Opinion ID: 1117033
Heading Depth: 1
Heading Rank: 2

Heading: was insurer justified in rejecting plaintiff's claim presented after dismissal of the criminal action? was delay prejudicial?

Text: Plaintiff argues that after the arson charge was dismissed, insurer rejected his claim even though he offered himself for examination and that since insurer was not prejudiced by the delay, insurer should have accepted the claim and paid or otherwise acted upon it. ( Campbell v. Allstate Ins. Co., 60 Cal.2d 303, at p. 305 [32 Cal. Rptr. 827, 384 P.2d 155].) On this theory a clear and single question of law is presented. Was insurer obligated under the expanded Crisci doctrine to accept the claim or otherwise promptly act on it? Plaintiff argues that his failure to appear for examination when it was requested cannot be a valid defense unless the insurer was substantially prejudiced thereby. The burden of proving that a breach of a cooperation clause resulted in prejudice is on the insurer. ( Campbell, supra, at p. 306.) ( Northwestern Title Security Co. v. Flack, 6 Cal. App.3d 134, 141 [85 Cal. Rptr. 693]; Bergeron v. Employers' Fire Ins. Co., 115 Cal. App. 672 [2 P.2d 453]; Phillips v. Protection Insurance Co., 14 Mo. 220, 234-236; Joyce v. United Ins. Co., 202 Cal. App.2d 654, 662 [21 Cal. Rptr. 361, 17 A.L.R.3d 517].) Hickman v. London Assurance Corp., 184 Cal. 524 [195 P. 45, 18 A.L.R. 742] (not overruled) and other well reasoned cases hold that the clause in the policy upon which insurer at bench relies is a condition precedent to collection of a claim. Section 2071 of the Insurance Code says in pertinent part: No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with.... ( Claflin v. Commonwealth Insurance Company, 110 U.S. 81, 97 [28 L.Ed. 76, 82, 3 S.Ct. 507]; Restina v. Aetna Casualty & Surety Company (1969) supra, 306 N.Y.S.2d at p. 219.) Since the law abhors forfeitures it may be that the forfeiture of rights required by Hickman and other cases is not sound. However, proper perspective if good faith and fair dealing is the issue, would impel the court also to bear in mind that the law abhors penalties. There can be no question that a tort action with its loaded measure of damages is a penalty. Thus, the question presented applying the expanded Crisci doctrine narrows itself to whether the insurer, guided by advice of counsel, and acting under a clause drafted by the Legislature and interpreted by this court as a condition precedent, can be properly accused of bad faith and unfair dealing when it rejected the claim. Restina, cited above, is on all fours with the facts at bench, and although by an inferior court, relies upon Hickman. When another court seeking only to administer the law, relies upon the doctrine of Hickman, can this court which enunciated the doctrine, now say it was bad faith and unfair dealing for insurer to rely on it? Should this court decide that Hickman does not compel a forfeiture of plaintiff's rights, does it follow that the court must, under Crisci, find bad faith and unfair dealing and penalize the insurer for no reason other than that it follows the law? In the circumstances, would it be just to limit recovery to the amount of the policy, assuming insured can make the necessary proof? In Restina, the New York court said in pertinent part: There does not appear to be any New York State case law authority on this particular issue. However, in Hickman v. London Assurance Corp., 184 Cal. 524, ... the Supreme Court of California sitting en banc faced an identical situation as presented here, and it held that the constitutional immunity from self-incrimination did not absolve an insured from complying with the provisions of the insurance contract requiring the insured to submit to an examination under oath, even though the insured is at that time under indictment for arson for the burning of the property in question. The court further held that an insured's refusal to submit to such examination on those particular grounds constituted a breach of the contract and deprives the insured of any claim or cause of action against the insurer on the insurance contract. This court agrees with and adopts as its own the sound legal reasoning set forth in the Hickman case to the present case on this issue. The majority accept nonperformance by plaintiff, avoid Hickman and ignore Restina. They say: We conclude, therefore, that the duty of good faith and fair dealing on the part of defendant insurance companies is an absolute one. At the same time, we do not say that the parties cannot define, by the terms of the contract, their respective obligations and duties. We say merely that no matter how those duties are stated, the non-performance by one party of its contractual duties cannot excuse a breach of the duty of good faith and fair dealing by the other party while the contract between them is in effect and not rescinded. (Italics added.) Does this mean that irrespective of how well defined the obligations of plaintiff are, he can ignore them and still demand performance on the part of the other party? Under liberal rules of pleading it is required that a plaintiff in a breach of contract complaint make it clear that plaintiff has performed in all respects and defendant has not. It is respectfully suggested that the majority have advised an insurer that if it expects to avoid a Crisci or Fletcher lawsuit, there is only one safe course: Pay all claims and investigate afterwards, assuming, of course, payment doesn't waive that right. I would affirm the judgment. Respondents' petition for a rehearing was denied July 18, 1973.