Absent duty to defend, did insurer act in bad faith?
On February 3, 2005, Responsive Management Systems (RMS) sued Onvia, Inc., accusing Onvia of “fax blasting,” the practice of sending unsolicited advertisements via fax in violation of state and federal law. At the time the lawsuit was filed, Onvia had liability insurance with St. Paul Fire and Marine Insurance Company. Onvia’s insurance broker claimed he faxed St. Paul a copy of the complaint, a tender letter, and a notice form on February 24. St. Paul claimed it did not receive the communication, although there was evidence it was sent. There was also evidence that the February communication was sent again in August. On November 4, 2005, St. Paul sent a letter to Onvia denying coverage. There were subsequent discussions between the two companies, but St. Paul reaffirmed its denial on March 24, 2006. Onvia defended itself in the lawsuit and eventually settled with RMS for $17.515 million. At that point, Onvia assigned any rights it had against St. Paul to RMS. On July 26, 2006, St. Pau
