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Torts Keyed to Prosser
Cates Construction, Inc. v. Talbot Partners
Facts
A surety, Transamerica, breached a contractual obligation by failing to investigate a declaration that the insured was in default of an agreement to build a condominium project. A jury determined that the surety breached the implied covenant of good faith and fair dealing. The court concludes that “unlike an insurance policy, the typical performance bond bears no indicia of adhesion or disparate bargaining power that might support tort recovery by an obligee.” Thus, the jury awarded $28 million in punitive damages.
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