Source: https://law.justia.com/cases/california/court-of-appeal/3d/219/625.html
Timestamp: 2019-04-22 08:47:54+00:00

Document:
Gordon, DeFraga, Watrous & Pezzaglia and Allan DeFraga for Plaintiff and Appellant.
Lillick & Charles, Stephen C. Johnson, Jeffrey A. Blair, Crosby, Heafey, Roach & May, James C. Martin and Kathy M. Banke for Defendants and Respondents.
Plaintiff and appellant, Gregory Marenger, filed an action on September 12, 1988, under Insurance Code section 790.03, subdivision (h), alleging that respondents refused to negotiate in good faith to effectuate a prompt, fair and equitable settlement of his personal injury action. Hughes Aircraft Company (hereafter Hughes) and Thermogenics, Inc. (hereafter Thermogenics), among other defendants, were sued by appellant for serious personal injuries he sustained in a "multi-vehicular" accident on November 2, 1980. Respondent Hartford Accident and Indemnity Company (hereafter Hartford) provided the primary policy of comprehensive liability insurance to Hughes and Thermogenics in the amount of $1 million, while respondents American Home Assurance Company (hereafter American) and Southeastern Aviation Underwriters (hereafter Southeastern) provided excess policy coverage.
Appellant's action for personal injuries was consolidated with others arising out of the same accident, and ultimately proceeded to trial. The jury found against appellant, but upon his motion the trial court found defendants Hughes and Thermogenics liable as a matter of law, and entered a [219 Cal. App. 3d 628] judgment notwithstanding the verdict, in favor of appellant on December 29, 1983. Hughes and Thermogenics filed an appeal from the judgment of the trial court. This court affirmed the judgment on September 14, 1987, and remanded the case to the trial court for a new trial on the issue of damages only.
Jury trial on the issue of damages in the underlying personal injury suit had not been held when appellant filed the present action against respondents, alleging that throughout the course of the litigation of the personal injury suit respondents "failed and refused and continue to fail and refuse, to attempt in good faith to effectuate a prompt, fair and equitable settlement of plaintiff's claim on which liability has been established in violation of their statutory duty as imposed upon them by § 790.03 (h) of the Insurance Code of the State of California." Appellant seeks damages for "additional costs and fees connected with continuing the litigation," and emotional harm which "will continue to accrue in the future."
Appellant filed the present action to avoid the consequences of Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal. 3d 287 [250 Cal. Rptr. 116, 758 P.2d 58] (hereafter Moradi-Shalal), in which our high court overruled its previous opinion in Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal. 3d 880 [153 Cal. Rptr. 842, 592 P.2d 329] (hereafter Royal Globe), to hold that a private civil cause of action is not available against an insurer for a violation of section 790.03, subdivision (h). (See also Zephyr Park v. Superior Court (1989) 213 Cal. App. 3d 833, 836 [262 Cal. Rptr. 106].) The court also determined that in "fairness to the substantial number of plaintiffs who have already initiated their suits in reliance on Royal Globe," its decision in Moradi-Shalal "will not apply to those cases seeking relief under section 790.03 filed before our decision here becomes final." (46 Cal. 3d 287, 305; see also Beatty v. State Farm Mut. Auto. Ins. Co. (1989) 213 Cal. App. 3d 379, 389 [262 Cal. Rptr. 79].) Appellant filed his action for unfair insurance practices after the Moradi-Shalal opinion was filed but before it became final. At that time, the liability of respondents' insured to appellant had been finally determined, but the issue of damages remained to be litigated.
[1a] The trial court sustained respondents' demurrer to appellant's action for unfair insurance practices (Ins. Code, § 790.03, subd. (h)) because the underlying personal injury suit is still pending. In this appeal, we must determine whether appellant's action is premature.
Appellant contends "that the language in Moradi-Shalal should be taken at face value," to mean that only a judicial determination of liability is a condition precedent to a section 790.03 action. It is appellant's position that Moradi-Shalal did not impose the additional requirement that the underlying action has been "concluded in all respects." Where, as here, liability of the insured has been finally determined and only the extent of damages remains an issue, appellant submits that his cause of action for unfair insurance practices has "fully accrued" and is not subject to demurrer as premature. We must disagree.
[1b] Where, as here, the liability of the insured has been conclusively established and only the issue of damages in the underlying suit remains to be litigated, we recognize that our high court's concerns with evidence of insurance and the quality of the insured's defense, while still meriting some consideration, are insignificant. Appellant's failure to conclude the damages element of his action against respondents' insured brings into play the remaining reasons for requiring predetermination, however.
[1d] Until final resolution of the entire underlying action, including the element of damages, respondent's duty to settle cannot be definitively assessed. In our view, a final determination of liability in the context of a Royal Globe action requires a judgment which is final, for res judicata purposes, as to both liability and damages. "The reason is apparent: unless the determination of liability and the amount of damages were finally determined in the res judicata sense, the insurer would not be collaterally estopped by the judgment from relitigating in the third party action facts relating to the question of liability and damages." (Nationwide Ins. Co. v. Superior Court, supra, 128 Cal.App.3d at p. 715; see also Taylor v. State Farm Fire & Casualty Co. (1985) 172 Cal. App. 3d 557, 560 [218 Cal. Rptr. 403].) We accordingly conclude that appellant's complaint for unfair insurance practices under section 790.03 is premature and was properly dismissed by the trial court. [219 Cal. App. 3d 633] The judgment is affirmed.
Racanelli, P. J., and Holmdahl, J., concurred.

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