R.G. Wegman Construction Co. v. Admiral Ins. Co.

Dist. Ct. erred in granting defendant-insurance company's motion for summary judgment in action by plaintiff-insured alleging that defendant breached its implied contractual duty of good faith when defendant, while representing plaintiff in underlying personal injury action pursuant to terms of insurance policy, failed to timely alert plaintiff about possibility that damages in underlying lawsuit might exceed $1 million policy limits, which in turn precluded plaintiff from giving timely notice of underlying lawsuit to its excess insurance carrier under circumstances where underlying lawsuit eventually resulted in $2 million judgment. Defendant was presented with conflict of interest once it became aware of reason to believe that plaintiff's liability might result in judgment in excess of policy limit, and duty of good faith required that defendant inform plaintiff of said conflict so that plaintiff could exercise option to either hire new attorney at defendant's expense to take over defense in underlying action or to timely inform excess insurer for purpose of triggering protection of excess policy.