Jenkins

[Opinion certified for partial publication. [*] ]

OPINION

MOORE, J.

Insurance Company of North America (INA) appeals a judgment of $500,000 compensatory damages and $2.5 million punitive damages in favor of Arthur T. Jenkins after a four-month jury trial. INA contends: (1) the evidence fails to support the judgment; (2) the trial court erroneously instructed the jury on its duty to appeal, on its duties concerning other insurance companies, and on its interpleader action and request for attorney's fees and costs; (3) the trial court erred by submitting to the jury the issue of bad faith failure to settle; (4) the trial court erred by permitting expert testimony on Jenkins's claim INA breached its legal duties and acted in bad faith; and, (5) the award of compensatory and punitive damages was invalid.

In the published portion of this opinion, we consider INA's claim of error in the court's instruction to the jury on the duty to appeal. We affirm the judgment in its entirety.

Jenkins commenced construction of six homes in Laguna Beach's Bluebird Canyon in February 1974. To provide funding for the purchase of the property, he formed a limited partnership known as Bluebird Glen,…

Insurance Company of North America (INA) appeals a judgment of $500,000 compensatory damages and $2.5 million punitive damages in favor of Arthur T. Jenkins after a four-month jury trial. INA contends: (1) the evidence fails to support the judgment; (2) the trial court erroneously instructed the jury on its duty to appeal, on its duties concerning other insurance companies, and on its interpleader action and request for attorney’s fees and costs; (3) the trial court erred by submitting to the jury the issue of bad faith failure to settle; (4) the trial court erred by permitting expert testimony on Jenkins’s claim INA breached its legal duties and acted in bad faith; and, (5) the award of compensatory and punitive damages was invalid.

In the published portion of this opinion, we consider INA’s claim of error in the court’s instruction to the jury on the duty to appeal. We affirm the judgment in its entirety.

I

Facts

Jenkins commenced construction of six homes in Laguna Beach’s Bluebird Canyon in February 1974. To provide funding for the purchase of the property, he formed a limited partnership known as Bluebird Glen, Ltd. The homes were each sold for approximately…

I dissent. I agree with parts VII, VIII and most of part IX, but particularly disagree with parts III and VI of the majority opinion. I would reverse the judgment and order a new trial.

The majority concludes the jury was properly instructed on INA’s duty to appeal the $716,000 verdict and judgment against Jenkins in the Brown case. While an insurer’s duty to defend may include, in an appropriate case, a duty to appeal, the evidence presented here did not establish Jenkins suffered any harm from the failure to appeal the judgment. The verdict, although substantial, was actually less than anticipated and was considered a victory for the defense. No one testified a reversal, followed by a retrial and a more favorable verdict, was likely.

Almost every trial record includes some “reasonable grounds for appeal,” but experience, statistics and common sense establish that relatively few appeals are successful. The appellate system could not exist as we know it if the law requires insurers, to avoid claims of bad faith, and presumably lawyers, to avoid claims of malpractice, to appeal whenever reasonable grounds can be found.

In this case an appeal would not have stayed the judgment…