Carlos Madrigal v. Allstate Indemnity Co.
697 F. App'x 905
| 9th Cir. | 2017Background
- Allstate appealed the denial of its renewed JMOL and new-trial motions after a jury found Allstate liable for bad-faith refusal to settle under California law and awarded the Tangs and Madrigal about $14 million.
- Underlying demand: Madrigal made a policy-limits demand ($100,000) tied to an asset-disclosure condition about Mr. Tang and spoke of an “appropriate release”; Allstate did not immediately accept and made counter-offers on January 29 and February 19, 2010.
- Key disputed facts at trial: whether the Tangs had decided or communicated a decision about asset disclosure before Allstate’s January 29 response; whether the demand’s phrase “appropriate release” required releasing Mrs. Tang; and whether evidence known to Allstate by January 29 made acceptance the reasonable course.
- Jury found Madrigal’s demand reasonable and Allstate’s refusal unreasonable; district court denied Allstate’s post-trial motions; Allstate appealed and Appellees cross-appealed an interest-rate ruling.
- The Ninth Circuit reviewed whether JMOL or a new trial was warranted and whether the district court correctly applied prejudgment and postjudgment interest rules.
Issues
| Issue | Plaintiff's Argument (Madrigal/Tangs) | Defendant's Argument (Allstate) | Held |
|---|---|---|---|
| Whether JMOL was required because asset-disclosure condition made demand unacceptabl e | Demand presented a reasonable opportunity to settle; Tangs’ disclosure decision was not clearly outside Allstate’s control | Allstate could not accept because the Tangs never disclosed assets, a factor outside Allstate’s control | Denied JMOL — record permitted a reasonable jury to find the demand was actionable and the Tangs’ decision was not conclusively out of Allstate’s control |
| Whether demand was unreasonable because it did not expressly release Mrs. Tang | Demand’s “appropriate release” could reasonably be read to include other necessary releases; jury question | Demand failed to offer a release for Mrs. Tang so Allstate could not protect all insureds | Denied JMOL — jury could fairly interpret “appropriate release” to permit settlement and trigger insurer’s duty |
| Whether Allstate’s policy-limit offers were timely, precluding bad faith | Allstate argued offers on Jan 29 and Feb 19 were timely and reasonable as a matter of law | Offers were timely and legally sufficient to avoid liability | Denied JMOL — timeliness and reasonableness were factual questions; jury could find Jan 29 rejection unreasonable given Allstate’s knowledge |
| Whether failure to include causation or a stricter instruction on releases in the verdict form/instructions required a new trial | Verdict form and instructions fully presented elements of bad faith; causation covered by questions asked | Omission of separate causation interrogatory and not instructing that release must include Mrs. Tang was prejudicial | Denied new trial — special verdict and instructions were adequate and correctly stated California law |
Key Cases Cited
- Wallace v. City of San Diego, 479 F.3d 616 (9th Cir.) (JMOL standard: verdict must permit only one reasonable conclusion)
- Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998 (9th Cir.) (weight-of-evidence review of jury verdict)
- Samson v. Transamerica Ins. Co., 636 P.2d 32 (Cal. 1981) (reasonableness of settlement demand is often a jury question)
- Crisci v. Sec. Ins. Co. of New Haven, Conn., 426 P.2d 173 (Cal. 1967) (insurer breaches implied covenant by unwarranted refusal of reasonable settlement)
- Mercado v. Allstate Ins. Co., 340 F.3d 824 (9th Cir.) (whether insurer rejected settlement in good faith is the salient inquiry)