Waters

In this first party insurance bad faith case arising from a dispute about the restoration of the insureds’ fire-damaged house, United Services Automobile Association (USAA) appeals from a judgment entered on a jury’s award of $1,375,000 in emotional distress damages to the insureds, Laughlin E. and Voula D. Waters. USAA contends the judgment must be reversed because the insureds failed to prove they suffered any financial loss of any kind. We agree, and therefore do not reach USAA’s other claims of error or the issues raised on the Waters’ protective cross-appeal.

Facts

On December 17, 1990, a fire caused substantial damage to the Waters’ elegant Hancock Park home. At that time, the Waters were insured by USAA under a homeowner’s policy, with limits of $1,615,000 for the dwelling; $1,615,000 for unscheduled personal property; $323,000 for loss of use or additional living expense (ALE); and additional coverage for clean up and emergency repair expenses. The fire was immediately reported to USAA, and a USAA claims adjuster (Kevin Bushaw) met the Waters at their house the day of the fire to explain the policy’s benefits and to give the Waters a $50,000 check to cover their…