Opinion ID: 786763
Heading Depth: 2
Heading Rank: 3

Heading: Future Damages Jury Instruction

Text: 45 The district court instructed the jury that if it found that Defendants breached [their] duty of good faith and fair dealing, it could award Hangarter an amount of future contract benefits that you reasonably conclude after examination of the policy and other evidence that plaintiff would receive had the contract been honored by the insured. Defendants argue that the district court misstated California law in its jury instruction. Though Defendants failed to object to the jury instruction, they did not waive this argument. 10 46 Nonetheless, Defendants' argument is unavailing on the merits. In Egan v. Mutual of Omaha Ins. Co., 24 Cal.3d 809, 169 Cal.Rptr. 691, 620 P.2d 141 (1979), the California Supreme Court stated that: 47 We have never held, however, that future policy benefits may not be recovered in a valid tort cause of action for breach of the implied covenant of good faith and fair dealing.... Thus, in applying to these facts the general rule for fixing tort damages ..., the jury may include in the compensatory damage award future policy benefits that they reasonably conclude, after examination of the policy's provisions and other evidence, the policy holder would have been entitled to receive had the contract been honored by the insurer. 48 Id. at 149 n. 7 (emphasis added). The California Court of Appeal in Pistorius v. Prudential Ins. Co., 123 Cal.App.3d 541, 176 Cal.Rptr. 660 (1981) interpreted Egan as holding, generally, that future damages for bad faith claims based upon tort theories of liability are appropriate. Id. at 666 (Defendant's position that compensatory damages based on a contractual cause of action for breach of an implied covenant of good faith in a disability insurance policy cannot include a sum for future benefits is correct. However where the damages are based on a tort theory, the situation is different. (citation omitted) (emphasis added)). 49 It is well established that a state court's interpretation of its statutes is binding on the federal courts unless a state law is inconsistent with the federal Constitution. Adderley v. Florida, 385 U.S. 39, 46, 87 S.Ct. 242, 17 L.Ed.2d 149 (1966). The court in Pistorius reasonably interpreted Egan to apply to insurance bad faith claims generally. Though Defendants espouse a theory of tort law, nowhere mentioned within Egan, that would limit the application of tort damages in this case to present and past harms, the California Supreme Court in Egan was quite clear in emphasizing that it had  never held ... that future policy benefits may not be recovered in a valid tort cause of action for breach of the implied covenant of good faith and fair dealing and that when applying the general rule for fixing tort damages... the jury may include in the compensatory damage award future policy benefits. Egan, 169 Cal.Rptr. 691, 620 P.2d at 149 n. 7 (emphasis added). The California Court of Appeal's announcement of a rule of law `is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise....' Hicks v. Feiock, 485 U.S. 624, 630 n. 3, 108 S.Ct. 1423, 99 L.Ed.2d 721 (1988) (quoting West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237-38, 61 S.Ct. 179, 85 L.Ed. 139 (1940)). Defendants have not advanced any persuasive argument to suggest that the California Supreme Court would not have allowed future damages in Pistorius or the instant case. 50 The district court therefore did not misstate California law in instructing the jury that Defendants could be liable for future damages.