Bench Trial Victory for Insurance Company Client in Bifurcated Bad Faith/Breach of Contract Case

Partner Valerie A. Moore successfully tried a case for our insurance company client who was sued by its insured for breach of contract and bad faith arising out of our client’s denial of defense and indemnity for an assault and battery committed by insured plaintiff in a 2011 bar fight. Plaintiff was arrested in 2012 and charged with two felonies (1) battery with serious bodily injury; and (2) assault with a deadly weapon or instrument other than a firearm. Plaintiff pled no contest to the assault with a deadly weapon charge and was convicted.

The victim of the assault filed suit against our insured for severe injuries suffered as a result of the 2011 bar fight. The insured tendered the defense to our insurer client claiming that he acted in self-defense and only pled no contest to the felony charge to avoid a strike on his record and a potentially longer sentence based on prior convictions. Our insurer investigated the claim under a reservation of rights and denied defense and indemnity because (1) the injuries were not the result of an “occurrence” or accident within the meaning of the insuring language in the policy; (2) the policy exclusion for violation of penal law and criminal acts conclusively barred coverage; and (3) the policy’s intentional acts exclusion barred coverage for the claims and lawsuit of the victim. As a result, the plaintiff sued our insurer client for breach of contract and bad faith.

On the night before the judge announced his decision, plaintiff reduced his settlement demand from $100,000 to $50,000. The demand was rejected by our client. Our client previously made a CCP §998 Offer to Compromise in the amount of $22,500 in 2015.

Trial in the Sacramento County Superior Court started on September 24, 2018. The court bifurcated the coverage issues for a court trial, to be followed by a jury trial on breach of contract and bad faith. Three days later, the judge found there was no potential coverage of the claims on three separate grounds: (1) There was no “occurrence” or accident; (2) the intentional acts exclusion bars coverage; and (3) the criminal acts exclusion bars coverage. The ruling on coverage effectively ends the case in favor or our client insurer.

September 29, 2018