Allstate Insurance Company, Appellant v. William Miller, Respondent

Summary

The court held that an insurer's duty to defend and implied covenant of good faith and fair dealing require it to adequately inform its insured of reasonable settlement opportunities, including offers exceeding policy limits. Allstate had no independent duty to file an interpleader action or consent to an excessive stipulated judgment, and the district court therefore submitted two invalid theories to the jury. Because the court could not determine which theory supported the general verdict and the district court rejected requested special interrogatories without explanation, it reversed in part and remanded for further proceedings. Justice Cherry, concurring in part and dissenting in part, and Justice Saitta, dissenting, would have affirmed the verdict because the viable failure-to-inform theory was supported by substantial evidence and the district court did not abuse its discretion.