Can a plaintiff in a bad faith cause of action for breach of the covenant of good faith and fair dealing in refusing to pay benefits under a policy?

California, United States of America


The following excerpt is from California State Auto. Assn. Inter-Ins. Bureau v. Superior Court, 184 Cal.App.3d 1428, 229 Cal.Rptr. 409 (Cal. App. 1986):

A somewhat analogous situation was present in the recent case of Brandt v. Superior Court (1985) 37 Cal.3d 813, 210 Cal.Rptr. 211, 693 P.2d 796, in which a cause of action by an insured to secure benefits under an insurance policy was combined with a cause of action for damages for breach of the covenant of good faith and fair dealing in refusing to pay benefits under the policy in question. The essential issue was whether attorney fees incurred in prosecuting the first cause of action were recoverable in the second. The court encountered no problems with the tandem causes of action. In holding the attorney fees are recoverable as damages in the bad faith cause of action, the court stated that while a postjudgment allocation and award of attorney fees by the court would be preferable, the matter could be presented to the jury with appropriate instructions that the insured could recover fees only if the jury first found he was entitled to recover on his bad faith cause of action, that such fees were reasonably necessary to collect benefits due under the policy and that the fees awarded "must not include attorney's fees incurred to recover any other portion of the verdict." (Id., at p. 820, 210 Cal.Rptr. 211, 693 P.2d 796.)

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