GUARANTEE INSURANCE CO. v. CITY OF LONG BEACH

Judgment affirmed.

Plaintiff is awarded one bill of costs.

Pursuant to the subject insurance policy the defendant insured was obligated to pay the first $10,000 of any settlement or judgment in favor of a third party. Plaintiff insurance company settled a third-party claim for $7,000 and thereafter commenced this action to recover that sum.

An insurance company must exercise good faith and fair dealing when it engages in settlement negotiations ( Gordon v. Nationwide Mut. Ins. Co., 30 N.Y.2d 427, cert den 410 U.S. 931). Before an insured may recover damages for an insurer's bad faith refusal to settle within policy limits or, by analogy, failure to enter into a settlement for as small a sum as possible where, as here, there is a deductible, there must be "an extraordinary showing of a disingenuous or dishonest failure to carry out a contract" ( Gordon v. Nationwide Mut. Ins. Co., supra, p 437). No such showing has been made here. Thompson, J.P., O'Connor, Niehoff and Boyers, JJ., concur.