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Teague-Strebeck Motors Inc. v. Chrysler Insurance Co.3/8/1999
the punitive damages award. See 723 P.2d at 676. The Arizona Supreme Court granted review as to the issue of punitive damages only. See id. Prior to oral argument, the Supreme Court asked counsel to address the following question:
1. Assuming that indifference to or failure to consider the interests of the insured is sufficient grounds for award of tort damages in a bad faith case, what additional requirement or standard is appropriate to justify an award of punitive damages? Id.
{81} After generally clarifying Arizona's punitive damages law, the Supreme Court held: "In a bad faith tort case, as with all other torts, punitive damages are not awardable unless there is something more than the conduct required to establish the tort." Id. at 681. See also Rawlings v. Apodaca, 726 P.2d 565, 577 (Ariz. 1986) (en banc) (rejecting argument that "since bad faith is a species of intentional tort, punitive damages are automatically recoverable in every case in which the plaintiff proves that the tort was committed").
{82} Paiz left unanswered several questions. Among them are (1) whether evidence of bad faith requires giving a jury instruction on punitive damages, (2) whether a finding of bad faith requires an award of punitive damages, and (3) whether a finding of bad faith would by itself be sufficient to support an award of punitive damages. We need not concern ourselves here with the first question because this matter was tried to the court alone. As to the second, Plaintiffs concede that an award of punitive damages is not mandatory even when bad faith is found. See UJI 13-1718 NMRA 1999 ("If you find that plaintiff should recover compensatory damages for the bad faith actions of the insurance company, then you may award punitive damages." (Emphasis added)). The third question is answered by Allsup's.
{83} We have already noted the passage from Allsup's upon which Plaintiffs rely. That passage provides some support for Plaintiff's position. However, another Discussion earlier in Allsup's is much more pertinent to our inquiry. Defendant North River's first challenge to the punitive damages award against it was that "insurance companies . . . were singled out by the jury instructions as having to act only unreasonably, as opposed to acting in bad faith, in order to be held liable for punitive damages, and that its due process right was thereby violated." 1999-NMSC-006, 44. North River pointed to a jury instruction essentially identical to UJI 13-1705 NMRA 1999 as symptomatic of the problem it faced. See id.
{84} In response, the Supreme Court quoted with approval another instruction given to the jury as clarifying any ambiguity in the instruction North River challenged.
"To establish the claim of breach of the implied covenant of good faith and fair dealing by defendants . . ., Allsup's has the burden of proving that one or more of the defendants acted in bad faith by not giving equal consideration to the interest of Allsup's as to its own interest in at least one of the following ways . . .
Related to its claims for punitive damages, Allsup's contends and has the burden of proving that any bad faith actions on the part of North River were malicious, reckless or wanton, and, therefore punitive damages should be awarded." Id. 46 (second alteration in original) (emphasis omitted).
Asserting that this instruction comported with its holding in Paiz, the Supreme Court wrote:
"Reading both instructions together clearly advised the jury that if it found that North River acted in bad faith, it also had to determine whether this constituted malicious, reckless, or wanton conduct before it could award punit
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