Weissmann, J.
In Erie Ins. Co. v. Hickman, 622 N.E.2d 515 (Ind. 1993), the Indiana Supreme Court held that an insurer owes its insured a common law duty of good faith in performing its obligations under an insurance policy. Id. at 519. As a matter of first impression, we are asked whether the duty recognized in Erie extends to the relationship between surety and obligee in the context of performance and payment bonds on a construction project. We conclude it does not.
Though suretyship is regulated as a class of insurance under the Indiana Insurance Code, there are fundamental differences between the two types of transactions. Most notably, the relationship between a surety and its bond obligee does not reflect the “special relationship” on which our Supreme Court relied in recognizing a duty of good faith in the insurance context. Id. at 518. We therefore affirm the trial court’s entry of partial summary judgment in favor of the surety in this case.
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In challenging the trial court’s grant of FCCI’s motion for partial summary judgment, Posterity argues that a surety owes its bond obligee a common law duty of good faith by extension of the duty an insurer owes its insured. This is a matter of first impression under Indiana law and is one on which other states are divided. States that extend an insurer’s common law duty of good faith to the surety-obligee relationship tend to rely heavily on the inclusion of sureties in their states’ regulatory schemes governing insurance. See, e.g., Transamerica Premier Ins. Co. v. Brighton Sch. Dist. 27J, 940 P.2d 348 (Colo. 1997); Dodge v. Fid. & Deposit Co. of Md., 778 P.2d 1240 (1989). States holding a contrary view champion the fundamental differences between suretyship and insurance. See, e.g., Cates Constr., Inc. v. Talbot Partners, 980 P.2d 407 (Cal. 1999); Great Am. Ins. Co. v. N. Austin Mun. Util. Dist. No. 1, 908 S.W.2d 415 (Tex. 1995).
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Posterity essentially argues that suretyship is analogous to insurance; therefore, a surety owes its bond obligee a common law duty of good faith under Erie. We disagree for several reasons.
1. Suretyship Distinguished
Our Supreme Court long ago distinguished between suretyship and insurance, stating: “Insurance has been defined as a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from an unknown or contingent event; whereas a contract of suretyship is one to answer for the debt, default, or miscarriage of another.” Meyer v. Bldg. & Realty Serv. Co., 209 Ind. 125, 133, 196 N.E. 250, 253-54 (1935). Though similar in some respects, “there is a very wide difference between the two kinds of contracts.” Id. at 253; see Ind. Univ. v. Ind. Bonding & Sur. Co., 416 N.E.2d 1275, 1285 n.6 (Ind. Ct. App. 1981) (“[T]he essential nature of the promises differ.”).
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2. Statutes Not Determinative
Largely ignoring the fundamental differences outlined above, Posterity claims suretyship and insurance should be treated in the same manner because the Indiana General Assembly included surety bonds as a class of insurance under the Indiana Insurance Code. See Ind. Code § 27-1-5-1(Class 2)(K); see also Ind. Code § 27-1-2-3(a) (broadly defining “[i]nsurance” as that which “grant[s] indemnity or security against loss for a consideration”).
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An insurer’s common law duty of good faith arises not because insurance is a regulated industry but from the “special relationship” between insurer and insured. See infra ¶¶ 9-10; cf. Erie, 622 N.E.2d at 519 n.1 (recognizing that the Indiana Insurance Code “provides no private cause of action” for unfair claim settlement practices; see Ind. Code §§ 27-4-1-4.5, -5.6, -6, -18). Thus, the inclusion of sureties in the Indiana Insurance Code does not compel us to extend an insurer’s duty of good faith to the surety-obligee relationship.
3. No Special Relationship
Without analysis, Posterity asserts that the surety-obligee relationship, like the insurer-insured relationship, is “a traditional arms-length dealing between two parties . . . but is also at times one of a fiduciary nature, and, at other times, an adversarial one.” Appellant’s Br. p. 20 (quoting Erie, 622 N.E.2d at 519).
To the contrary, the arms-length dealing in a suretyship occurs between surety and principal, not surety and obligee….
For these reasons, we find the relationship between a surety and its bond obligee does not reflect the “special relationship” on which our Supreme Court relied in Erie. We therefore conclude that the common law duty of good faith that an insurer owes its insurer does not extend to the surety-obligee relationship in the context of performance and payment bonds on a construction project.
Accordingly, the trial court did not err in granting FCCI’s motion for partial summary judgment as to Posterity’s tortious bad faith claim. [Footnote omitted.]
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Conclusion
We affirm the trial court’s grant of FCCI’s motion for partial summary judgment as to Posterity’s tortious bad faith claim. And we dismiss Posterity’s appeal of the trial court’s order denying Posterity’s motion for partial summary judgment as to its breach of contract claim.
Vaidik, J., and Crone, J., concur.