Taylor v. State Farm Mutual Automobile Insurance Co.

175 Ariz. 148, 854 P.2d 1134 (1993)



The judge first considers the offered evidence and, if he or she finds that the contract language is reasonably susceptible to the interpretation asserted by its proponent, the evidence is admissible to determine the meaning intended by the parties.


Plaintiff insured sought damages against the insurer for bad faith, asserting that the insurer improperly failed to settle a claim within policy limits, resulting in a large excess verdict against the insured. The insurer moved for summary judgment, asserting that the insured had released the bad faith and all other claims through a document which provided for the release of "all contractual claims" against the insurer as part of a settlement involving uninsured motorist coverage. The insured also moved for partial summary judgment for a finding that the release did not preclude his bad faith claim. The trial judge denied both motions, finding that the release was ambiguous and that therefore parol evidence was admissible at trial to aid in interpreting the release. The jury awarded the insured compensatory damages, and the court granted attorney fees. The court of appeals reversed judgment, holding that the release agreement was not ambiguous and therefore the judge erred by admitting parol evidence to vary its terms. On appeal, the court vacated the decision of release and the matter was remanded to the court of appeals for resolution of remaining unresolved issues.



Did the trial judge did err in admitting parol evidence to the jury?




The trial court properly considered and then admitted extrinsic evidence to interpret the release and determine whether it included Taylor's bad faith claim. That question, in this case, was appropriately left to the trier of fact.

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