Justia California Supreme Court Opinion Summaries

After Plaintiff was injured, he sought benefits from Defendant-insurer under an indemnity benefit policy. Plaintiff subsequently filed suit alleging that Defendant breached the insurance contract and the implied covenant of good faith and fair dealing. The jury awarded Plaintiff $31,500 in unpaid policy benefits, $35,000 in damages for emotional distress, and $19 million in punitive damages. The parties stipulated that the amount of attorney fees to which Plaintiff was entitled under Brandt v. Superior Court was $12,500, and the court awarded that amount. Defendant moved for a new trial seeking a reduction in the punitive damages award on the grounds that it was unconstitutionally excessive. The trial court granted the motion and reduced the jury’s award to a 10-to-1 ratio of punitive to compensatory damages. In so doing, the court considered only the $35,000 damages award but did not include the $12,500 in Brandt fees. The court of appeal affirmed. The Supreme Court reversed, holding that, in determining whether a punitive damages award is unconstitutionally excessive, Brandt fees may be included in the calculation of the ratio of punitive to compensatory damages, regardless of whether the fees are awarded by the trier of fact as part of its verdict or are determined after the verdict has been rendered. Remanded. View "Nickerson v. Stonebridge Life Ins. Co." on Justia Law

This case concerned an insured’s assignment of the right to invoke defense and indemnification coverage under a liability policy issued by Hartford Accident & Indemnity Company. The Supreme Court held in Henkel Corp. v. Hartford Accident & Indemnity Co., a case decided on similar facts, that the consent-to-assignment clause was enforceable and precluded the insured’s transfer of the right to invoke coverage without the insurer’s consent even after the coverage-triggering event had already occurred. At issue here was whether Cal. Ins. Code 520 - a statute that was not considered by the Court when it Henkel - changes the Court’s determination in Henkel. Section 520 specifically restricts an insurer’s ability to limit an insured’s right to transfer or assign a claim for insurance coverage. The court of appeal below concluded that section 520 does not apply to liability insurance and that, even assuming the statute applies, it should be construed to reflect the same rule articulated in Henkel. The Supreme Court reversed, holding (1) in light of the relevant language and history of section 520, the statute applies to third party liability insurance and bars an insurer from refusing to honor an insured’s assignment of policy coverage regarding injuries that predate the assignment; and (2) consequently, the decision in Henkel cannot stand. View "Fluor Corp. v. Superior Court of Orange County" on Justia Law

A commercial general liability insurer initially refused to defend its insured against a third-party lawsuit but subsequently provided independent counsel under a reservation of rights (so-called Cumis counsel) to defend its insured in the third party suit. A court order required the insurer to pay defense costs but expressly preserved the insurer’s right to later challenge and recover payments for “unreasonable and unnecessary” charges by counsel. The insurer sought reimbursement, alleging that independent counsel “padded” their bills by charging fees that were, in part, excessive unreasonable and unnecessary. The trial court concluded that the insurer’s right to reimbursement, if any, was from its insureds, not directly from Cumis counsel. The Court of Appeal affirmed, concluding that reimbursement could not be obtained directly from Cumis counsel. The Supreme Court reversed, holding that, under the circumstances of this case, the insurer could seek reimbursement directly from Cumis counsel. View "Hartford Cas. Ins. Co. v. J.R. Marketing, LLC" on Justia Law

At issue in this case was whether insurance practices that violate the Unfair Insurance Practices Act (UIPA) can support an Unfair Competition Law (UCL) action. In 1988, the Supreme Court held in Moradi-Shalal v. Fireman's Fund Insurance Companies that the Legislature did not intend to create a private cause of action under the UIPA for commission of various unfair practices listed in Cal. Ins. Code 790.03(h). In this case, Plaintiff sued Insurer for, among other causes of action, violation of California's unfair competition law (UCL) for engaging in false advertising. The trial court concluded that the UCL claim was an impermissible attempt to plead around Moradi-Shalal's bar against private actions for unfair insurance practices under section 790.03. The court of appeal reversed. The Supreme Court affirmed, holding (1) private UIPA actions are absolutely barred, and litigants may not rely on the proscriptions of section 790.03 as the basis for a UCL claim; (2) however, when insurers engage in conduct that violates both the UIPA and obligations imposed by other statutes or the common law, a UCL action may lie; and (3) here, Plaintiff alleged causes of action that provided grounds for a UCL claim independent from the UIPA. View "Zhang v. Superior Court" on Justia Law

Hartford Casualty Insurance Company issued a commercial general liability policy to Ultimate Support Systems, a company that sold the Ulti-Cart. The policy covered “personal and advertising injury,” which included claims arising out of publication of material that "disparages a person’s or organization’s goods, products or services.” Gary-Michael Dahl, the manufacturer of the Multi-Cart, sued Ultimate for patent and trademark infringement, false designation of origin, and damage to business, reputation, and goodwill. Hartford denied coverage on the ground that the suit did not allege that Ultimate had disparaged the Multi-Cart or Dahl. The Supreme Court affirmed, holding (1) a claim of disparagement requires a plaintiff to show a false or misleading statement that specifically refers to the plaintiff’s product or business and clearly derogates that product or business; and (2) because Dahl’s suit did not allege that Ultimate clearly derogated the Multi-Cart, there was no claim of disparagement triggering Harford’s duty to defend. View "Hartford Cas. Ins. v. Swift Distrib., Inc." on Justia Law

This case considered complex questions of insurance policy coverage interpretation in connection with a federal court-ordered cleanup of the state's Stringfellow Acid Pits waste site. The Supreme Court affirmed the court of appeal's judgment, holding (1) the "continuous injury trigger" and "all sums" rule announced in Montrose Chemical Corp. v. Admiral Ins. Co. and Aerojet-General Corp. v. Transport Indemnity Co. applied to the State's successive property or long-tail first party property loss, triggering the duty to indemnify here; and (2) the court of appeal correctly applied the "all-sums-with-stacking" allocation rule in allocating the indemnity duty among the insurers responsible for covering the property loss. View "State v. Cont'l Ins. Co." on Justia Law

This case stemmed from a lawsuit filed in 2007 by the Retired Employees Association of Orange County, Inc. against the County of Orange contesting the validity of certain changes the county had made to health benefits for retired employees. At the request of the Ninth Circuit, the court addressed the following question: "Whether, as a matter of California law, a California county and its employees can form an implied contract that confers vested rights to health benefits on retired county employees." In response, the court concluded that, under California law, a vested right to health benefits for retired county employees could be implied under certain circumstances from a county ordinance or resolution. Whether those circumstances existed in this case was beyond the scope of the question posed to the court by the Ninth Circuit. View "Retired Employees Assoc. v. Co. of Orange" on Justia Law

This case stemmed from injuries Anthony Verdon Lujan sustained when his arm got caught on a luggage conveyor when he was inspecting the conveyor as an employee of Lloyd W. Aubry Co. (Aubrey), an independent contractor hired by US Airways to maintain and repair the conveyor. Aubry's workers' compensation insurer paid Verdon benefits based on the injury and subsequently sued US Airways seeking what it paid in benefits. Verdon intervened as plaintiff in the action, alleging causes of action for negligence and premises liability. At issue was whether the Privette v. Superior Court rule applied when the party that hired the contractor (the hirer) failed to comply with workplace requirements concerning the precise subject matter of the contract and the injury was alleged to have occurred as a consequence of that failure. The court held that the Privette rule did apply in that circumstance. The court concluded that, by hiring an independent contractor, the hirer implicitly delegated to the contractor any tort law duty it owed to the contractor's employees to ensure the safety of the specific workplace that was the subject of the contract. That implicit delegation included any tort law duty the hirer owed to the contractor's employees to comply with applicable statutory or regulatory safety requirements. Accordingly, plaintiffs here could not recover in tort from US Airways on a theory that Verdon's workplace injury resulted from defendant's breach of what plaintiffs described as a nondelegable duty under California Occupational Safety and Health Act of 1973 (OSHA), Cal. Code Regs., tit. 8, sections 3999, 4002, regulations to provide safety guards on the conveyor. Therefore, the court erred in reversing the trial court's grant of summary judgment for defendant. View "Seabright Ins. v. US Airways" on Justia Law

This case arose when plaintiff was seriously injured in an automobile accident negligently caused by a driver for defendant. At issue was whether an injured person could recover from the tortfeasor, as economic damages for past medical expenses, the undiscounted sum stated in the medical care provider's bill but never paid by or on behalf of the injured person. The court held that the collateral source rule, which precluded deduction of compensation the plaintiff had received from sources independent of the tortfeasor from damages the plaintiff "would otherwise collect from the tortfeasor" ensured that plaintiff here could recover in damages the amounts her insurer paid for her medical care. The rule, however, had no bearing on amounts that were included in a provider's bill but for which the plaintiff never incurred liability because the provider, by prior agreement, accepted a lesser amount as full payment. Such sums were not damages the plaintiff would otherwise have collected from the defendant and were neither paid to the providers on the plaintiff's behalf nor paid to the plaintiff in indemnity of his or her expenses. Therefore, because they did not represent an economic loss for the plaintiff, they were not recoverable in the first instance. The collateral source rule precluded certain deductions against otherwise recoverable damages, but did not expand the scope of economic damages to include expenses the plaintiff never incurred. View "Howell v. Hamilton Meats" on Justia Law