Opinion ID: 204907
Heading Depth: 1
Heading Rank: 1

Heading: Trishan's Claims for Breach of the Implied Covenant of Good Faith and Fair Dealing And For Bad Faith

Text: California law recognizes in every contract, including insurance policies, an implied covenant of good faith and fair dealing. Brehm v. 21st Century Ins. Co., 166 Cal.App.4th 1225, 1235, 83 Cal. Rptr.3d 410 (2008), as modified (citations omitted). In the insurance context the implied covenant requires the insurer to refrain from injuring its insured's right to receive the benefits of the insurance agreement. Id. (citation omitted). As a general rule . . . there can be no breach of the implied covenant of good faith and fair dealing if no benefits are due under the policy[.] Id. Summary judgment on Trishan's claim was proper because Trishan's failure to comply with the pilot warranty precluded a material issue of fact regarding coverage. See id. Trishan's bad faith claim fails under California's genuine dispute rule. [A]n insurer denying or delaying the payment of policy benefits due to the existence of a genuine dispute with its insured as to the existence of coverage liability or the amount of the insured's coverage claim is not liable in bad faith even though it might be liable for breach of contract. Id. at 1237, 83 Cal.Rptr.3d 410 (citation and internal quotation marks omitted). The linchpin of a bad faith claim is that the denial of coverage was unreasonable. McCoy v. Progressive W. Ins. Co., 171 Cal.App.4th 785, 793, 90 Cal.Rptr.3d 74 (2009). Before an insurer can be found to have acted in bad faith for its delay or denial in the payment of policy benefits, it must be shown that the insurer acted unreasonably or without proper cause. Id. (citation omitted) (emphasis in the original). Because California law does not establish that substantial compliance with the pilot warranty was sufficient for coverage, we conclude that no material issue of fact was raised regarding Federal's good faith assertion of its coverage position. See id. (Where there is a genuine issue as to the insurer's liability under the policy for the claim asserted by the insured, there can be no bad faith liability imposed on the insurer for advancing its side of that dispute.) (citation omitted) (emphasis in the original); see also Griffin Dewatering Corp. v. N. Ins. Co. of New York, 176 Cal.App.4th 172, 204, 97 Cal.Rptr.3d 568 (2009), as modified (explaining that the insurer's position was rooted in the literal language of the . . . exclusion, so the insurer was going to win if a court were to apply the literal language of the exclusion.). [18]