Procedural Posture

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Procedural Posture - Facebook Portrait Project

Defendant insurer appealed from judgments entered by the Superior Court of Santa Clara County (California) in favor of plaintiffs, a test group pulled from hundreds of investors in the insured failed business, who asserted four insurance bad faith causes of action that were assigned to plaintiffs by insured and one direct cause of action against defendant pursuant to Cal. Ins. Code § 790.03(h).


Defendant insurer appealed from five judgments awarding damages to plaintiff Norway salmon farm. After finding that the insured company’s assignment of four claims to plaintiffs was valid, the court reversed with directions to enter judgment for defendant on three of those claims. Defendant did not fail to settle as the settlement exceeded policy limits. The fraud and negligent misrepresentation claims failed as there was no detrimental reliance. The court reversed the judgment on plaintiff’s wrongful cancellation claim and remanded. Policies favoring settlement and equalizing strategic advantage prevailed, but the general verdict form misinformed the jury about available coverage. The court reversed plaintiffs’ Cal. Ins. Code § 790.03(h) unfair claims settlement practices action and the award of punitive and emotional distress damages as it could not determine as a matter of law that defendant’s handling of the claims did not violate § 790.03(h). Plaintiffs’ claimed violations of defendant’s failure to respond promptly and communicate and to provide explanation, Cal. Ins. Code § 790.03(h)(2), (13), failed as there was no coverage. All other § 790.03(h) claims were remanded.


The court reversed the judgment against defendant insurer on the breach of contract/failure to settle, fraud, and negligent misrepresentation claims assigned to plaintiff investors by insured company with the direction to enter judgment for defendant. The court reversed the judgment on the assigned claim of wrongful cancellation and two of plaintiffs’ direct claims of unfair claims settlement practices and remanded for retrial.

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