Kanne

This matter came on regularly for trial on March 6, 1984, before the Honorable Edward Rafeedie, United States District Judge. Plaintiffs Theodore Kanne and Beatriz Kanne appeared with their attorneys of record, Carol A. Hay and Ernest Francheschi, Jr. Defendant Connecticut General Life Insurance Company appeared through its attorneys of record, Adams, Duque & Hazeltine, by James Cline and Suzette Clover. The Court, having heard the testimony of witnesses, having received oral and documentary evidence in the matter and having considered the pleadings and all of the records and files herein, renders its decision as follows:

I. BACKGROUND

1. Procedural

On December 17, 1982 plaintiffs Theodore Kanne (“Theodore”) and Beatriz Kanne (“Beatriz”) filed this civil action in the Superior Court of the State of California for the County of Los Angeles. The defendants at that time were Connecticut General Life Insurance Company (“Connecticut General”), Lincoln National Life, Metropolitan Life Insurance Company (“Metropolitan”), Harlow Carpets, Inc. (“Harlow Carpets”) and Hart, Shaffner & Marx. The complaint sought compensatory and punitive damages under state law for (1) breach of contract…