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Bills v. Arizona Property and Casualty Insurance Guaranty Fund2/2/1999
explanation as to why the legislature might have intentionally omitted the words "the fund" from § 20-675(A) while, in the same legislative session, including those words in A.R.S. § 20-693, which provides immunity for the life and disability insurance guaranty fund.
Plaintiff also argues that any immunity for the Fund and its agents only applies to "action taken in the performance of their powers and duties pursuant to [the statutes]." § 20-675(A). According to her, bad faith conduct is outside the scope of that language and is, therefore, not immunized. Although that contention was not addressed and apparently was not raised in Wells Fargo, we rejected a similar argument in Ramirez v. Health Partners of Southern Arizona, 272 Ariz. Adv. Rep. 27 (Ct. App. June 23, 1998). Analogizing to that case, " o accept plaintiff's contention that statutory immunity is automatically unavailable [when bad faith is alleged] would completely dilute, if not altogether eliminate," the immunity provision. Id. at .
The Fund's activities to which plaintiff's allegations of bad faith relate "are undeniably part of [the Fund's] statutory powers and duties to adjust, handle, and pay covered claims while denying all others." T & N PLC v. Pennsylvania Ins. Guar. Ass'n, 800 F. Supp. 1259, 1265 (E.D. Pa. 1992). See also Fernandez v. Florida Ins. Guar. Ass'n, 383 So. 2d 974, 975 (Fla. Dist. Ct. App. 1980), quoting Fla. Stat. Ann. § 631.66 (1979) (no bad faith action against fund because its refusal to accept settlement offer "was an 'action' it took 'in the performance of (its) powers and duties' under the statute to dispose of the covered claim in question"); cf. Valencia Energy Co. v. Arizona Dep't of Revenue, 191 Ariz. 565, 575, 959 P.2d 1256, 1266 (1998) (act authorized by statute or undertaken within general parameters of statutory authority does "not become unauthorized simply because the act was performed erroneously").
Aside from its immunity argument, the Fund maintains that it should not be exposed to bad faith claims because it lacks statutory authority to assess or collect from its member insurers amounts needed to defend, settle, or satisfy such claims. In contrast, plaintiff contends the statutes permit, rather than prohibit, the Fund to collect and pay funds for tort damages. Wells Fargo supports the Fund's position. The court there noted that "the legislature limited the Fund's obligation to the extent of the 'covered claims' . . . [and its] authority to collect funds to pay covered claims" and then stated:
"The Fund is thus statutorily limited to the payment of "covered claims," the definition of which does not include tort claims made against the Fund. Moreover, the Fund (through its board) is also statutorily unable to collect funds from member insurers beyond that necessary to pay "covered claims." In sum, the legislature neither provided for the Fund to obtain money to discharge an adverse tort judgment nor authorized the Fund to actually pay such a judgment against it were one to be rendered." 165 Ariz. at 572, 799 P.2d at 913.
We find the Wells Fargo court's reasoning on this point sound. The definition of "covered claim" in § 20-661(3) does not include tort damages, because they do not "arise out of" and are not "within the coverage of an insurance policy to which [the statutes] appl ." § 20-661(3). See T & N PLC; Veillon v. Louisiana Ins. Guar. Ass'n, 608 So. 2d 670 (La. Ct. App. 1992);Vaughn v. Vaughn, 597 P.2d 932 (Wash. Ct. App. 1979).
Nor do §§ 20-666(A) and 20-667(C), upon which plaintiff relies, support her position or override § 20-675(A). Section 20-666(A) requires the Fund's board to "assess each member insurer, . . .
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