NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

CARLOS MADRIGAL, ANNA TANG, RICHARD TANG, Plaintiffs-Appellees / Cross- Appellants,

v. ALLSTATE INDEMNITY CO., Defendant-Appellant / Cross- Appellee. Nos. 16-55839, 16-55863 D.C. No. 2:14-CV-04242-SS

MEMORANDUM *

Appeal from the United States District Court for the Central District of California, Los Angeles Suzanne H. Segal, Magistrate Judge, Presiding Argued and subm itted March 6, 2017 Pasadena, California Before: REINHARDT and NGUYEN, Circuit Judges, and EZRA,** District Judge.Allstate Indem nity Company (“Allstate”) appeals the district court’s denial 

# FILED

JUN 15 2017 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.

* * The Honorable David A. Ezra, United States District Judge for the District of Hawaii, sitting by designation.of its renewed m otion for judgm ent as a m atter of law (“JMOL”) and m otion for

new trial after a jury found Allstate guilty of bad faith refusal to settle under California law and awarded Carlos Madrigal, Richard Tang, and Anna Tang (collectively, “Appellees”) approxim ately $14 m illion in dam ages. Appellees also filed a cross-appeal as to the district court’s interest rate order. We have jurisdiction under 28 U.S.C. § 1291, and WE AFFIRM both of the district court’s orders. 1. Allstate argues that it was entitled to JMOL on the bad faith claim because – since Madrigal’s policy lim its dem and was prem ised on, inter alia , a requirem ent that Mr. Tang disclose his assets, and it is undisputed he never did – Allstate cannot be liable for bad faith where it could not accept the dem and due to factors “outside its control.” While it is true that bad faith liability cannot be im posed if the insurer does not have a reasonable opportunity to settle, there is substantial evidence in the record from which a reasonable jury could conclude that Madrigal’s dem and presented such an opportunity and that, at the point at which Allstate responded to the dem and and technically rejected it, the Tangs’ asset disclosure decision was not out of Allstate’s control. By its own wording, Allstate’s January 29, 2010 response to Madrigal’s dem and stated that Allstate was still awaiting the Tangs’ decision on the asset disclosure condition. Allstate cannot

Page 2 of 9soundly argue that its rejection of the dem and was com pelled by a factor that – by Allstate’s own implicit concession – was still under advisem ent by its insureds. Moreover, the record contains contradictory testim ony as to whether the Tangs

ever m ade a “decision,” m uch less whether they even com m unicated that to their insurance adjuster prior to Allstate’s January 29 response. We m ust affirm the district court’s denial of renewed JMOL because the evidence does not “perm it[ ] only one reasonable conclusion, and that conclusion is contrary to the jury’s verdict.” Wallace v. City of San Diego , 479 F.3d 616, 624 (9th Cir. 2006) (em phasis added). 2. A llstate also argues that it is entitled to JMOL because it could not accept Madrigal’s dem and, which did not expressly release Mrs. Tang, because of its obligation under California law to protect all of its insureds when settling claim s. See, e.g. , Coe v. State Farm Mut. Auto Ins. Co. , 136 Cal. Rptr. 331, 338 (Cal. Ct. App. 1971); Lehto v. Allstate Ins. Co. , 36 Cal. Rptr. 2d 814, 820 (Cal. Ct. App. 1994) (citations om itted). A reasonable jury, however, could conclude that Madrigal’s dem and was reasonable, triggering Allstate’s good faith duty to accept it, because the evidence did not perm it “ only one ” reasonable conclusion that the phrase “appropriate release” imperm issibly offered to only and exclusively release Mr. Tang. See Wallace , 479 F.3d at 624 (em phasis added); see also Samson v.

Page 3 of 9Transamerica Ins. Co. , 636 P.2d 32, 46 (Cal. 1981) (stating reasonableness of a

settlem ent dem and is often a fact question for the jury). A reasonable jury could have concluded that Madrigal’s dem and (1) was directed to Mr. Tang (the known insured), but (2) incorporated a condition that Allstate provide an “appropriate release” that included other insureds (whether disclosed or not) whom Allstate m ay have deem ed necessary for the resolution of the claim . We m ust affirm the district court’s denial of renewed JMOL because it is not “quite clear that the jury [ ] reached a seriously erroneous result” regarding the m eaning of “appropriate release” to find Madrigal’s dem and was reasonable. Hangarter v. Provident Life & Acc. Ins. Co. , 373 F.3d 998, 1005 (9th Cir. 2004) (internal quotations om itted). 3. A llstate argues that it is entitled to JMOL on the bad faith claim because it tendered the $100,000 policy lim its twice to settle Madrigal’s dem and in a reasonably tim e ly fashion. Allstate asserts that the tim eliness of its two policy lim its offers – one on January 29, 2010 and the other on February 19, 2010 – was reasonable as a m atter of law and precludes bad faith liability. Whether an insurer has acted unreasonably, and thus in bad faith, in rejecting a settlem ent dem and is a question of fact for the jury. Cain v. State Farm Mut. Auto. Ins. Co. , 121 Cal. Rptr. 200, 205 (Cal. Ct. App. 1975). Moreover, “the ultim ate test is whether the insurer’s conduct was unreasonable under all of the circumstances. ” Barickman v.

Page 4 of 9Mercury Cas. Co. , 206 Cal. Rptr. 3d 699, 708 (Cal. Ct. App. 2016) (em phasis

added) (citation om itted). Here, the jury had substantial evidence from which it could reasonably find that Allstate’s initial January 29 response, a rejection and counter-offer, was unreasonable because, by that date, Allstate’s claim s adjuster had: (1) found a previously-unidentified witness who contradicted Mr. Tang’s version of events and placed responsibility for the accident on Mr. Tang; (2) determ ined that Mrs. Tang could also be liable under em ployer-employee liability; (3) received m e dical bills and inform ation about Madrigal’s uninsured status that led the adjuster and her colleagues to believe the Tangs’ exposure could be well above the policy lim its and had advised the Tangs of the sam e; and (4) declined to discuss or clarify potential compliance issues – even in writing as the dem and letter allowed – with Madrigal’s attorney. Thus, it was reasonable for the jury to conclude that – when Allstate responded on January 29 with a rejection (and counter-offer) – Allstate breached the im plied covenant of good faith and fair dealing by “unwarrantedly refus[ing] an offered settlem ent where the most reasonable mannerof disposing of the claim [was] by accepting the settlem ent.” Crisci v. Sec. Ins. Co. of New Haven, Conn. , 426 P.2d 173, 176–77 (Cal. 1967) (em phasis added); see also Mercado v. Allstate

Page 5 of 9Ins. Co. , 340 F.3d 824, 827 (9th Cir. 2003) (“[T] he salient question . . . is whether

the insurer rejected the settlem ent in good faith.”). Because the bad faith verdict is “not against the great weight of the evidence,” we m ust affirm the district court’s denial of renewed JMOL on these grounds, as well. Hangarter , 373 F.3d at 1005. 4. A llstate argues that it is entitled to a new trial because the district court prejudicially om itted causation from the special verdict form . So long as the questions on the special verdict form are “adequate to obtain a jury determ ination of all the factual issues essential to judgm ent,” the trial judge has com plete discretion as to its form and content. Saman v. Robbins , 173 F.3d 1150, 1155 (9th Cir. 1999) (citing Mangold v. Cal. Pub. Utils. Comm’n , 67 F.3d 1470, 1475 (9th Cir. 1995)). Here, the special verdict form specifically asked: (1) whether Madrigal m a de a reasonable settlem e nt dem and for an am ount within policy lim its; and (2) whether Allstate’s failure to accept Madrigal’s settlem ent dem and was unreasonable. As discussed above, these are the elem ents of bad faith refusal to settle liability under California law. Accordingly, the special verdict form presented to the jury – which was labeled and identified as such by the parties and the district court, see Floyd v. Laws , 929 F.2d 1390, 1396 (9th Cir. 1991) (holding interrogatories subm itted to a jury were a special verdict because they were declared as such by the trial court) – coupled with the jury instructions, “fully and

Page 6 of 9fairly presented to the jury the issues it was called upon to decide” regarding

Allstate’s bad faith liability. Mateyko v. Felix , 924 F.2d 824, 827 (9th Cir. 1990). The district court did not abuse its discretion in denying Allstate’s m otion for a new trial on this ground. 5. In addition, Allstate as serts that it is entitled to a new trial because the district court prejudicially failed to instruct the jury that Madrigal’s dem and could not legally be “reasonable” unless it offered to release Mrs. Tang as well. Allstate takes issue with the district court’s instruction of the second elem ent of reasonable settlem ent dem ands – that the dem and “m ust include a proper release under the circum stances” – arguing that this was a “nebulous instruction” that did not accurately state California law. To the contrary, the jury instructions given by the district court fairly and adequately covered the issues presented at trial and correctly stated California law on the elem ents of bad faith refusal to settle. See Oviatt v. Pearce , 954 F.2d 1470, 1481 (9th Cir. 1992). Thus, we find that the district court did not abuse its discretion in denying Allstate’s new trial m otion on these instructional grounds either. 6. O n cross-appeal, Appellees contest the district court’s order determ ining the applicable prejudgm ent interest on the underlying state court judgm ent and the applicable postjudgm ent interest on the federal bad faith judgm ent. Because the

Page 7 of 9district court’s award of postjudgm ent interest turned on its interpretation of 28

U.S.C. § 1961, we review the district court’s order de novo

. Am. Tel. & Tel. Co. v. United Comput. Sys. Inc. , 98 F.3d 1206, 1209 (9th Cir. 1996). Appellees are correct that prejudgm ent interest on an underlying state court judgm e nt is an elem ent of dam ages in a bad faith refusal to settle action. See Consol. Am. Ins. Co. v. Mike Soper Marine Servs. , 951 F.2d 186, 191 (9th Cir. 1991) (affirm ing a dam ages award consisting of a stipulated underlying judgm ent plus accrued state law interest in a duty to defend and bad faith refusal to settle case); O sterneck v. Ernst & Whinney , 489 U.S. 169, 175 (1989) (generally stating that prejudgm ent interest is an elem ent of plaintiff’s com plete com pensation). However, in keeping with the compensatory nature of this interest, once judgm ent is entered in the federal case, the prejudgm ent interest on the underlying state court judgm e nt ceases to accrue. See Schneider v. Cty. of San Diego , 285 F.3d 784, 789 (9th Cir. 2002) (stating that prejudgm ent interest serves to com pensate for the loss of use of m oney due as dam ages “from the tim e the claim accrues until judgment is entered ” (quoting West Virginia v. United States , 479 U.S. 305, 310 n.2 (1987)) (em phasis added)). Once judgm ent is entered, the entire judgm ent, including interest on the underlying state court judgm ent, is subject to m andatory federal postjudgm ent interest governed by 28 U.S.C. § 1961. Air Separation Inc. v.

Page 8 of 9Underwriters at Lloyd’s of London , 45 F.3d 288, 290 (9th Cir. 1995). Under

Section 1961, postjudgm ent interest accrues at a single rate fromthe date judgm ent is entered for the duration of the accrual period. Soc’y of Lloyd’s v. Reinhart , 402 F.3d 982, 1005 (9th Cir. 2005) (“The U.S. post-judgm ent interest rate should apply as of the date of the entry of the judgm ent in the U.S. district court.”). Therefore, we find that the district court properly determ ined that Madrigal was entitled to: (1) prejudgm ent interest under California law on the stipulated judgm e nt from the date of the state court judgm ent to the date of the federal judgm e nt; and (2) federal postjudgm ent interest under Section 1961 on the entire federal judgm ent from the date of the federal judgm ent until it is satisfied. The

m otions for leave to file am icus curiae briefs filed on Septem ber 8, 2016, are granted. AFFIRMED.

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