CHATEAU CHAMBERAY HOA v. Associated Internat. Ins. Co.

This appeal tests the validity of an order of the trial court summarily adjudicating, in favor of the insurer, the claim that the insurer was liable for its bad faith adjustment of the insured's claim of loss. Following the Northridge earthquake on January 17, 1994, the appellant, Chateau Chamberay Homeowners Association (HOA), submitted a claim of loss to its insurer, the respondent, Associated International Insurance Company (AIIC). When it was finally calculated, HOA's claim totaled $5,771,522.

During the investigation process, AIIC paid to HOA several interim payments, which together represented the total amount AIIC believed was due; that amount totaled $1,949,161. A subsequent stipulated arbitration determined that AIIC had underpaid the total amount of HOA's covered loss and ordered that AIIC pay an additional $610,753, plus interest; thus, HOA's total covered loss was determined to be $2,559,914, or approximately 45% of its claimed total loss.

While the amount of HOA's covered loss was resolved by arbitration, its claim for bad faith conduct on the part of AIIC went forward in the trial court. Concluding from the evidence presented that AIIC and HOA had a…