Mosten Management Co. v. Zurich-American Insurance Group

dissenting.

In Brandt v. Superior Court, 37 Cal.3d 813 , 210 Cal.Rptr. 211 , 693 P.2d 796 (1985), the California Supreme Court created a narrow exception to the general rule that parties to a lawsuit bear their own attorney’s fees. It provided that an insured can recover attorney’s fees expended in an action to recover policy benefits an insurer denied in bad faith. Id. at 798. But, while bad faith is a prerequisite for Brandt fees, the court made clear that fees were not available for “bringing ... the bad faith action itself.” Id; see also Burnaby v. Standard Fire Ins. Co., 40 Cal.App.4th 787 , 47 Cal.Rptr.2d 326, 329 (1995) (noting that Brandt didn’t authorize “fees incurred in prosecuting the tortious breach of covenant claim”). Only actions to recover policy benefits—not to prove the insurer’s bad faith in denying them—qualify for fees.

Here, Mosten simply claims Zurich breached the implied covenant of good faith and fair dealing; neither the majority nor the district court suggests otherwise. But the implied covenant is a contractual duty, not a contractual benefit (like, say, indemnification). The good faith obligation is simply a means for securing the contractual ends.…

ORDER

Plaintiff—Appellee Mosten Management Company, Inc.’s petition for rehearing is GRANTED. The disposition filed June 20, 2002 is withdrawn. A new memorandum disposition has been filed simultaneously with this order.

MEMORANDUM **

Zurich-American Insurance Group (“Zurich”) appeals the district court’s orders *177 awarding attorney’s fees and expenses to Mosten Management, Ine. (“Mosten”) pursuant to Brandt v. Superior Court, 87 Cal.3d 813 , 210 Cal.Rptr. 211 , 693 P.2d 796, 798 (1985) and White v. Western Title Ins., 40 Cal.3d 870 , 221 Cal.Rptr. 509 , 710 P.2d 309 (1985). Zurich also argues that the district court erred when it failed to apportion attorney’s fees. On cross-appeal, Mosten argues that the district court erred by refusing to award Brandt fees for defending the underlying judgment on appeal. We have jurisdiction under 28 U.S.C. § 1291 , and we affirm in part and reverse in part.

We review for abuse of discretion the district court’s award of Brandt fees, see Hemmings v. Tidyman’s, Inc., 285 F.3d 1174 , 1200 (9th Cir.2002), and we affirm the award of fees and expenses related to the pre-trial, trial and post-trial motions work. We review for abuse of discretion…