Walbrook Insurance v. Liberty Mutual Insurance

A jury determined that a primary insurer was not guilty of bad faith when, having rejected pretrial offers to settle a claim against its insured within the limits of its policy, it entered into an agreement at trial which resulted in a judgment exceeding its policy limits and thus required a substantial payment by the insured’s excess insurers. Concluding that the jury’s verdict is supported by substantial evidence, and that no prejudicial instructional error was committed by the trial court, we affirm.

Background

On November 22,1980, Lynn Cameron lost control of the Chevrolet sedan she was driving on a wet San Francisco street. The Cameron vehicle crossed over the center divider and collided with a smaller Honda being driven by Nancy Petersilge, a dermatology resident at the University of California Medical Center in San Francisco.

In April of 1981, suffering from what at the time seemed to be moderately severe physical and psychological injuries caused by the accident, Petersilge filed a complaint for damages against the driver and owners of the Cameron vehicle. Five months later Petersilge filed an amended complaint adding as an additional defendant Sears Roebuck…