Court Opinion

ID: 9795544
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:31:02.6989+00
Date Added: 2024-06-11T08:30:15.260828
License: Public Domain

MOSK, J.
I concur with the result and much of the reasoning of the majority opinion and in the Chief Justice’s concurring opinion. I write separately to address an issue raised only implicitly by this case. As the majority state: “[T]he Jacobsens took the position that since Blue Ridge had determined the settlement was reasonable, it had an obligation to accept the settlement or ‘ “blow[]” ’ its policy limits. Hence, they sought to receive either the benefit of an unconditional settlement of an uncovered claim, or, in the alternative, should Blue Ridge fail to settle, the opportunity to make a bad faith claim.” (Maj. opn., ante, at p. 504.) In rejecting this position as fundamentally unfair, the majority suggest that the insured has basically two options when it disagrees with an insurer about whether to settle a case for which the insurer claims noncoverage: (1) to accept the settlement anyway, including the insurer’s reservation of rights that may make the insured liable; or (2) to assume its own defense, however financially burdensome that may be.
A third option, that would neither place the insurer in a “Catch-22” position (maj. opn., ante, at p. 502) nor place an undue burden on the insured *507is to allow the insured to refuse settlement and still retain the insurance defense, but, consistent with that refusal, waive any right to sue the insurance company for bad faith failure to refuse a settlement. This third option would not allow a windfall for the insured, but it would permit the insured the discretion of refusing a settlement it considers unfair and for which it may ultimately be financially responsible. Indeed, the insurer offered this option in the present case. This option is in harmony with the principle that the insured should truly consent to a settlement in such a situation. (See Val’s Painting & Dry-wall, Inc. v. Allstate Ins. Co. (1975) 53 Cal.App.3d 576, 588 [126 Cal.Rptr. 267].) Without this option, the insured is forced to choose between accepting an unfair settlement for which it may be liable and having to pay its own legal expenses up front. Although as a practical matter the insured may rarely exercise this third option, and did not seek to do so in this case, it should nonetheless have it.
Werdegar, J., concurred.