Joan Cherie Amadeo v. Principal Mutual Life Insurance Company

290 F.3d 1152 Joan Cherie AMADEO, Plaintiff-Appellant, v. PRINCIPAL MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellee. No. 00-55333. United States Court of Appeals, Ninth Circuit. Argued and Submitted October 18, 2001. Filed May 22, 2002. COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Stanley K. Jacobs and Thomas F. Borcher, Jacobs, Jacobs & Rosenberg, Los Angeles, CA, for the plaintiff-appellant. Margaret Levy and Becky J. Belke, Manatt, Phelps & Phillips, LLP, Los Angeles, CA, for the defendant-appellee. Appeal from the United States District Court for the Central District of California; Nora M. Manella, District Judge, Presiding. D.C. No. CV-98-03097-NM. Before: BROWNING, FERNANDEZ and FISHER, Circuit Judges. FISHER, Circuit Judge. 1 Joan Amadeo filed this suit after Principal Mutual Life Insurance Company ("Principal") denied her benefits under her disability income insurance policy. Principal based its denial on its contention that Amadeo's "regular occupation ... just prior to her disability" was "unemployed," despite Amadeo's 20 year career in the securities industry before she became unemployed during a period of severe depression. The district court granted…

Joan Amadeo filed this suit after Principal Mutual Life Insurance Company (“Principal”) denied her benefits under her disability income insurance policy. Principal based its denial on its contention that Amadeo’s “regular occupation ... just pri- or to her disability” was “unemployed,” despite Amadeo’s 20 year career in the securities industry before she became unemployed during a period of severe depression. The district court granted partial summary adjudication against Amadeo on her claim that Principal breached the implied covenant of good faith and fair dealing (“bad faith claim”) because it found that Principal’s denial of benefits was reasonable as a matter of law.

First, as a matter of our jurisdiction, we hold that Amadeo’s voluntary dismissal of her breach of contract claim does not preclude her from pursuing her appeal of the district court’s ruling on the bad faith claim. Second, we reverse the district court’s grant of summary judgment on the bad faith claim. Amadeo presented sufficient evidence from which a jury could conclude that Principal’s denial of benefits to Amadeo was based on a bad faith interpretation of its policy and an inadequate investigation into the…

Dissenting:

I dissent from the decision to overturn the district court’s grant of summary judgment in favor of Principal Mutual Life Insurance on Amadeo’s claims for tortious breach of the covenant of good faith and fair dealing, and for punitive damages.

After the district court granted summary judgment on the above mentioned claims, Amadeo voluntarily dismissed her claim for breach of contract with prejudice, which had the undeniable effect of determining that claim on the merits in favor of Principal. See Commercial Space Mgmt. Co., Inc. v. The Boeing Co., Inc., 193 F.3d 1074, 1080 (9th Cir.1999); Harrison v. Edison Bros. Apparel Stores, Inc., 924 F.2d 530, 534 (4th Cir.1991); Schwarz v. Folloder, 767 F.2d 125, 129 (5th Cir.1985). That being so, Amadeo cannot claim that Principal breached the contract when it denied benefits in this case. But under California law, a breach of the obligations (expressed or implied) of the underlying contract is a sine qua non of a bad faith claim. See Waller v. Truck Ins. Exch., Inc., 11 Cal.4th 1, 35-36 , 900 P.2d 619, 638-39 , 44 Cal.Rptr.2d 370, 389-90 (1995); Love v. Fire Ins. Exch., 221 Cal.App.3d 1136, 1151 , 271 Cal.Rptr. 246, 255…