. However, in this case the motion for leave to amend was denied as "futile".
The reason the proposed amendment would be futile in this case, was that the contract breaches alleged and the damages claimed as a result of them, were identical, and the Court had already held that there was no Breach of Contract because the Title Insurance Company had performed its obligations under "the express provisions of the contract". Following from that holding, the Court further held that "the proposed amendment is futile in that the Bank is unable to recover the lost profits based on a claim for breach of the covenant of good faith and fair dealing." Lewis & Clark Bank v. Stewart Title Guar. Co., 2012 WL 2946717 *10 (D. Or. July 17, 2012).
The rule applied by Courts holding that where there is no Breach of Contract, there can be no Bad Faith, is examined in Third-Party Cases in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 3:105 (Third Edition, West, 2011 with 2012 Supplement in process), and the rule is examined in First-Party Cases in id., § 9:25.
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