Opinion ID: 2633511
Heading Depth: 2
Heading Rank: 3

Heading: Is Prejudgment Interest Pursuant to Code of Civil Procedure Section 3291 Available in the Present Case?

Text: Farmers argues that even if Pilimai may receive costs pursuant to Code of Civil Procedure section 998, he may not receive prejudgment interest under a related statute, Civil Code section 3291. That statute provides in pertinent part: In any action brought to recover damages for personal injury sustained by any person resulting from or occasioned by the tort of any other person, corporation, association, or partnership, whether by negligence or by willful intent of the other person, corporation, association, or partnership, and whether the injury was fatal or otherwise, it is lawful for the plaintiff in the complaint to claim interest on the damages alleged as provided in this section. [¶] If the plaintiff makes an offer pursuant to Section 998 of the Code of Civil Procedure which the defendant does not accept prior to trial or within 30 days, whichever occurs first, and the plaintiff obtains a more favorable judgment, the judgment shall bear interest at the legal rate of 10 percent per annum calculated from the date of the plaintiff's first offer pursuant to Section 998 of the Code of Civil Procedure which is exceeded by the judgment, and interest shall accrue until the satisfaction of judgment. ( Ibid. ) Farmers argues, among other things, that the present case is not an action brought to recover damages for personal injury sustained by any person resulting from or occasioned by the tort of any other person. . . . Although the plain language of the statute is consistent with Farmers's position, Pilimai argues in effect that the language of the statute is consistent with his own interpretation: he is bringing an action against Farmers for the purpose of recovering damages for personal injury resulting from the tort of another, i.e., an uninsured motorist. In other words, under Pilimai's reading, an action brought to recover damages for personal injury does not itself have to be a personal injury action  it may be a contractual action against one's own insurance company to recover compensation for a personal injury. Pilimai's argument fails for several reasons. First, it is not supported by the literal language of the statute. An action against an insurance company to recover policy benefits is not an action to recover damages for personal injury but rather damages for breach of contract, even if that contract is to provide compensation for personal injury. Moreover, the legislative history does not support his position. Civil Code section 3291 was characterized throughout the various analyses and digests leading up to its passage as pertaining to personal injury actions. (Legis. Counsel's Dig. Assem. Amends., Sen. Bill No. 203 (1981-1982 Reg. Sess.) Sept. 15, 1981; Sen. Democratic Caucus, Analysis of Sen. Bill No. 203 (1981-1982 Reg. Sess.) as amended Sept. 4, 1981, p. 2; Assem. Judiciary Com. Republican Analysis of Sen. Bill No. 203 (1981-1982 Reg. Sess.) as amended Aug. 19, 1981.) These references undermine Pilimai's position that the action itself does not have to be a personal injury action to fall within the scope of Civil Code section 3291. Pilimai's interpretation is also directly at odds with Gourley v. State Farm Mut. Auto. Ins. Co. (1991) 53 Cal.3d 121, 3 Cal.Rptr.2d 666, 822 P.2d 374 ( Gourley ). In that case, the plaintiff sued for breach of the covenant of good faith and fair dealing on the ground that the insurer refused in bad faith to fully compensate her for personal injuries suffered in an automobile accident with an uninsured motorist. We began by observing that [c]ourts generally agree that the purpose of section 3291 is to provide a statutory incentive to settle personal injury litigation where plaintiff has been physically as well as economically impaired, and thus it has been considered inapplicable to contractual disputes, business-tort losses and arbitration proceedings. ( Id. at p. 126, 3 Cal. Rptr.2d 666, 822 P.2d 374.) We held in Gourley that a suit for an insurer's tortious breach of the implied covenant of good faith and fair dealing was not a personal injury action that would permit recovery of interest pursuant to section Civil Code section 3291, but rather is an action primarily to recover economic loss caused by the tortious interference with a property right. ( Gourley, supra, 53 Cal.3d at p. 123, 3 Cal.Rptr.2d 666, 822 P.2d 374, italics omitted.) A first party suit for breach of the covenant against the insurer exists to assure the insurer makes prompt payment of claims to the insured. The substance of a bad faith action in these first party matters is the insurer's unreasonable refusal to pay benefits under the policy. ( Id. at p. 127, 3 Cal.Rptr.2d 666, 822 P.2d 374.) An `action against an insurer for bad faith is conceptually similar to an action for interference with contractual relations, for in both actions the primary interest of the plaintiff which is invaded by the defendant's wrongful conduct is the plaintiff's right to receive performance under an existing contract.' ( Id. at p. 129, 3 Cal.Rptr.2d 666, 822 P.2d 374.) Pilimai argues that this case is distinguishable inasmuch as it involves a direct suit for recovery of insurance proceeds for compensation of personal injury, whereas Gourley concerned a suit against an insurer for breach of the covenant of good faith and fair dealing. This distinction, however, does not work in Pilimai's favor. Implicit in our observation in Gourley that a bad faith suit is brought primarily to recover economic loss caused by the tortious interference with a property right ( Gourley, supra, 53 Cal.3d at p. 123, 3 Cal. Rptr.2d 666, 822 P.2d 374, italics omitted), is the notion that the right to recover damages from an insurer based on an insurance policy is a contractual right or property right, and not a personal injury action, even when the insurance is for compensation for personal injury. Although in the present case, as in Gourley, the insurance policy was compensating plaintiff for personal injuries, the money the insurer owed the insured was not the result of personal injury inflicted by the insurer but of a contractual obligation that the insurer assumed. Thus, we conclude that an action brought to recover damages for personal injury sustained by any person resulting from or occasioned by the tort of any other person within the meaning of Civil Code section 3291 must be a personal injury action sounding in tort, and does not include an action for breach of an insurance contract. Therefore, Pilimai may not recover prejudgment interest pursuant to that statute.