Amato

Introduction

This case presents a question of the damages recoverable when an insurer breached its duty to defend the insured but ultimately prevailed on the issue of coverage. Because he had no funds to obtain other counsel to defend the underlying lawsuit following the insurer’s refusal to defend, the insured suffered a default judgment against him. In the subsequent lawsuit against the insurer upon the underlying judgment and for breach of the duty to defend, the insurer prevailed on the coverage issue but was found to have wrongfully refused to defend. Upon those findings the trial court initially granted judgment for the insured in the amount of the underlying default judgment. On a prior appeal from that judgment, Amato v. Mercury Casualty Co. (1993) 18 Cal.App.4th 1784 [ 23 Cal.Rptr.2d 73 ] (Amato I), we held that because the insurer had ultimately prevailed on the coverage issue, the measure of the insured’s damages was not the full amount of the underlying judgment but rather the insured’s costs of defense. Then upon remand the trial court ruled that, since it was stipulated the insured incurred no costs of defense because the matter went by default, the insured…