Court Opinion

ID: 9720560
Source: CourtListenerOpinion
Date Created: 2023-08-26 08:36:02.179198+00
Date Added: 2024-06-11T18:24:19.525991
License: Public Domain

RATTIGAN, J.
I concur in reversal of the judgment awarding respondent his attorneys’ fees, because he did not sue appellant bank for breach of the written security agreement which provided for them. As to reversal of the judgment for actual and punitive damages entered on the jury’s verdict, I respectfully dissent.
Respondent did sue the bank for its breach of its oral contract to keep the pickup insured. His complaint alleged the oral contract, its breach by the bank, and that the breach had caused him actual damage in the *141amount of $2,005.90 (which, according to his proof, was the sum he was required to spend in having the uninsured pickup repaired). He proved the oral contract, which was made when an employee of the bank, at its branch office, promised him that the bank would renew the vehicle insurance if he did not. He testified to the employee’s promise, she corroborated him, and there was evidence that the promise was kept through more than one renewal of the insurance. The jury obviously found, from this substantial evidence, that the oral contract was made. Its breach, and respondent’s consequent damage in the amount of $2,005.90, are not disputed.
The bank’s implied covenant of good faith and fair dealing separately obligated it, by operation of law, as an incident of the oral contract pleaded and proved. (Universal Sales Corp. v. Cal. etc. Mfg. Co. (1942) 20 Cal.2d 751, 771 [128 P.2d 665]; Berkeley Lawn Bowling Club v. City of Berkeley (1974) 42 Cal.App.3d 280, 286 [116 Cal.Rptr. 762].) Respondent separately sued the bank for breach of this covenant, alleging $5,000 in separate damages by reason of his having become “sick” and “emotionally distressed” in consequence of the breach. Although such damages are not recoverable for breach of a contract as such (Mack v. Hugh W. Comstock Associates (1964) 225 Cal.App.2d 583, 588 [37 Cal.Rptr. 446]), they were recoverable here, in tort, for the bank’s separate breach of its implied covenant of good faith and fair dealing. (Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, 432-434 [58 Cal.Rptr. 13, 426 P.2d 173].) Respondent was entitled to elect between suing for these damages in contract or in tort. (Id., at p. 432.) He was accordingly entitled to recover them if he proved the breach of the implied covenant and the requisite causation.
The bank’s regional officers denied respondent’s claim for $2,005.90 on the strength of the written security agreement, which on its face obligated him to renew the vehicle insurance. They did this after an unexplained delay of several months, and without any knowledge of the facts of the oral contract or of its previous performance by the bank. There was evidence supporting the inference that these facts were intentionally concealed by one or more of the bank’s employees at the branch office. The bank’s in-house attorney testified that she recommended a settlement offer only after she learned of the oral contract from respondent himself.
The conduct of the branch-office employees, which must be imputed to the bank, amounted to more than the mere “resistance to an assertion of contract liability” mentioned in the majority opinion. It was not *142good-faith “resistance to an assertion” of the bank’s liability under the oral contract, but a bad-faith effort to conceal that liability from the responsible management of the bank by concealing the fact of the contract itself. The concealment frustrated respondent’s realization of the benefits of the contract. This is precisely the result which the bank’s implied covenant of good faith and fair dealing obligated it to avoid. (Universal Sales Corp. v. Cal. etc. Mfg. Co., supra, 20 Cal.2d 751 at p. 771; Berkeley Lawn Bowling Club v. City of Berkeley, supra, 42 Cal.App.3d 280 at p. 286.)
As the majority opinion points out, there was also evidence that respondent became nervous and upset and lost sleep. The source of that evidence attributed his condition to the bank’s failure to honor his claim for $2,005.90, which in turn resulted from the concealment mentioned above.
The sum of this evidence supports the verdict holding the bank liable in tort—not for its “resistance to an assertion” of liability in contract—for the $5,000 respondent pleaded and proved as actual damages for breach of the implied covenant of good faith and fair dealing. The additional award of punitive damages is supported by the same evidence. Punitive damages are recoverable because respondent was entitled to sue for breach of the covenant in contract or in tort. (4 Witkin, Summary of Cal. Law (8th ed. 1974) Torts, § 865, p. 3153.)
The bank does not contend on appeal that either amount awarded is excessive, and the trial court denied its motion for a new trial made on that ground. I do not perceive the instruction error it claims. I would affirm the judgment on the basis that the verdict is supported by respondent’s pleading and by substantial evidence.
A petition for a rehearing was denied August 24, 1978, and the opinion was modified to read as printed above. Rattigan, J., was of the opinion that the petition should be granted. Respondent’s petition for a hearing by the Supreme Court was denied September 20, 1978. Bird, C. J., was of the opinion that the petition should be granted.