VERY EASILY FIND IN CALIFORNIA - I COULD ADOPT YOUR [referring to the insurer's counsel] ARGUMENT THAT THERE WAS NO SUPREME COURT DECISION, THAT IT WAS - THERE WAS NO DECISION ONE WAY OR ANOTHER. I COULD ADOPT THAT. THE PROBLEM I HAVE IS THERE'S A SECOND ISSUE, THAT SINCE IT WAS UNSETTLED, AND FOLLOWING MY REASONING ALL ALONG, WAS IT UNREASONABLE NOT TO DEFEND WHILE THEY WENT AND GOT THE ANSWER." (Italics added.)
[24] Here is the relevant portion of the transcript:
"THE COURT: ... IN THAT CASE [referring to CalFarm] THEY [referring to the insurance company] PROVIDED A DEFENSE SO THEY [referring to the appellate court] SAID WAS THE CONDUCT OF PROVIDING A DEFENSE IN DISPUTING THE COVERAGE REASONABLE. ISN'T THAT WHAT THEY [not clear whether this refers to the insurance company or the appellate court] DID IN CALFARM?"
[25] There had been causes of action for fraud in the inducement of the written contract, but those were dropped.
[26] Here is the relevant portion of the transcript: "THE COURT: WHAT ABOUT IF PEOPLE WITH AUTHORITY FROM YOUR COMPANY COME IN AND SAY, OKAY, WE'RE GOING TO HAVE A GENTLEMEN'S AGREEMENT, AND LET'S GO FOR MY EXAMPLE THE WAY THAT THE PLAINTIFF WOULD LIKE TO HAVE IT, AND THAT IS, ALL FUTURE CLAIMS, AND WE DON'T GET INTO POLICY YEARS, AND THE WATER DISTRICT FILES THEIR LAWSUIT FOR INDEMNITY. CAN THEY THEN TURN AROUND AND GO, NEENER, NEENER, GOT YOU. FINGERS CROSSED BECAUSE WE HAVE AN INTEGRATION CLAUSE IN THE CONTRACT AND, YOU KNOW, YOU REALLY COULDN'T TRUST ANYTHING WE SAID AT THAT DARN MEETING BECAUSE UNLESS YOU GET IT IN WRITING, IT REALLY DOESN'T COUNT?"
[27] "MR. WILLIAMS: AND THE RELATED MOTION WAS NORTHERN 32 THAT DEALT WITH THE GENTLEMEN'S AGREEMENT.
"THE COURT: LET ME RUN IN THE BACK REAL QUICK. I THOUGHT I HAD THEM RIGHT HERE. ALL RIGHT. DO YOU WANT TO GO THROUGH THEM INDIVIDUALLY OR IS AN ANSWER TO ONE AN ANSWER TO ALL?
"MR. CRONIN: YOUR HONOR, I THINK I CAN CLEAR IT UP PRETTY QUICKLY. WHERE WE LEFT OFF, TO REORIENT THE COURT, WAS WE WERE GOING TO AMEND OUR THIRD AND FOURTH CAUSES OF ACTION ON THE FRAUD. WHAT WE'VE DECIDED TO DO IS WE'RE JUST GOING TO WITHDRAW THOSE CAUSES OF ACTION IN LIGHT OF THE COURT'S RULING IN CONNECTION WITH BAD FAITH. SO THOSE ARE NO LONGER AN ISSUE. AND COUNSEL WAS ADVISED, WHATEVER IT WAS, TWO WEEKS AGO, YOUR HONOR, OF THIS. WE STILL INTEND TO PRESENT TESTIMONY AND EVIDENCE RELATING TO THE GENTLEMEN'S AGREEMENT AND THE CIRCUMSTANCES SURROUNDING REPRESENTATIONS MADE AT THE MAY 20, 97, MEETING. BUT INSOFAR AS THE FRAUD AND THE INTENTIONAL MISREPRESENTATION AS STAND-ALONE CAUSES OF ACTION, WE'RE WITHDRAWING THEM." (Italics added.)
[28] To quote from a heading of the supplemental briefing filed by the insured March 10, 2009: "Northern's bad faith liability rests on its unreasonable refusal to defend the 1999 South Coast Lawsuit, which tortiously breached Griffin's 1996 policy, not the Houston Promise." (Original italics,