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Procedural Posture

Procedural Posture

Defendants, insurer, claims adjuster, and claims manager, appealed the judgment entered by the California trial court in plaintiff insured’s complaint that sought damages for tortious breach of contract, general damages for emotional distress, and punitive damages. The court awarded general damages for emotional distress, compensatory damages, and punitive damages.

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Overview

Plaintiff insured purchased a disability policy from defendant insurer and filed a claim after he suffered a debilitating injury. Plaintiff filed a complaint against defendants, insurer, claims adjuster, and claims manager, when they refused to pay disability benefits. The trial court entered a judgment in favor of plaintiff and awarded compensatory damages, general damages for emotional distress, and punitive damages, as well as an award of $ 5,000,000 against defendant insurer. The court affirmed, but reduced the punitive damages against defendant insurer by half because the amount of the punitive damages awarded against defendant insurer was excessive and was the result of passion and prejudice on the part of the jury. The court reversed the damages awarded against defendants, adjuster and manager, for tortious breach of contract because they were not liable for tortious breach of the insurance contract. The remaining damages were affirmed. The court held that the evidence supported the findings of a breach of the contract and of respondeat superior and found no error in the jury instructions. The court held that Cal. Civ. Code § 3294 was constitutional.

Outcome

The court affirmed, but reduced, the punitive damages awarded against defendant insurer, holding that the amount of the punitive damage award rendered against defendant insurer was excessive. The court reversed as to the damages against defendants, adjuster and manager, for tortious breach of contract because they could not be held liable for tortious breach of the insurance contract.

 

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