Courtesy Ambulance Service v. Superior Court

The question presented in this original proceeding is whether the State Compensation Insurance Fund (hereinafter SCIF), when sued in tort, can be held liable for punitive damages. We conclude that it can, and that the trial court accordingly erred in granting SCIF’s motion to strike the request for such damages from the complaint.

The facts of the case—or, more properly, the allegations of the complaint—need not be recited in detail. Petitioner Courtesy Ambulance Service of San Bernardino (hereinafter Courtesy) has been for several years insured for workers’ compensation coverage by SCIF. It has sued SCIF both in contract and in tort, alleging generally that SCIF has, or may have, improperly calculated premiums by overestimating the amounts necessary for re-, serves, and has also compelled itself to charge higher premiums by its inefficient handling of claims. The complaint includes two causes of action, those for 1) breach of the covenant of good faith and for 2) constructive fraud, upon which Courtesy bases a claim for punitive damages.

SCIF filed a demurrer and a motion to strike. The trial court overruled the demurrer, but granted SCIF’s motion to strike the claims…