Judy Bamberger v. National Union Fire Ins. Co.
699 F. App'x 649
| 9th Cir. | 2017Background
- Bamberger sued National Union alleging breach of insurance contract and bad faith related to contribution to the Moradi settlement after an automobile accident.
- National Union reimbursed Bamberger for her out-of-pocket contribution to the Moradi settlement plus interest; excess insurer also contributed to the settlement.
- Procedural history: district court granted partial summary judgment for National Union on several issues and, after a bench trial on remaining bad-faith claims, entered judgment for National Union; Bamberger appealed.
- Key factual timeline: (1) period after National Union learned of the Moradi action but before state court granted Marsh summary judgment; (2) period after state court granted Marsh summary judgment but before the Moradi appeal became final; (3) period after the Moradi appeal became final.
- District court found National Union owed no duty to defend during the first period, reasonably relied on the state summary-judgment ruling during the second period, and did not act in conscious bad faith during the third period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contract damages — extent of recoverable damages | Bamberger sought contract damages including contribution made by excess insurer | National Union argued it already reimbursed Bamberger for her out-of-pocket payment and excess insurer contribution is not recoverable | Court: Affirmed for National Union; only Bamberger's out-of-pocket (already reimbursed) was recoverable (no extant contract damages) |
| Emotional distress damages on contract claim | Bamberger sought emotional distress damages for breach of insurance contract | National Union argued emotional distress generally unavailable in contract actions absent tort or special circumstances | Court: Denied; emotional distress damages not allowed in ordinary insurance contract claims absent tortious breach |
| Bad faith — period before state court granted Marsh summary judgment | Bamberger said National Union failed to defend and impermissibly favored Marsh and withheld disclosure | National Union said it owed no duty to defend, disclosed the policy, and reasonably relied on facts (Bamberger initially denied agency/employment) | Court: Affirmed summary judgment for National Union; no duty to defend then, no actionable nondisclosure, and no harm shown |
| Bad faith — period after state court granted summary judgment and after appeal became final | Bamberger argued National Union unreasonably refused to contribute to settlement after summary judgment and after appeal | National Union argued reliance on state summary-judgment ruling and reasonableness of its conduct; after appeal final, it still did not act with conscious, deliberate intent to frustrate rights | Court: Affirmed; reliance on summary-judgment ruling was reasonable for the intermediate period, and district court properly found no conscious, deliberate bad faith after appeal (no punitive damages) |
Key Cases Cited
- Pan Pac. Retail Props., Inc. v. Gulf Ins. Co., 471 F.3d 961 (9th Cir.) (insurer not liable for amounts paid by excess insurer in this context)
- Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 869 P.2d 454 (Cal. 1994) (emotional distress damages generally unavailable in contract actions)
- Crisci v. Sec. Ins. Co. of New Haven, 426 P.2d 173 (Cal. 1967) (insurance-breach liability for emotional distress where breach constituted a tort)
- Signal Cos. v. Harbor Ins. Co., 612 P.2d 889 (Cal.) (insurer's duty to defend principles)
- Fillipo Indus., Inc. v. Sun Ins. Co. of N.Y., 88 Cal. Rptr. 2d 881 (Ct. App.) (reasonableness of insurer's conduct evaluated as of the time decision was made)
- Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 108 Cal. Rptr. 2d 776 (Ct. App.) (bad-faith requires a conscious and deliberate act to frustrate insured’s rights)
- Careau & Co. v. Sec. Pac. Bus. Credit, Inc., 272 Cal. Rptr. 387 (Ct. App.) (distinguishing bad faith from honest mistake, negligence, or bad judgment)