This section contains the nature of the case and procedural background.

P is the successor in interest to Solaglas. Solaglas was a distributor and installer of replacement windshields for cars and trucks. George Miller was driving a truck manufactured by General Motors Corporation (GMC) when another vehicle collided with the left rear of the truck. The truck jumped the curb and hit a metal light pole. The truck's windshield 'popped out' and Miller was ejected through the opening. Miller is now a quadriplegic. Solaglas installed the windshield. Miller sued Solaglas in Colorado, seeking both compensatory and punitive damages. Solaglas tendered the defense to its liability carrier, P, which had issued policies totaling $ 1.5 million. Transamerica agreed to defend Solaglas, but it informed Solaglas that the insurance policies did not provide indemnity coverage for punitive damages. Settlement efforts were unsuccessful, and a jury trial in Colorado resulted in a judgment for Solaglas, but this was reversed on appeal. Miller offered to settle for an amount within the limits of Solaglas' liability coverage. P turned down Solaglas's requests to accept the settlement offer. A second jury trial resulted in a judgment against Solaglas for $6.1 million with $ 1 million of that in punitive damages. Solaglas appealed. The appeals court affirmed the punitive damages award finding that Solaglas was more then culpable. D paid the policy limits of $ 1.5 million plus $ 1,277,094.88 as costs and interest on the judgment against Solaglas. Industrial Indemnity Company, which had insured Solaglas for $ 9 million in excess liability coverage, paid the remaining $3.6 million in compensatory damages. P was stuck with the $1 million in punitive damages. P sued D for breach of the covenant of good faith and fair dealing alleging D had breached the covenant by unreasonably refusing to settle the Miller lawsuit. The trial court granted summary judgment for D, relying on the well-established rule prohibiting indemnity coverage for punitive damages awarded against the insured. The Court of Appeal affirmed the judgment. P appealed.

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