Austero

Defendant appeals from a judgment, after retrial, awarding compensatory and punitive damages against it for bad faith failure to pay plaintiffs’ claims under two insurance policies. 1 Defendant does not challenge the damages awarded to compensate plaintiffs for the benefits they should have received under the policies (approximately $24,678), but do claim error in the award of $25,000 to plaintiff Dorothy Austero for emotional distress, $200,000 for attorney’s fees, and $200,000 as punitive damages. The award for emotional distress is not supported by substantial evidence; the attorney’s fee award is legally erroneous. We shall modify the judgment by striking those two portions and, otherwise, affirm the judgment as modified.

Facts

The dispute involves two insurance policies issued by defendant. One was an occupational total disability policy which was issued to plaintiff Julius Austero in 1958 and lapsed on March 15, 1973 for nonpayment of premiums. The other was a major medical expense policy which was issued to Julius Austero insuring him and his wife, Dorothy Austero, effective May 15, 1973.

Julius Austero’s initial notice of claim under the medical policy was…

I agree with the majority that there is substantial evidence to support the award of punitive damages and that the damages awarded for emotional distress should be stricken. However, I respectfully dissent from that portion of the majority opinion which strikes the damages awarded for attorney’s fees. Ignoring one statute and misapplying another, the majority frustrates the very purpose of tort law—compensation.

The pertinent rule on the issue of attorney’s fees in this case is that, “[f]or the breach of an obligation not arising from contract, the measure of damages, ... is the amount which will compensate for all the detriment proximately caused thereby, ...” (Civ. Code, § 3333.) The attorney’s fees incurred by plaintiffs in recovering the benefits due under the insurance policies was “detriment proximately caused” by defendant’s tortious conduct and plaintiffs should be compensated for those attorney’s fees. The general rule of section 1021 of the Code of Civil Procedure, that attorney’s fees are not recoverable absent statutory authorization or agreement between the parties, does not require a contrary conclusion. Like the insurance company in Mustachio v. Ohio Farmers Ins.…

Defendant appeals from a judgment, after retrial, awarding compensatory and punitive damages against it for bad faith failure to pay plaintiffs' claims under two insurance policies. [1] Defendant does not challenge the damages awarded to compensate plaintiffs for the benefits they should have received under the policies (approximately $24,678), but do claim error in the award of $25,000 to plaintiff Dorothy Austero for emotional distress, $200,000 for attorney's fees, and $200,000 as punitive damages. The award for emotional distress is not supported by substantial evidence; the attorney's fee award is legally erroneous. We shall modify the judgment by striking those two portions and, otherwise, affirm the judgment as modified.

The dispute involves two insurance policies issued by defendant. One was an occupational total disability policy which was issued to plaintiff Julius Austero in 1958 and lapsed on March 15, 1973 for nonpayment of premiums. The other was a major medical expense policy which was issued to Julius Austero insuring him and his wife, Dorothy Austero, effective May 15, 1973.

Julius Austero's initial notice of claim under the medical policy…