Procedural Posture

Auto Draft

Plaintiff third-party claimants appealed an order of the Superior Court of Los Angeles County (California), dismissing their complaint against defendants, two insurers (collectively insurer), for intentional infliction of emotional distress, negligent infliction of emotional distress, and breach of the implied covenant of good faith and fair dealing. The claimants were involved in a traffic accident with a driver insured by one of the insurers.

Overview

The driver’s insurer was the parent company of the claimants’ insurer. At issue was whether an insurer owed a duty of good faith and fair dealing to a third party claimant whom it also insured, under an unrelated policy. In affirming, the court held that a private right of action by the claimants against the insurer was barred because the coincidental fact that the claimants were insured by the same insurer as the other party did not change the claimants’ position as strangers to the other party’s insurance policy and as adversaries to the insurer, who acted as the agent of the insurer’s other insured. The claimants had no relevant contractual relationship with the insurer. Thus, the insurer owed no duty of good faith and fair dealing to the claimants in settling their claims against the other party. Furthermore, where there was no duty of good faith and fair dealing, there was no duty that would give rise to a claim of negligent infliction of emotional distress. The court concluded that the insurer’s conduct did not reach the level of outrageousness necessary to support a cause of action for intentional infliction of emotional distress.

Outcome

Expert witness designation included employment lawyer for all parties during pretrial discovery. The court affirmed the trial court’s order.

Procedural Posture

Plaintiff insurer appealed a judgment from the Superior Court of Los Angeles County (California), which dismissed the insurer’s action following an order sustaining, without leave to amend, the demurrers of defendant alarm companies in an action claiming subrogation to losses arising from property damage incidents.

Overview

The insurer appealed a judgment dismissing its action following an order sustaining, without leave to amend, the demurrers of the alarm companies in an action claiming subrogation to losses arising from property damage incidents sustained by the insurer. The court affirmed the judgment of dismissal. The court held that the insurer did not allege that the alarm companies created the fires or perpetrated the burglaries. While the alarm companies may have been negligent in performance of their contractual duties, their negligence did not create the harm. Thus, the insurer made no claim that a duty was owed to it outside of that created by the contract, and no breach of duty was alleged other than a failure to render the contracted service. The court held that the insurer, which charged its premiums based on the extent of insurance coverage, was in the best position to spread the risks assumed.

Outcome

The court affirmed the judgment of dismissal because the alarm companies did not create the fires or perpetrate the burglaries, the insurer alleged no breach of duty other than a failure to render the contracted service, and the insurer was in the best position to spread the risks assumed.