The federal district court for the district of Hawaii rejected the insured's argument that the insurer acted in bad faith because the insured had to contribute to a settlement of the underlying case. Hanover Ins. Co. v. Anova Food, LLC, 2016 U.S. Dist. LEXIS 146114 (D. Haw. Oct. 21, 2016).

    After a prior round of briefing, the court determined that Hanover had a duty to defend, but rejected Anova's claim for pre-tender fees. [prior post here].

    After the underlying case settled with Hanover and Anova each contributing one half of the amount, Anova moved for summary judgment to establish that Hanover had acted in bad faith. Anova argued that Hanover acted in bad faith by refusing to pay for the entire settlement of the underlying lawsuit.

    Florida law controlled. Under Florida law, an insurer had a duty to use the same degree of care and diligence as a person of ordinary care and prudence would exercise in the management of its own business.

    Here, Hanover provided a defense to Anova. Hanover negotiated with Anova during attempts to settle the underlying lawsuit. Both Hanover and Anova agreed that each would contribute half of the amount to the settlement. The case did not settle in excess of Hanover's policies.

    Anova did not present any evidence that it was "forced" to contribute to the settlement as a result of Hanover's bad faith. The patent infringement claims in the underlying suit were not covered by the policies. Therefore, it made sense for Anova to contribute to the settlement. Consequently, the motion for summary judgment was denied.