Court Opinion

ID: 9797327
Source: CourtListenerOpinion
Date Created: 2023-08-31 04:18:23.263061+00
Date Added: 2024-06-11T08:54:27.091456
License: Public Domain

KENNARD, J.
—I dissent.
The majority holds that comparative fault principles have no application to a policyholder’s tort action against its liability insurer for unreasonable failure to settle a third party’s suit against the policyholder. In so ruling, the majority denies juries in these insurance bad faith actions the ability to equitably apportion the policyholder’s loss according to the respective fault of all parties responsible for that loss. I disagree.
As this court has stressed, “the ‘comparative fault’ doctrine is a flexible, commonsense concept, under which a jury properly may consider and evaluate the relative responsibility of various parties for an injury (whether their responsibility for the injury rests on negligence, strict liability, or other theories of responsibility), in order to arrive at an ‘equitable apportionment or allocation of loss.’” (Knight v. Jewett (1992) 3 Cal.4th 296, 314 [11 Cal.Rptr.2d 2, 834 P.2d 696], italics added.) The comparative fault doctrine is flexible enough to encompass a tort action against an insurance company *418for breach of a policy’s implied covenant of good faith and fair dealing (commonly known as an insurance bad faith action), and the argument in favor of equitable apportionment is as compelling in this setting as in others this court has considered. Refusing to recognize comparative fault in this context sanctions the harsh, one-sided, all-or-nothing verdicts that this court has frequently criticized. As one commentator puts it: “Holding insurers wholly liable for damages for which they are only partly responsible, while allowing insureds to recover for self-inflicted harm, offends all notions of equity and fairness.” (Richmond, The Two-way Street of Insurance Good Faith: Under Construction, But Not Yet Open (1996) 28 Loy. U. Chi. L.J. 95, 140, fn. omitted.)
The majority also holds that the insurance company’s comparative fault defense in this case was flawed “[a]s a factual matter.” (Maj. opn., ante, at p. 408.) Given its primary holding that a comparative fault defense is unavailable as a matter of law in this entire class of insurance bad faith tort actions, the majority’s purpose in discussing these factual matters is obscure. In any event, I disagree that the evidence in this case fails to support the jury’s verdicts finding comparative fault.
I
In Li v. Yellow Cab Co. (1975) 13 Cal.3d 804 [119 Cal.Rptr. 858, 532 P.2d 1226, 78 A.L.R.3d 393] (Li), this court abolished the common law doctrine of contributory negligence, under which a plaintiff was denied any remedy for an injury proximately caused by the defendant’s negligence if the plaintiff’s own conduct involved an unreasonable risk of self-injury and was also a contributing cause of the plaintiff’s injury. In place of the harsh, all-or-nothing contributory negligence doctrine, this court adopted a “general scheme of assessment of liability in proportion to fault.” (Id. at p. 825; see also Daly v. General Motors Corp. (1978) 20 Cal.3d 725, 736-737 [144 Cal.Rptr. 380, 575 P.2d 1162]; American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 591 [146 Cal.Rptr. 182, 578 P.2d 899].)
Under the comparative fault system, it is normally a partial defense to a tort claim that the plaintiff’s own “fault” was a contributing cause of the injury for which the plaintiff seeks damages. A policyholder’s claim against an insurance company for breach of a policy’s implied covenant of good faith and fair dealing sounds in tort. (Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 574-575 [108 Cal.Rptr. 480, 510 P.2d 1032].) Therefore, comparative fault should provide a partial defense to a bad faith claim against an insurance company, or, stated otherwise, a jury deciding a bad faith claim *419should be instructed to equitably apportion the policyholder’s loss according to the respective fault of the insurance company and the policyholder. In insurance bad faith tort actions, as in other tort actions this court has considered, there is no sound reason to conclude that a “common sense determination of proportional fault or proportional responsibility will be beyond the ken of . . . juries.” (Safeway Stores, Inc. v. Nest-Kart (1978) 21 Cal.3d 322, 332 [146 Cal.Rptr. 550, 579 P.2d 441].) Here also, apportioning liability according to fault is preferable to an all-or-nothing outcome “from the point of view of logic, practical experience, and fundamental justice.” {Li, supra, 3 Cal.3d 804, 808.) Simply put, the law should not allow a policyholder to shift to its insurance company the entire burden of damages for which the policyholder is partly responsible.
Of course, liability insurance exists in large measure to protect policyholders from the consequences of their own improvident conduct, and in this sense it is neither unfair nor uncommon for an insurance carrier to bear the full financial burden of a policyholder’s careless conduct. But the carrier’s obligation is not unbounded; the policy defines and limits the scope of the insurance company’s responsibility. Although the carrier is required to indemnify the policyholder for the consequences of improvident conduct within the terms of the policy’s coverage provisions, the policyholder should not be permitted to add to the carrier’s burden by inflating the loss through additional improvident conduct outside the terms of the insurance bargain. To add this extra load to the carrier’s burden is, in essence, to judicially enlarge the carrier’s obligation without its consent.1
The majority never pauses to ask whether, in a policyholder’s tort action against its insurance company for unreasonably failing to settle a third party claim, the jury should be permitted to equitably apportion the policyholder’s loss according to the respective fault of the insurance company and the policyholder. The majority never frames the issue this way because it spends most of its energy considering and rejecting the concept of “comparative bad faith,” a somewhat novel variant of comparative fault.2 Almost as an afterthought, the majority also rejects the defense of comparative negligence. The *420majority’s rejection of both comparative bad faith and comparative negligence necessarily means that equitable apportionment of loss is not permitted in insurance bad faith actions based on failure to settle third party suits.
In rejecting comparative fault, the majority argues primarily that the defense of comparative bad faith is conceptually flawed because an insurance company’s breach of the implied covenant of good faith and fair dealing “is governed by tort principles” whereas a policyholder’s breach of the same covenant “is not a tort” and thus “an insurer’s breach of the covenant of good faith and fair dealing is not directly comparable with the insured’s contractual breach.” (Maj. opn., ante, at p. 402.) The majority insists that allowing a defense of comparative bad faith “misleadingly equates an insured’s contractual breach of the reciprocal covenant of good faith and fair dealing with an insurer’s tortious breach of the covenant” and “is confusing and inconsistent insofar as it acknowledges an insured’s breach of the covenant is not actionable in tort, but nonetheless can give rise to tort consequences because the insurer may assert it as a defense in a bad faith action to lessen responsibility for its own tortious conduct.” (Maj. opn., ante, at pp. 406-407, fn. omitted.)
In so arguing, the majority badly misses the point of comparative fault. Comparative fault is not about offsetting equivalent tort claims that parties have against each other for damages each has suffered. Rather, comparative fault is about the equitable apportionment of a single loss that only one of the parties has suffered. In the comparative fault context, it is not necessary that the plaintiff’s fault be “directly comparable with” the defendant’s fault. Nor is it necessary that the party who suffered the loss at issue engaged in conduct that breached a duty to the other party, resulted in loss to the other party, or would be legally actionable in tort if it did result in loss to the other party.
The source of the majority’s confusion may be traced back to the term “contributory negligence.” As the late Dean Prosser has explained, “It is perhaps unfortunate that contributory negligence is called negligence at all. ‘Contributory fault’ would be a more descriptive term. Negligence as it is commonly understood is conduct which creates an undue risk of harm to others. Contributory negligence is conduct which involves an undue risk of harm to the actor himself. Negligence requires a duty, an obligation of *421conduct to another person. Contributory negligence involves no duty, unless we are to be so ingenious as to say that the plaintiff is under an obligation to protect the defendant against liability for the consequences of the plaintiff’s own negligence.” (Prosser & Keeton on Torts (5th ed. 1984) § 65, p. 453, fns. omitted.)
What Dean Prosser says of contributory negligence is equally true of comparative negligence, comparative bad faith, and indeed of comparative fault in all its varieties as applied to a plaintiff. Because a plaintiff’s comparative fault is conduct that contributed to the plaintiff’s own loss, it is conduct that has resulted in self-inflicted harm. Because a plaintiff’s comparative fault is invoked only to prevent the plaintiff from shifting all of the plaintiff’s own loss onto another party, the plaintiff’s conduct need not involve breach of any duty owed to another. It is sufficient that the plaintiff’s conduct involved an unreasonable risk of self-inflicted injury and is at least partly responsible for the injury suffered. Thus, comparative negligence is self-directed negligence and comparative bad faith is, in essence, self-directed bad faith. Comparative bad faith means only that in determining whether a policyholder has acted unreasonably during third party litigation, a jury may properly consider the policyholder’s contractual obligations to the carrier under the policy. To avoid confusion occasioned by the terms “negligence” and “bad faith,” it would be better to use the term comparative fault as a substitute for both.
In real life situations, of course, conduct frequently involves an unreasonable risk of harm to both the actor and others. For example, careless driving likely to result in a collision is fault that is both self-directed and other-directed, because a vehicle collision may injure not only the careless driver but also the innocent drivers of other vehicles, as well as passengers and pedestrians. But if one driver sues another for injuries suffered in a collision, it is not essential to comparative fault as a defense that the plaintiff’s own conduct risked harm to others or breached a duty owed to others. For example, a partial defense of comparative fault may be based on the plaintiff’s failure to wear a seat belt (see Housley v. Godinez (1992) 4 Cal.App.4th 737 [6 Cal.Rptr.2d 111]), conduct that creates no risk of harm to others and breaches no duty owed to others, but merely creates an unreasonable risk of self-injury.
The same principles should apply to liability insurance litigation. When a third party sues a policyholder, the suit creates a risk of financial loss for both the policyholder and its liability carrier. The policyholder risks the amount of any deductible or self-insured retention, plus any amount by *422which the third party’s recovery exceeds the policy’s liability coverage. The carrier risks the amount of the liability coverage it is contractually obligated to provide. Just as drivers sharing a highway have a common interest in avoiding a collision, a policyholder and its liability carrier have a common interest in avoiding or minimizing liability in a third party action. Any litigation misstep by either policyholder or carrier that increases the likelihood or the size of an adverse judgment threatens harm to the interests of both. For purposes of a carrier’s partial defense of comparative fault, it should not be essential that a litigation misstep by the policyholder breached a duty owed to the carrier that would be actionable in tort. For purposes of the comparative fault defense and equitable apportionment of a loss suffered by the policyholder alone, it should be sufficient that the policyholder’s misstep created an unreasonable risk of self-injury in the form of an adverse verdict in the third party action.
The majority betrays its confusion by its reliance on Agricultural Ins. Co. v. Superior Court (1999) 70 Cal.App.4th 385, 389 [82 Cal.Rptr.2d 594], a Court of Appeal decision that did not involve a comparative fault defense, but the assertion of a cross-claim for “reverse bad faith.” The Court of Appeal itself correctly recognized that “the two issues pose significantly different considerations.” (Id. at p. 396, fn. 3.) By relying on this decision, the majority misleadingly equates bad faith as a form of comparative fault with bad faith as a basis for a claim or cross-claim, although the two share almost nothing except the “bad faith” label. When a policyholder sues its insurance carrier for bad faith, allowing the carrier to assert bad faith as a form of comparative fault merely permits the jury to equitably apportionment the damages suffered by the policyholder according to the respective fault of the carrier and the policyholder. The focus of the comparative bad faith inquiry is the extent to which the policyholder’s damages should be deemed self-inflicted. By contrast, an insurance carrier asserting a bad faith cross-claim is seeking damages for a loss the carrier has suffered, rather than equitable apportionment of a loss the policyholder has suffered. Unlike a partial defense of comparative fault, a cross-claim must meet all the requirements of an independent cause of action. For a cross-claim in tort, it is essential that the cross-defendant have owed a duty to the cross-plaintiff, that the cross-defendant have breached that duty, and that breach of that duty constituted a tort. For a partial defense of comparative fault, none of these elements is required.
Finding the majority’s reasoning conceptually flawed and unpersuasive, I do not join in its holding. Instead, I would hold that the comparative fault system inaugurated by Li, supra, 13 Cal.3d 804, encompasses a policyholder’s tort action against its liability carrier for breach of the policy’s implied *423covenant of good faith and fair dealing. In this context, comparative fault includes a policyholder’s failure to exercise ordinary care in the preparation and trial of third party litigation when that failure is a legal cause of all or part of the adverse third party judgment in excess of policy limits. The jury in the bad faith action should be instructed that in determining whether the policyholder exercised ordinary care during the third party litigation, the jury should consider the policyholder’s contractual responsibilities under the terms of the liability insurance policy.
n
The other reasons that the majority offers for rejecting equitable allocation of loss under the comparative fault doctrine all relate to the particular facts of this case. Accordingly, I summarize those facts.
In June 1987, 35-year-old Michael Hubert broke his neck when he jumped on a water slide, called Slip ’N Slide, manufactured by Kransco, a California corporation. When Hubert sued Kransco in Wisconsin, where the injury occurred, Kransco tendered defense of the action to its primary liability carrier, American Empire Surplus Lines Insurance Company (AES), which assumed the defense. Because Kransco had a $100,000 self-insured retention under the policy, decisions regarding defense and settlement were made jointly by Kransco and AES.
The attorney representing Kransco at first thought there was a good chance of a defense verdict because Hubert had disregarded various warnings printed prominently on the Slip ’N Slide. In the event of liability, he thought compensatory damages might be relatively modest because the seriousness of Hubert’s injuries was unclear.
During discovery, Hubert served Kransco with interrogatories asking, among other things, whether Kransco knew of prior Slip ’N Slide accidents resulting in cervical injuries to adults. The interrogatories required Kransco to diligently inquire among its agents and employees to elicit all available information. Kransco’s in-house counsel, Stuart Schneck, prepared answers in which Kransco denied knowledge of any such prior accidents. Schneck affirmed that he had “made a due and diligent inquiry of [Kransco’s] agents and employees with a view to eliciting all available information for the purpose of placing [himself] in a position to fully answer these interrogatories.” This affirmation was false. Schneck had not spoken to Steven Schneider, Kransco’s vice-president in charge of the redesign and manufacture of the Slip ’N Slide, who knew of two prior cervical injuries to adults.
The falsehood came to light during a conversation between Schneider and the attorney representing Kransco in the Wisconsin litigation. At this attorney’s insistence, Kransco prepared an amended answer admitting knowledge *424of two accidents in which the Slip ’N Slide had caused cervical injury to an adult. One accident had resulted in the user’s death; the other accident had left the user a quadriplegic and he had accepted $1.5 million in settlement of his claim against Wham-O, the corporation from which Kransco had acquired the rights to manufacture the Slip ’N Slide. The amended response contained a new falsehood, putting the date of one accident much earlier than it was.
While the Wisconsin trial was in progress, Hubert offered to settle for $750,000. Kransco wanted to accept and agreed to contribute its $100,000 self-insured retention, but AES thought the offer was too high in light of the potential for a defense verdict and the doubts about the seriousness of Hubert’s injuries. AES counteroffered for $450,000, which Hubert rejected. During these midtrial settlement negotiations, AES was aware of Kransco’s false interrogatory answers but apparently misjudged their significance.
The trial proceeded, and Hubert introduced evidence of Kransco’s false and misleading interrogatory answers. In his summation to the Wisconsin jury, Hubert’s counsel used this damaging evidence to good effect. He argued that Kransco should be punished because it knew when it reintroduced the Slip ’N Slide that the product was inherently and unreasonably dangerous as shown by its knowledge of the prior adult cervical injuries, one fatal and the other catastrophic. Hubert’s counsel argued that the false interrogatory answers were part of a plan by Kransco to cover up its own knowledge of the Slip ’N Slide’s dangerous propensities. As further evidence of Kransco’s supposed arrogance and mendacity, Hubert’s counsel pointed to the amended interrogatory answer’s incorrect dating of one of the prior accidents, which counsel suggested was an attempt by Kransco to diminish tlie significance of this incident by making it appear more remote in time. The Wisconsin jury awarded Hubert $12.3 million in damages, of which $10 million was punitive damages.
Kransco then brought this action in California against AES, alleging that AES had breached the implied covenant of good faith and fair dealing by unreasonably failing to accept Hubert’s settlement offer. Kransco sought as damages the amount by which the Wisconsin judgment exceeded the coverage provided by AES’s policy, plus interest. Instructed on comparative fault principles, the California jury returned verdicts finding that although AES had unreasonably refused the midtrial settlement offer, Kransco was also at fault in submitting the false interrogatory answers. Finding that each party’s fault was a legal cause of the excess verdict, the jury apportioned fault 90 percent to Kransco and 10 percent to AES.
*425Concluding that it had erred in instructing the jury on comparative fault, the trial court granted Kransco’s motion for judgment notwithstanding the verdict and ordered judgment for Kransco for the full amount of compensatory damages found by the jury. On appeal, the Court of Appeal affirmed the judgment.
The majority asserts that comparative fault cannot apply on these facts because AES was aware of Kransco’s false interrogatory responses when it rejected Hubert’s settlement offer and so “Kransco’s litigation misconduct was not a factual cause of AES’s decision to reject Hubert’s midtrial settlement offer . . . .” (Maj. opn., ante, at p. 409.) Here also, the majority displays a misapprehension of comparative fault principles: The issue is not apportionment of fault for the failure to settle, it is apportionment of fault for the excess judgment.
To understand why this is so, examples from other tort liability contexts may be helpful. Suppose, for example, that the driver of one vehicle sues the driver of another vehicle for injuries sustained in a collision. Suppose further that the evidence at trial reveals that the defendant drove carelessly and that the plaintiff drove carefully but failed to wear a seat belt. Although the plaintiff’s failure to wear a seat belt in no sense caused either the defendant’s careless driving or the collision, it nonetheless may provide the basis for a comparative fault apportionment if the evidence reveals that the plaintiff’s injuries would have been less severe had the plaintiff worn a seat belt. (Housley v. Godinez, supra, 4 Cal.App.4th 737.)
To take another example, suppose the driver of a vehicle is injured when his vehicle leaves the roadway and overturns. The driver sues the vehicle’s manufacturer, claiming negligent vehicle design caused the rollover, and the manufacturer asserts comparative fault, claiming that the plaintiff negligently drove the car off the roadway. The comparative fault defense is permitted even though the plaintiff’s careless driving in no sense caused or contributed to the defendant’s defective design of the vehicle. (See Daly v. General Motors Corp., supra, 20 Cal.3d 725, 736-737.)
As these examples illustrate, the comparative fault inquiry has always been understood to include all fault that contributed to the particular injury or harm at issue, and never before has a defendant been required to show that the plaintiff’s fault affected the defendant’s own conduct. If this requirement does not exist in other comparative fault situations, why does the majority insist on it here? Nothing about insurance bad faith litigation justifies this novel requirement. The majority’s reasoning presses back into *426service the “last clear chance” doctrine that this court expressly abolished in Li, supra, 13 Cal.3d 804, 826. Under that repudiated doctrine, a defendant in an action for negligence could not assert the plaintiff’s self-directed negligence as a defense if the defendant had the final opportunity to avert the harm. Similarly, the majority makes comparative fault unavailable as a defense because the insurance company had the final opportunity to avert an excess verdict by accepting a reasonable settlement offer.
It is true, of course, that there would have been no excess verdict in the Wisconsin litigation had AES agreed to accept Hubert’s settlement offer. But the same may be said of the other hypothetical situations just discussed. In the first situation, the plaintiff not wearing a seat belt would have suffered no injury had the defendant not driven carelessly. In the second situation, the plaintiff who carelessly drove off the roadway would have suffered no injury had the manufacturer not defectively designed the vehicle to easily overturn. But a defendant’s ability to prevent all of the harm at issue by acting with proper care has not been considered a barrier to application of comparative fault in any other setting.
The purpose of comparative fault is to equitably distribute loss among the responsible parties in proportion to their respective fault. To achieve that end, the loss should be equitably distributed among all parties whose failure to use proper care was a legal cause of the harm, regardless of the effect of that conduct on the acts or omissions of other parties.
Because Kransco’s misconduct in making the false and incomplete discovery responses increased the likelihood of a judgment in excess of policy limits, AES’s knowledge of that misconduct may be relevant to an assessment of AES’s fault in rejecting Hubert’s settlement offer, but that knowledge in no way lessens or eliminates Kransco’s own fault, nor does it prevent Kransco’s litigation misconduct from being a legal cause of the huge verdicts that the Wisconsin jury ultimately returned. Having found that the loss Kransco suffered as a result of the Wisconsin litigation was in part self-inflicted by means of its litigation misconduct, the jury acted properly in requiring that Kransco share the financial burden of that loss in proportion to its comparative fault.
The majority’s last line of reasoning for rejecting equitable apportionment under comparative fault on the facts shown here is its assertion that the record contains insufficient evidence to establish that Kransco’s litigation misconduct, in submitting false interrogatory answers, was a legal or proximate cause of the Wisconsin verdicts in excess of AES’s policy limits. The *427majority asserts, specifically, that evidence of causation is insufficient because Stuart Schneck, Kransco’s in-house counsel, did not testify in the Wisconsin litigation and because the Wisconsin jury may have relied entirely on Kransco’s manufacture of the defective product, and not at all on its false interrogatory responses, when it made the $12.3 million award of compensatory and punitive damages. (Maj. opn., ante, at pp. 408-409.)
The standard of review for a jury’s findings on causation issues in relation to comparative fault is substantial evidence. (Sparks v. Owens-Illinois, Inc. (1995) 32 Cal.App.4th 461, 476 [38 Cal.Rptr.2d 739].) Under that standard, a court starts by presuming that the record contains evidence to sustain every finding of fact, and its power begins and ends with the determination as to whether there is any substantial evidence, contradicted or uncontradicted, to support the finding. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881 [92 Cal.Rptr. 162, 479 P.2d 362].) The majority fails to apply this deferential standard of review.
Although Schneck, who prepared and executed the false interrogatory responses for Kransco, did not testify in the Wisconsin litigation, it is undisputed that the Wisconsin jury heard evidence of the false responses. For purposes of applying the substantial evidence test, it makes no conceivable difference that the evidence did not consist of Schneck’s testimony but instead the testimony of Steven Schneider, Kransco’s vice-president in charge of the redesign and manufacture of the Slip ’N Slide, who knew that the interrogatory responses were false when made and who knew that, despite his sworn statement to the contrary, Schneck had not made a diligent inquiry among Kransco employees before executing the responses.
The record does not show with absolute certainty or precision the effect that evidence of the false interrogatory responses had on the excess judgment in the Wisconsin products liability action. But when a jury awards $12.3 million in damages, of which $10 million is punitive damages, on a claim that the plaintiff would have settled during trial for $750,000, it is reasonable to infer that something happened at trial to cause the jury to form a very low opinion of the defendant. Kransco’s own experts conceded during the California bad faith trial that one of the worst things that can happen at any trial is for the jury to believe that a party has lied. This is especially true when the jury has the option of awarding punitive damages. The California jury in the bad faith action could reasonably conclude, based upon the evidence presented, that the Wisconsin judgment would have been substantially less, and perhaps within policy limits, had Kransco never submitted the false interrogatory responses. This causation determination is no more conjectural or speculative than the determinations juries routinely make in legal *428malpractice actions in deciding whether counsel’s errors or omissions injured the client by affecting a verdict in an earlier proceeding. (See Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 831-837 [60 Cal.Rptr.2d 780].)
Ill
“[C]ourts cannot logically ground the duty of good faith and fair dealing in tort law and, at the same time, reject the concomitant and well-established affirmative defense of comparative fault. Fidelity to legal doctrine requires that.if the implied duty of good faith and fair dealing merits tort remedies for its breach, so must it be subject to tort defenses.” (Richmond, The Two-way Street of Insurance Good Faith: Under Construction, But Not Yet Open, supra, 28 Loy. U. Chi. L.J. 95, 140, fns. omitted.) When it abolished the all-or-nothing contributory negligence doctrine, this court said the decision was “to be viewed as a first step in what we deem to be a proper and just direction.” (Li, supra, 13 Cal.3d 804, 826.) By refusing to recognize a partial defense of comparative fault in insurance bad faith actions based on unreasonable failure to settle with third parties, the majority takes a step backward, making liability insurers the only parties to whom this court has denied the benefits of California’s comparative fault tort system.
Rather than perpetuate an all-or-nothing system in this one tort setting, I would take the next logical step in the proper and just direction of equitable apportionment by recognizing that the comparative fault system includes insurance bad faith tort litigation.
On July 26, 2000, the opinion was modified to read as printed above.

Here, for example, the majority asserts that “[the insurance carrier] was duty bound under the insurance policy to protect [the policyholder] from an excess judgment, whether that judgment be the result of [the policyholder’s] negligence in marketing the [defective product] or its conduct as a litigant in the underlying third party personal injury action, or a combination of both.” (Maj. opn., ante, at p. 412.) Yet the majority fails to identify any provision of the policy obligating the carrier to protect the policyholder from an excess judgment resulting from litigation misconduct rather than from the marketing of a defective product.

In California, the term “comparative bad faith” first appeared in California Casualty Gen. Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274 [218 Cal.Rptr. 817], a decision *420authored by Justice Marcus Kaufman before his appointment to this court. The Chief Justice aptly describes it as “the seminal California decision that has been the controlling California authority on this issue for the past 15 years.” (Conc. & dis. opn. of George, C. J., ante, at p. 414.) The majority disapproves this decision; I would not.