Opinion ID: 2548554
Heading Depth: 3
Heading Rank: 4

Heading: The breach of the implied covenant of good faith and fair dealing by the plaintiffs, was a legal cause of injury, damage, loss or harm to the plaintiffs.

Text: As to Allstate's defense, the trial court delivered these instructions: Allstate has asserted a defense of intentional material misrepresentation by the plaintiffs. A misrepresentation is material if it concerns a subject reasonably relevant to the insurer's investigation and a reasonable insurer would attach importance to the fact misrepresented. Mere over-evaluation does not void a claim on a fire policy under a fraud and false swearing provision, because there must be deliberate over-statement with intent to deceive. An insured's over-valuing a fire loss due to mere opinion, mistake or error of judgment regarding quality, value or authenticity will not defeat an insured's recovery. An insured is bound by any intentional, material misrepresentation his or her agent made to the insured's insurance company whether or not the insured knew the agent made the misrepresentation. If you find there is contributory breach of the duty of good faith and fair dealing on the part of plaintiffs themselves which, combining with a breach of the duty of good faith and fair dealing by the defendants contributes as a legal cause in bringing about their injury, such contributory breach will result in a reduction of plaintiffs' recovery in an amount proportionate to plaintiffs' alleged bad faith. This will be calculated based upon your findings in the special verdict form. Following closing arguments by both sides, the trial court gave its final instructions, including this one: I've not intended by anything I've said or done or by any questions I've asked to suggest how you should decide the questions of fact, or that I believe or disbelieve any witness. If anything I've done or said seemed to so indicate, you must disregard it and form your own opinion. The purpose of the court's instructions is to instruct you in the applicable law so you may arrive at a just and lawful verdict. Whether some instructions apply will depend on what you find to be the facts. Even though I've instructed you on various subjects, including damages, you must not treat the instructions as indicating the court's opinion on how you should decide any issue in this case as to which party is entitled to your verdict. (Italics added.) After a 38-day trial, the jury returned a series of special verdicts, specifically finding that plaintiffs had made no intentional material misrepresentations with respect to the claim on their policy, they did not set fire to their own home, Allstate had breached the implied covenant of good faith and fair dealing, plaintiffs did not breach the covenant, and Allstate was responsible for 100 percent of the comparative bad faith. The jury awarded $1,797,300 in compensatory damages each to Fareed and Rashida Cassim. In addition, finding Allstate acted with oppression, fraud or malice, the jury also jointly awarded the Cassims $5 million in punitive damages. [3] The parties having stipulated to have the trial court sit as the trier of fact for the award, if any, of damages under Brandt, supra, 37 Cal.3d 813, 210 Cal.Rptr. 211, 693 P.2d 796, the trial court awarded the Cassims $1,193,533 in Brandt fees. In a split decision, the Court of Appeal reversed the judgment. The appellate court found Herzog's argument constituted prejudicial misconduct requiring reversal. One justice dissented, finding any misconduct was harmless. We granted review.