THAKKAR v. HONEYWELL INTERNATIONAL INC (2018)

MEMORANDUM *

Shivani Thakkar appeals the district court's order granting the motion to dismiss her claim for tortious breach of the covenant of good faith and fair dealing against the Life Insurance Company of North America. We have jurisdiction under 28 U.S.C. § 1291.

Even assuming that the salary continuation plan provided by Thakkar's employer is a contract or part of a contract, the tort of bad faith under Arizona law requires a “special relationship” between the parties, as well as a contract. Burkons v. Ticor Title Ins. Co., 168 Ariz. 345, 355, 813 P.2d 710 (1991). In general, Arizona law does not recognize a special relationship between an employer and employee. Wagenseller v. Scottsdale Mem'l Hosp., 147 Ariz. 370, 385, 710 P.2d 1025 (1985), superseded by statute on other grounds, Ariz. Rev. Stat. § 12-341.01, as recognized in Powell v. Washburn, 211 Ariz. 553, 560, 125 P.3d 373 (2006); Nelson v. Phx. Resort Corp., 181 Ariz. 188, 197–98, 888 P.2d 1375 (1994). Although Arizona law recognizes a special relationship between an insurance company and an insured, Rawlings v. Apodaca, 151 Ariz. 149, 163, 726 P.2d 565 (1986), Arizona has not designated a salary continuation plan such as the one in this case as either an insurance contract or as workers’ compensation insurance. This salary continuation plan has some similarities to workers’ compensation insurance funded by an employer, see Mendoza v. McDonald's Corp., 222 Ariz. 139, 149, 213 P.3d 288 (2009), but Arizona courts “have been reluctant ․ to extend the tort action beyond the insurance setting,” Wagenseller, 147 Ariz. at 385, 710 P.2d 1025, and we see no basis for inferring that Arizona courts would extend the tort to an employer's salary continuation plan. Given the lack of a special relationship between Thakkar and her employer, the district court did not err in dismissing her tort claim.

AFFIRMED.