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Bills v. Arizona Property and Casualty Insurance Guaranty Fund2/2/1999
n action taken pursuant to statutory authority, and therefore does not warrant immunity" under Washington's immunity statute. Id. at 244.
Even were we to agree with that Conclusion, it is inapplicable here. Plaintiff does not merely seek to hold the Fund liable for breach of its statutory duties, but rather, seeks non-contractual and non-statutory damages under a common law bad faith theory. The Alaska court's statement that "we see no obstacle that would prohibit an insured from suing [the Washington guaranty fund] in contract for bad faith handling of a claim" is dictum that we find unpersuasive. Id. at 245 n.25. Moreover, the Washington Court of Appeals has rejected a bad faith claim against that state's guaranty fund because such a claim "is not a 'covered claim' within the meaning of [the Washington statute]," which is identical to § 20-661(3). Vaughn, 597 P.2d at 934.
Plaintiff also points to subsection (B) of § 20-675, first enacted by the legislature in 1977, which provides:
"The board and its agents or employees shall be indemnified by the fund against all expenses incurred in the defense of any action, suit or proceeding brought against such person on account of any action taken in the performance of the powers and duties of such person pursuant to this article, unless such person is finally adJudged to have committed a breach of duty involving gross negligence, bad faith, dishonesty, wilful malfeasance or reckless disregard of the responsibilities of his or her office. In the event of settlement before the final adjudication, such indemnity shall be provided only if the board is advised by independent counsel selected by the board that such person did not, in counsel's opinion, commit such a breach of duty."
As plaintiff correctly notes, the court in Wells Fargo did not address subsection (B), nor is that provision contained in the Model Act. According to plaintiff, subsection (B) "completely contradicts the immunity" in subsection (A) and renders the statute ambiguous, because " person cannot be finally adJudged to have committed bad faith if such person is entitled to immunity from suit." Plaintiff further argues that § 20-675(A), properly interpreted in conjunction with subsection (B), does not immunize the Fund from bad faith acts or omissions, even if they occur "in the performance of the powers and duties of [the Fund's board or its agents or employees] pursuant to [the statutes]." § 20-675(B).
If possible, " e must harmonize apparently conflicting language of different parts of the statute so as to give effect to both." Chaparral Dev. v. RMED Int'l, 170 Ariz. 309, 313, 823 P.2d 1317, 1321 (App. 1991). The Fund did not address plaintiff's argument in its brief, but conceded at oral argument that subsection (B)'s indemnification provisions are superfluous in view of subsection (A)'s grant of immunity. Despite that concession, we do not find the two subsections logically irreconcilable.
Subsection (B) is not unlike other Arizona statutes that authorize or require indemnity for those who act in good faith on behalf of a corporation or other organization. See, e.g., A.R.S. §§ 3-416, 10-851, 10-3851, 10-3852, 38-847(P), and 38-893(P). That any right to indemnification under (B) is limited to "expenses incurred in the defense of any action" renders that subsection compatible with subsection (A). Contrary to plaintiff's contention, a person who seeks indemnity for defense costs pursuant to subsection (B), through a separate indemnity action, cross-claim or third-party claim against the Fund, could be "finally adJudged to have committed a breach of duty involving . . . bad faith." § 20-675(B). If so, that person would not be
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