Milhouse v. Travelers Commercial Insurance
2013 U.S. Dist. LEXIS 164037
C.D. Cal.2013Background
- Plaintiffs Milhouse owned a Yorba Linda home insured by Travelers; November 2008 fire caused total loss of dwelling and contents.
- Milhouses filed breach of contract and bad faith claims seeking policy benefits and punitive damages.
- Jury trial in August 2013 awarded breach of contract damages of $1,949,634 but found no bad faith or punitive damages.
- Court ordered two post-trial motions: Milhouses for new trial and prejudgment interest; Travelers for JMOL or remittitur/new trial.
- Court granted Travelers’ remittitur (or alternative new trial) and denied JMOL and Milhouses’ new-trial requests on contract and bad-faith issues.
- Court remitted total contract damages to $1,076,634 and noted mediation evidence and IRS co-payee issues.
- Status: remittitur/place for new trial on contract; prejudgment interest denied without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Remittitur appropriate for contract damages | Milhouses claim higher damages under policy terms | DW damages limited by policy and ARCP | Remittitur granted to $1,076,634 |
| ARCP endorsement applicability to damages | ARCP increases dwelling limit when elect to repair | ARCP only available after replacement exceeds dwelling limit | ARCP applies if insured elects to repair; damages include ARCP in rule |
| IRS co-payee impact on damages | IRS liens reduce recoveries under policy | IRS co-payee must be paid from benefits | IRS payment did not defeat recovery; court declined further reduction; remittitur reflects other damages |
| Admissibility of mediation statements | Mediation privilege should bar such evidence | Evidence needed for complete defense; due process requires | Admissible; waiver and due process rights supported admission |
| Correctness of actual cash value instruction | Jefferson definition required; ACA value misdefined | Parties contractually defined actual cash value; Jefferson can be bypassed | Court allowed replacement-cost-with-depreciation formula per contract; instruction not erroneous |
Key Cases Cited
- Jefferson Ins. Co. v. Superior Court, 3 Cal.3d 398 (Cal. 1970) (defines the default actual cash value in California)
- Cheeks v. Cal. Fair Plan Ass’n, 61 Cal.App.4th 423 (Cal. App. 1998) (limits of replacement cost/dep. where policy defines A.C.V.)
- Sierra Pac. Power Co. v. Hartford Steam Boiler Ins. Co., 665 F.3d 1166 (9th Cir. 2012) (role of contract while defining A.C.V. in context of policy terms)
- Cassel v. Superior Court, 51 Cal.4th 113 (Cal. 2011) (mediation privilege and due process considerations)
- Foxgate Homeowners’ Ass’n, Inc. v. Bramalea Cal., Inc., 26 Cal.4th 1 (Cal. 2001) (mediation confidentiality statute scope)
- Minthome v. Seeburg Corp., 397 F.2d 237 (9th Cir.1968) (remittitur framework and alternative new trial)
- Lewis Jorge Constr. Mgmt., Inc. v. Pomona Unified Sch. Dist., 34 Cal.4th 960 (Cal. 2004) (duty to foresee damages in contract breach)