Opinion ID: 764976
Heading Depth: 2
Heading Rank: 3

Heading: Bad faith and punitive damages

Text: 66 The district court granted summary judgment to American Casualty on Zweig's counterclaim for bad faith because it was ambiguous whether the sport or athletic contest/event language in the policy applied to bungee jumping, and American Casualty was therefore not unreasonable in denying coverage. 67 [A] court can conclude as a matter of law that an insurer's denial of a claim is not unreasonable, so long as there existed a genuine issue as to the insurer's liability. An insurer is liable for breach of the implied covenant of good faith and fair dealing if it acted unreasonably in denying coverage. 68 Lunsford v. American Guar. and Liability Ins. Co., 18 F.3d 653, 656 (9th Cir. 1994) (applying California law) (citation omitted). In this case, the district court concluded that American Casualty's actions were based on a reasonable construction of the policy. Therefore it did not act in bad faith and was entitled to summary judgment on that claim. Id. Zweig has not shown that American Casualty's construction of the policy was unreasonable, and we affirm the grant of summary judgment on the bad faith claim. 69 If the insurer did not act in bad faith, punitive damages are unavailable: Punitive damages may be awarded when the insurer breaches the covenant of good faith and fair dealing and is guilty of oppression, fraud or malice. Id. (quotations omitted). We also affirm the grant of summary judgment on the claim for punitive damages.