On January 1, 2023, California enacted SB1155, a law setting parameters for reasonable time-limited settlement demands. In a prior blog post, Jordan Derringer and Michael Bean discussed the statute
Continue Reading New Time-Limited Settlement Demand Laws Need Testing in Court
This article was originally published in Daily Journal on January 4, 2023.
On January 1, 2023, a new California law, Code of Civ. P. § 999, et seq., took effect. This law sets forth various requirements that a policy “time-limited demand” must meet to justify a “bad faith refusal to settle” claim in the event the liability insurer does not accept it.
Continue Reading New California Law Impacts “Time-Limited Demands” in the Insurance Industry
In Yahoo Inc. v. National Union Fire Ins. Co. of Pittsburgh, — Cal. Rptr. 3d —;2022 Cal. LEXIS 6887; 2022 WL 16985647 (Nov. 17, 2022), the California Supreme Court applied established rules of policy interpretation and found that the definition of “personal injury” in Yahoo’s policy was ambiguous. The Court also determined that the rule of contra proferentem applied to a manuscript endorsement negotiated by two sophisticated parties, because the disputed language was standard insurance language. While the holding appears to be case specific, future questions may arise regarding the application of the rule of contra proferentem.
Over the past 10 years, policy limit settlement demands with myriad conditions have become the norm. In many instances, the conditions are imposed in the hope that the insurer will falter in its efforts to comply. Unless there was strict compliance with every condition, the claimants argued, the demand was rejected and the policy was “open.” Recently, however, California courts have begun to recognize common-sense limitations to these “gotcha” tactics. In 2021, Pinto v. Farmers Ins. Exch., 61 Cal. App. 5th 676 (2021) clarified that to be liable for a bad faith failure to settle, the insurer must have acted unreasonably. In Palma v. Mercury Ins. Co., 2022 WL 3592722, issued on August 23, 2022, the Court of Appeal expressed its distaste for gamesmanship that is designed to prevent a settlement that an insurer is attempting to consummate.
Continue Reading Negligence is Not Enough/Set-Up Tactics are Disfavored