21st Century Insurance Company v. Superior Court

(Assignment of Rights Under Automobile Policies Based on a Stipulated Judgment Fails Due to Inability to Prove Damages As a Result of Election to Settle Without An Actual Trial and Judgment After Verdict)

In 21st Century Ins. Co. v. Superior Court, ____ Cal.App.4th ____ (September 10, 2015) the California Fourth District Court of Appeal granted 21st Century Insurance Company's (“21st Century”) petition for an order requiring the trial court to enter summary judgment in its favor in connection with an underlying lawsuit brought by assignee of the insured after the insured stipulated to a judgment with a covenant not to execute in the amounts of $3 million and $1,150,000. Thereafter, the plaintiff assignee filed an action against 21st Century for bad faith based on its failure to accept a purported policy limits demand of $150,000 made in connection with 3 different policies issued by 21st Century.

The parties' dispute arose out of the underlying lawsuit filed against defendant Cy Tapia, after a vehicle he was operating crashed and inflicted severe and eventually fatal injuries on his passenger, Cory Driscoll. Before his death, Driscoll's mother filed an action for damages on March 6, 2007. The parties established that the vehicle driven by Tapia was owned by his grandfather and that Tapia was entitled to $100,000 in liability coverage under an auto policy issued to Melissa McGuire (Tapia's sister), which listed the vehicle as an insured vehicle and listed Tapia as the driver of the vehicle. This policy was issued by 21st Century. In October 2007, 21st Century offered to settle the action for the policy limits of the McGuire policy in the amount of $100,000.

However, plaintiff also believed that Tapia might be covered under policies issued to his aunt and grandmother, each offering $25,000 in coverage and also issued by 21st Century. Accordingly, plaintiff communicated an offer to settle for $150,000, (i.e., the total policy limits of all three policies combined) in July of 2008. 21st Century contended that it never received this offer, and was not accepted within the time limit communicated by plaintiff's counsel. Nonetheless, in September 2008, 21st Century offered the full $150,000 in limits afforded by the combined three policies to settle the case against Tapia. Plaintiff did not accept this offer. But rather, sent a statutory offer to compromise pursuant to Code of Civil Procedure section 998 in the amount of $3 million for Cory...