General Insurance v. Mammoth Vista Owners' Ass'n

We approach this appeal with a sense of deja vu as this is the second time this matter has been before us. However, in the instant appeal, the primary issue confronting us is whether a surety bonding company is subject to an action for breach of the covenant of good faith and fair dealing either under the common law or the statutory duties imposed by section 790.03 et seq. of the Insurance Code, the Unfair Practices Act.

Plaintiff General Insurance Company of America (General) was the recipient of a judgment for compensatory and punitive damages in favor of Mammoth Vista Owners’ Association, Inc. (Mammoth) in an action on a surety bond for breach of the implied covenant of good faith and fair dealing and violation of the Unfair Practices Act (Ins. Code, § 790 et seq.). On this appeal General contends that a surety is not subject to liability in tort for breach of the implied covenant of good faith and fair dealing or violation of the Unfair Practices Act. In addition, General asserts Mammoth lacked capacity to prosecute its cross-complaint as its corporate status was suspended, Mammoth’s action on the bond was barred by the statute of limi tations, the court erred in…