Defendants challenged the order of the Superior Court of Orange County (California), awarding compensatory and punitive damages against defendant insurer in a breach of covenant action and finding defendant counsel was also negligent, thus awarding plaintiff insured damages jointly and severally against defendants for emotional distress. Plaintiff cross-appealed an order conditionally granting a partial new trial.
Plaintiff insured collided with another car at a signaled intersection. Defendant insurer was the carrier for both accident vehicles. Defendant insurer referred plaintiff to a litigation firm to undertake the defense of a personal injury suit brought by other driver. Plaintiff’s accident statement suggested that she negligently contributed to the accident. A reputable accident reconstruction firm investigated the accident for defendant insurer and found that the other driver was traveling at a lesser rate of speed than plaintiff. Defendant insurer rejected offers by other driver to settle within policy limits. The trial court ruled against plaintiff. Alleging breach of covenant to deal fairly and in good faith, plaintiff sued defendant insurer based on its bad faith refusal to accept the settlement offer within the policy limits and argued defendant counsel was negligent in conducting her defense. A jury awarded plaintiff compensatory and punitive damages against defendants. The appellate court affirmed the judgment because defendant insurer failed to meet the duty to accept a reasonable settlement and defendant counsel breached his obligation of loyalty to plaintiff. The appellants and respondents through their small business lawyer in California submitted their briefs.
The appellate court affirmed the judgment against defendant insurer in a breach of covenant case and against defendant counsel for negligence, thus awarding plaintiff insured damages jointly and severally against defendants for emotional distress because defendant insurer acted in bad faith by its unwarranted rejection of a reasonable settlement offer within policy limits and defendant counsel was negligent in conducting plaintiff’s defense.
Plaintiff insured appealed from a judgment of the Superior Court of Orange County (California), which found that the insured had no supportable damages for breach of contract or breach of the covenant of good faith and fair dealing. The trial court denied the insured’s post-judgment motion to amend its complaint to allege an assignment of a second insurer’s claims against the insurance company.
Two homeowners sued the insured, a homeowners’ association, over a dispute concerning the homeowners’ efforts to construct improvements in their home. The insurance company paid some attorney fees and defense costs but ultimately concluded that the policy provided no coverage for the claims. The court held that the trial court had the authority to decide the standing issue. Unlike the scope of a prior judge’s ruling on the summary judgment motion, the trial court could weigh the evidence and make factual findings based on the evidence presented at trial. Because the insurance company paid a portion of the insured’s legal expenses and another insurer, which had an independent obligation to defend and indemnify the insured, paid the balance of those expenses plus the settlement, the insured could not show it suffered any contract damages. Even if the other insurer had an equitable contribution claim, the insured did not sue as an assignee. The causal relationship between the insured’s claim that its insurance premiums had increased and the insurance company’s alleged wrongful failure to defend and indemnify it was too tenuous to support recovery of this expense as special damages.
The court affirmed the judgment.