Plaintiff appealed from a judgment of the Superior Court of Mono County (California) which granted defendant’s motion notwithstanding the verdict in a case involving action on a surety bond.
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Overview
Defendant, a nonprofit corporation, was awarded compensatory and punitive damages against plaintiff, an insurance company, in an action on a surety bond for breach of implied covenant of good faith and fair dealing and violation of the Unfair Practices Act, Cal. Ins. Code § 790 et seq. On this second appeal, the primary issue was whether a surety was subject to liability in tort for a breach of an implied covenant of good faith and fair dealing either under common law or statutory duties imposed by the Unfair Practices Act, Cal. Ins. Code § 790.03 et seq. The court concluded that an obligee under a surety bond may bring an action against its surety for engaging in unfair claims settlement practices in violation of Cal. Ins. Code § 790.03(h). The court reversed and remanded the issue of compensatory damages and directed the determination of interest on the penal sum.
Outcome
The judgment with respect to the amount of compensatory damages was reversed and remanded with an instruction to subtract from the verdict award the total amount actually received by defendant. The court also directed a determination of interest on the penal sum of the bond. The judgment in all other respects was affirmed.