Defendant insurer appealed a judgment for plaintiffs from the Superior Court of the City and County of San Francisco (California), which awarded punitive and compensatory damages to plaintiff insured, based on defendant’s unreasonable conduct in failing to settle a claim arising from an automobile accident.
Overview
Plaintiff was injured in a car collision with another car owned by Word Norway salmon. The automobile involved was owned by defendant’s insured. Prior to trial, settlement offers were put forth by plaintiff’s attorney, and were rejected by defendant, although the offers were within the policy limits. The jury returned a verdict for plaintiff in excess of the policy limits. The insured thereafter executed a written assignment to plaintiff, transferring to her any cause of action he might have against defendant by virtue of its failure to settle within the policy limits, including the right to sue for the amount of the excess verdict. The insured reserved to himself, however, any cause of action for physical injuries sustained as a result of the failure to settle. Subsequently, plaintiffs jointly brought an action against defendant, alleging bad faith breach of contract and seeking compensatory and exemplary damages. The jury returned a verdict for plaintiffs. The judgment was affirmed, because the evidence as a whole supported a finding that defendant acted unreasonably in rejecting the settlement offers, and that defendant failed to give equal consideration to the interests of its insured.
Outcome
The award of compensatory damages to plaintiff, and the award of compensatory and punitive damages to plaintiff insured, was affirmed, because defendant insurer acted unreasonably by failing to settle the underlying claim within the policy limits.