Security Plans, Inc. v. CUNA Mutual Insurance Society

Security Plans (plaintiff) sold its insurance book of business to CUNA (defendant) for a base price plus an earnout payment calculated using a formula involving premiums and loss ratios, with the sale contract giving CUNA broad discretion to run the business using its own best judgment without any obligation to maximize the earnout; during the calculation period, CUNA maintained unusually high claim reserves company-wide (later reduced to normal levels), inflating Security's apparent loss ratios and depressing its earnout, and CUNA managers who noticed the distortion began but never completed a recalculation using more accurate figures. Security sued for breach of the implied duty of good faith and fair dealing, and CUNA moved for summary judgment.