Bad Faith: Does It Apply to Sureties in Alabama?
Updated: Apr 8, 2022
While a Shareholder at Hubbard, Smith, McIlwain, Brakefield & Shattuck, Cooper Shattuck authored this article in The Alabama Lawyer on the application of the tort of bad faith to sureties in Alabama.
"Bad faith" has been a popular topic in Alabama for continuing legal education seminars and numerous articles. One issue which has apparently not been addressed is the application of the tort of bad faith to sureties in Alabama. This article addresses the nature of the law of suretyship as it relates lo surety bonds and construction bonds, the surety's good faith obligations under the law of suretyship, the tort of bad faith as it applies in the context of insurance in Alabama, the difference between suretyship and insurance, the treatment by the Alabama courts of bad faith claims made against sureties, and why the tort of bad faith should not be extended as a cause of action against sureties. Finally, this article suggests a means ol addressing bad faith in the context of suretyship if this tort is to be extended beyond its present appliations.