Yahoo! Inc. v. National Union Fire Insurance
19-16475
| 9th Cir. | Jun 23, 2021Background
- Yahoo sued National Union for breach of a liability insurance contract and breach of the implied covenant of good faith and fair dealing after National Union failed to defend/indemnify under a 2011 policy with a Deductible Coverage Endorsement.
- The district court granted partial summary judgment holding Yahoo was entitled only to thirty days’ interest on defense and settlement costs (reflecting the policy’s reimbursement timing) rather than the full value of those costs.
- A jury awarded Brandt attorney’s fees to Yahoo; National Union challenged the fee award, timeliness of billing-record disclosure, exclusion of expert testimony, and certain jury instructions.
- National Union argued Yahoo failed to segregate recoverable Brandt fees and was prejudiced by late billing-record production; Yahoo produced detailed billing records and elicited testimony from in-house counsel about fee apportionment.
- The Ninth Circuit reviewed these issues on appeal and affirmed the district court in all respects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Measure of contract damages for breach of duty to defend | Yahoo: entitled to full value of defense/settlement costs and prejudgment interest | National Union: damages limited to benefit-of-the-bargain (30 days’ reimbursement delay) | Court: Affirmed limitation to 30 days’ interest under the endorsement |
| Insurer reliance on reimbursement provision after breach | Yahoo: insurer cannot rely on reimbursement-term to avoid defense liability (citing Kennedy) | National Union: reimbursement term governs measure of damages here | Court: Kennedy does not bar using the reimbursement provision to measure contract damages in this context |
| Recoverability/segregation of Brandt fees | Yahoo: provided detailed billing records and testimony to apportion recoverable fees | National Union: fees not adequately segregated; award should be overturned | Court: Yahoo met Brandt/Cassim requirements; jury fee award stands |
| Prejudice from late billing records / exclusion of expert | National Union: late production prevented preparation and warranted expert testimony or other relief | Yahoo: no prejudice; testimony from in-house counsel adequate | Court: No abuse of discretion; National Union failed to show prejudice |
| Jury instruction on Brandt fee limitation | Yahoo: instruction was adequate | National Union: court omitted Brandt’s cautionary language excluding fees for non-policy recovery | Court: Instruction accurately stated recoverable fees; refusal to adopt defendant’s phrasing not an abuse |
Key Cases Cited
- Foster-Gardner, Inc. v. Nat’l Union Fire Ins., 959 P.2d 265 (Cal. 1998) (explains benefit-of-the-bargain measure for contract damages in insurer context)
- Lewis Jorge Constr. Mgmt., Inc. v. Pomona Unified Sch. Dist., 102 P.3d 257 (Cal. 2004) (contract damages aim to approximate agreed performance)
- Kennedy v. American Fidelity & Casualty Co., 217 P.2d 457 (Cal. Ct. App. 1950) (refuses insurer’s attempt to avoid duty-to-defend liability by invoking reimbursement right)
- Brandt v. Superior Court, 693 P.2d 796 (Cal. 1985) (entitles insured to attorney fees incurred to obtain policy benefits)
- Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 869 P.2d 454 (Cal. 1994) (distinguishes contract remedies from tort-based bad-faith deterrence)
- Cassim v. Allstate Ins., 94 P.3d 513 (Cal. 2004) (requires plaintiff to demonstrate apportionment of recoverable fees)
- Slottow v. Am. Cas. Co. of Reading, Penn., 10 F.3d 1355 (9th Cir. 1993) (addresses failure to segregate litigation expenses per Brandt)
- Passantino v. Johnson & Johnson Consumer Prods., Inc., 212 F.3d 493 (9th Cir. 2000) (issues not raised below typically are forfeited on appeal)