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DODGE v. FIDELITY & DEPOSIT CO. OF MD.

No. CV-86-0370-PR.

161 Ariz. 344 (1989)

778 P.2d 1240

David Elgin DODGE and Anneliese M. Dodge, husband and wife, Plaintiffs-Appellants, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Defendant-Appellee.

Supreme Court of Arizona, En Banc.

Reconsideration Denied September 19, 1989.

Attorney(s) appearing for the Case

Jennings, Strouss & Salmon by Jefferson L. Lankford, Phoenix, for plaintiffs-appellants.

Snell & Wilmer by H. William Fox, James J. Osborne, Donald H. Smith, Phoenix, for defendant-appellee.

Harrison, Rollman & Gabroy, P.C. by W. James Harrison, Richard M. Rollman, Tucson, for amicus curiae, La Paloma Hotel Ltd. Partnership, Cottonwood Properties.

Jennings, Kepner & Haug by Curtis A. Jennings, William F. Haug, Mark R. Santana, Phoenix, for amicus curiae, U.S. Fidelity & Guar. Co., Hartford Acc. & Indem. Co., United Pacific Ins. Co., Reliance Ins. Co.

Kohn, Neff & Zirkle by Sidney Y. Kohn, Tucson, for amicus curiae, Centuras Inv. Co., Tucson Sav. & Loan Ass'n.

OPINION

CORCORAN, Justice.

The question before this court is one of first impression in Arizona: Can a surety on a contractor's performance bond be liable for the tort of bad faith? We answer the question in the affirmative.

FACTS

In March 1978, Mr. and Mrs. Dodge (plaintiffs) contracted with Homes & Son Construction Company, Inc. (Homes) to build a residence in Scottsdale, Arizona. The contract...

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