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Introduction
Trying a bad
faith case is
just like trying
any other case
and then again,
it isn’t.
As in any trial,
the plaintiff’s
case of bad
faith against an
offending
carrier must be
presented in
terms of right
and wrong,
social
responsibility
and doing
justice by
restoring
balance between
insurer and
insured.
Yet, in a larger
sense, the bad
faith trial is
in its essence a
retelling of the
Biblical tale of
how David took
on Goliath. In
an insurance
transaction, the
carrier is the
party with the
power. The
carrier has the
power of the pen
when the
insurance
contract is
made, it has the
power of
knowledge when
the claim is
presented, it
has the power of
the purse when
it decides to
deprive its
insured of
benefits
rightfully owed.
This tale of the
use and abuse of
power is set on
a stage that is
at both
familiar, since
we all have
insurance, and
strange, as
insurance law
can seem arcane
and confusing.
When your tale
of how the
defendant abused
its power
position to the
detriment of its
trusting insured
comes through,
you will obtain
a great result
for your client.
Some tips . . .
Theme
The theme of
your case should
always be
focused through
the prism of
jury
instructions. It
is not enough to
point out that
your client is a
deserving David
and the
defendant an
offending
Goliath. You
must look to the
substantive law
that the judge
will provide the
jury in crafting
your thematic
frame.
BAJI 12.90-12.98
are the
foundational
pillars that you
should build
your bad faith
case upon from
the first day
you open the
file.
BAJI 12.90
states, “In
every insurance
policy there is
an implied
obligation of
good faith and
fair dealing on
the part of both
parties.” This
is the
well-spring from
which all your
arguments must
flow. Re-read
Comunale v.
Traders &
General Ins. Co.
(1958) 50 Cal.2d
654, 328 P.2d
198; Austero v.
National Cas.
Co. (1976) 62
Cal.App.3d 511,
133 Cal.Rptr.
107 and; Egan v.
Mutual of Omaha
Ins. Co. (1979)
24 Cal.3d 809,
169 Cal.Rptr.
691.
You must
thoroughly
understand the
inner-workings
of the implied
covenant of good
faith and fair
dealing if your
trial theme is
to be accepted
as persuasive.
Approach the
trial as a
lecture on the
principles of
insurance. Do
not assume that
either judge or
jury are more
than passingly
acquainted with
bad faith.
Always remember:
the touchstone
of insurance bad
faith is
reasonable
conduct.
You must explore
and enunciate
upon just where
the boundaries
of unreasonable
conduct begin.
Your theme
should consider
the nature of
insurance, its
purpose in
society, how
insurance is
meant to
protect, how the
law imposes
various duties
upon insurance
companies so
that they will
act honestly in
their dealings
with insureds.
Consider the
sensitivity of
the
insurer-insured
relationship and
develop that
sensitivity as
the basic lens
through which
all evidence
will be assessed
and weighed.
Voir Dire
During voir
dire, ask the
jury questions
regarding
insurance. Ask
why people buy
insurance, since
this has the
effect of
reinforcing the
purpose and
scope of the
insurance
agreement.
Bring home the
notion that
insurance is
there for
protection and
that given the
insurance
company’s
overwhelming
economic power,
any abuse during
the claims
process has
severe
consequences to
the insured and
justifies tort
penalties in
general and
punitive damages
in particular.
In other words,
insurance bad
faith law is not
about lawyers
getting rich or
their clients
receiving a
windfall. It is
about holding
insurance
companies
accountable
because it is
the public
policy of the
state that they
shall be
accountable to
their insureds.
Opening
Statement
The opening
statement should
develop your
theme in a
chronological
manner so that
the jury can
understand
exactly what
facts are
critical, where
they fall in
time and how the
juxtaposition of
documents and
positions taken
by the insurance
carrier support
the plaintiff’s
case.
Again, look to
your BAJI and
special jury
instructions in
determining
precisely what
facts and
evidence are key
to your case in
chief and where
the stress of
your opening
statement should
lie.
Percipient
Witnesses
Particularly in
a bad faith
case, hostile
witnesses
examined under
776 will make up
the bulk of your
case in chief.
You must utilize
the claims
examiner,
supervisor and
other claims
personnel to
illustrate just
what went wrong
with the claim.
These are the
witnesses who
will allow you
to present the
deficiencies in
claims handling,
the neglect,
abuse of power
and malice that
your case
revolves around.
Hostile
witnesses will
allow you to set
the stage for
your lay
witnesses and/or
your own experts
later in the
case.
Be aware that
your witness
examination will
often require
your referencing
multiple
documents
gleaned from
claim files,
correspondence,
etc. Electronic
presentation
software such as
Sanction or
Trial Director
is a must,
though you
should consider
blowing up ten
or so key
documents so
that you may
emphasize them
to the jury.
Experts
Generally,
plaintiffs will
utilize one or
more liability
and/and damage
experts in
presenting their
case.
A claims
handling expert
is preferred,
though not
essential, since
the case law
allows the jury
to determine on
its own what
constitutes
reasonable
versus
unreasonable
conduct.
In property loss
cases, there are
often multiple
layers of
liability
experts,
beginning with
technical
subjects such as
engineering,
construction and
the like,
providing
foundation for
the claims
handling expert
to opine of how
the adjusters
unfairly bent or
ignored evidence
to the carrier’s
advantage.
An economist may
or may not be
necessary for
fixing economic
loss. So far as
the net worth of
the carrier for
punitive damages
purposes, an
economist may be
used, or the
defendant may
well stipulate
to a number.
Insurance
carrier net
worth is
generally on
file with the
Department of
Insurance and a
certified copy
may be
subpoenaed to
trial. Also,
where the
carrier is
local, the chief
financial
officer may be
subpoenaed to
testify during
the punitive
damage phase.
Defenses
There are some
key defenses
that seem to
arise in every
bad faith case
and these need
to be dealt
with.
One is the
genuine dispute
doctrine, which
is detailed in
cases such as
Chateau Chambrey
Homeowners
Association v.
Associated
International
Ins. Co. (2001)
90 Cal.App.4th
335, 108
Cal.Rptr.2d 776
and Guebara v.
Allstate
Insurance
Company (9th
Cir. 2001) 237
F.3d 987. Learn
the intricacies
of this defense
and prepare to
address it.
Every effort
should be made
to reduce what
the carrier will
characterize as
a genuine
dispute into a
one-sided
problem with the
insurance
company unfairly
taking advantage
of the
situation,
misconstruing
policy language,
etc.
Watch for the
advice of
counsel defense.
During your case
work up you
should seek to
eliminate it
from the
equation by
propounding a
request for
admission. Where
the defense
seeks to utilize
advice of a
lawyer as a
defense, strive
to show how the
lawyer was not
providing legal
opinions, but
instead was
providing only
factual
analysis.
Challenge the
basis of the
lawyer’s
opinions, show
that the
opinions lack
basis or that
the lawyer in
fact changed his
or her opinions
to support the
plaintiff’s
case.
Closing Argument
Closing argument
and jury
instructions
should all be
wrapped up into
one neat
presentation.
The jury
instructions, as
the rules that
the jury will
apply to the
facts, should be
presented in a
Powerpoint
presentation to
give your
closing argument
a nice, logical
and orderly
structure with
an end point for
punitive damages
when they are
available, an
explanation
about what
punitive damages
are and why they
are deserved in
your particular
case.
In Sum
Don’t forget to
always provide a
trial brief to
your judge with
enough time so
that your jurist
can absorb the
factual and
legal basis for
your case. Do
not
assume that the
Court is
familiar with
insurance law;
often it is not
sufficiently
versed that you
can rest
comfortably.
Be prepared, be
thorough, be
persuasive. You
are on the right
side of the
argument.
Go get’em
LEARNING
CENTER
for more information:
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