A Video Revealing The Birth of the Tort of Bad Faith in Comunale

Read the full article at https://www.linkedin.com/pulse/video-revealing-birth-tort-bad-faith-comunale-barry-zalma-esq-cfe and see the full video and full text of the case at https://youtu.be/A0I909NN-nI and at https://rumble.com/c/c-262921 and at https://zalma.com/blog plus more than 3900 posts. 

The California supreme court in Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 328 P.2d 198, held the insurer liable for amounts over the policy limit because of its wrongful refusal to settle the underlying action. The opinion distinguishes the consequences of a wrongful refusal to settle and a wrongful refusal to defend, pointing out that as to the latter, the liability of the insurer is ordinarily limited to the amount of the policy plus attorneys’ fees and costs.

Mr. and Mrs. Comunale were struck in a marked pedestrian crosswalk by a truck driven by Percy Sloan. Mr. Comunale was seriously injured, and his wife suffered minor injuries. Sloan was insured by defendant Traders & General Insurance Company under a policy that contained limits of liability in the sum of $10,000 for each person injured and $20,000 for each accident. He notified Traders of the accident and was told that the policy did not provide coverage because he was driving a truck that did not belong to him. When the Comunales filed suit against Sloan, Traders refused to defend the action, and Sloan employed competent counsel to represent him. On the second day of the trial Sloan informed Traders that the Comunales would compromise the case for $4,000, that he did not have enough money to effect the settlement, and that it was highly probable the jury would return a verdict in excess of the policy limits. Traders was obligated to defend any personal injury suit covered by the policy, but it was given the right to make such settlement as it might deem expedient. Sloan demanded that Traders assume the defense and settlement of the case. Traders refused, and the trial proceeded to judgment in favor of Mr. Comunale for $25,000 and Mrs. Comunale for $1,250.

Comunale v. Traders & General Ins. Co., 328 P.2d 198, 50 Cal.2d 654, 68 A.L.R.2d 883 (Cal. 1958)

The Video covers the full text of the California Supreme Court decision.

ZALMA OPINION

This is the first case that created the tort of bad faith and allowed a person to obtain both contract and tort damages as a result of a bad faith refusal to defend and or settle a claim within policy limits. It us imperative that everyone interested in insurance claims know the full text of the case that started the creation of the tort of bad faith.