Opinion ID: 706879
Heading Depth: 2
Heading Rank: 4

Heading: The district court understood the standard of care for a

Text: 37 claims adjuster 38 Last, the Aceveses sought to introduce evidence that the standard of care that Allstate claims adjusters owed to the Aceveses did not depend on whether they were represented by counsel. This evidence would have helped them show that Allstate's adjusters improperly withheld information that Allstate should have disclosed, and relied instead on the Aceveses' counsel to disclose it to them. 39 The district court held the adjuster to the correct standard of care. Allstate owed the Aceveses a duty of good faith and fair dealing, to settle their claim without injuring their right to receive the benefits of their policy. See Egan, 24 Cal.3d at 818, 169 Cal.Rptr. at 695, 620 P.2d at 145. The Aceveses' evidence would only be relevant if Allstate, to fulfill its duty, needed to disclose the same information to them irrespective of whether they were represented by counsel. California law is not entirely clear on whether Allstate's standard of care depended on the Aceveses' representation by counsel. In such situations, a federal court is bound to consider all the available data and use its best judgment to rule as it thinks the California Supreme Court would rule. See State Farm Mut. Auto. Ins. Co. v. Davis, 937 F.2d 1415, 1418 (9th Cir.1991), appeal after remand, 7 F.3d 180 (9th Cir.1993). 40 We think the district court correctly interpreted the available data, California appellate court decisions and state insurance statutes, as indicating that the duty did vary. The California Insurance Code relieves insurers of certain duties during claim investigation and negotiation when the insured is represented by counsel. See, e.g., Cal.Ins.Code Secs. 2070.1 (requiring the insurer of a corrosive-soils loss to notify the insured thirty days before the expiration of the statute of limitations), 11580.2(k) (imposing the same duty on the insurer of an uninsured-motorist loss). There are also some circumstances in which an insured may not establish estoppel if represented by counsel, but may successfully prove estoppel if not represented. See, e.g., Wilhelm v. Pray, Price, Williams & Russell, 186 Cal.App.3d 1324, 1332, 231 Cal.Rptr. 355, 358 (1986). Under these circumstances, it was more prudent for the district court to predict that the California Supreme Court would not impose a fixed standard of conduct on insurers negotiating with represented and unrepresented insureds than to predict the opposite. 41 Having set the correct legal standard, the district court did not abuse its discretion in ruling the Aceveses' evidence was irrelevant. All the evidence the Aceveses sought to introduce would have shown that Allstate was less forthcoming to them after they hired an attorney. Allstate's conduct after the Aceveses retained counsel did not constitute a breach of its standard of care. 42 In short, we conclude the district court did not abuse its discretion in its ruling on all of the rejected evidence from which the Aceveses appeal. These appeals are the only challenges the Aceveses bring against the district court's post-trial findings and conclusions on the bad faith negotiation claim. We thus affirm this judgment by the district court. 43