Hodges v. Standard Acc. Ins. Co.
| Decision Date | 27 December 1961 |
| Citation | 198 Cal.App.2d 564,18 Cal.Rptr. 17 |
| Court | California Court of Appeals Court of Appeals |
| Parties | R.A. HODGES, Plaintiff and Respondent, v. STANDARD ACCIDENT INSURANCE COMPANY, John W. Medlen, Doe I, Doe II, Doe III and Doe IV, Defendants and Appellants. Civ. 25495. |
Gilbert, Thompson & Kelly, Los Angeles, and Jean Wunderlich, No. Hollywood, for appellants.
Neil D. Heily, Oxnard, for respondent.
On September 5, 1953, at the controlled intersection of certain highways, the automobiles of plaintiff Hodges and Richard Baurmann were involved in a collision. Each driver contended that he had the green light in his favor on entering the intersection. Standard Accident Insurance Company had issued a policy in favor of the Baurmanns (the singular is used hereafter) and the policy limits were $10,000.00 for damages for personal injuries to one person and $20,000.00 for damages to more than one person. By the terms of the policy the insurer was bound to defend any actions for damages claimed against the insured, and also was required to make such investigation and settlement of any claim it deemed expedient.
Hodges filed suit against Baurmann for $50,000.00 damages and in that action Standard defended its insured, Baurmann. There were three trials of the personal injury action. The first and second trials were favorable to defendant but in each instance plaintiff was granted a new trial on the particular ground of insufficiency of evidence to justify the verdict.
The third trial resulted in a plaintiff's verdict awarding damages in the sum of $35,721.20. Defendant's motion for a new trial was denied upon the condition that plaintiff within five days remit the sum of $8,000.00 and consent to the entry of a judgment in the sum of $27,721.20. Plaintiff consented to this condition. Defendant appealed said cause to the District Court of Appeal and by remittitur filed July 2, 1957, the judgment was affirmed. The appellate court referred to the 'hopeless conflict' in the evidence (Hodges v. Baurmann, 150 Cal.App.2d 576, 577, 310 P.2d 24). Standard then paid the sum of $12,003.26 in partial satisfaction of the judgment which constituted the full amount of its policy limits together with interest and costs. Thereafter Baurmann filed a petition in bankruptcy with reference to the excess amount of the judgment and was adjudicated a bankrupt.
In the personal injury trials mentioned above, plaintiff was represented by the attorney who represents him here and who, after his employment and before the first trial, made an offer of settlement to the adjuster for Standard in the sum of $5,000.00. This offer was never withdrawn until after the jury in the third trial rendered its verdict in favor of the plaintiff.
The present action was filed in 1958 and plaintiff sought damages in the amount of the excess personal injury judgment (over and above the policy limits) against Standard and John W. Medlen, its adjuster, upon the theory that said defendants acted in bad faith toward Baurmann in refusing to settle the case for the sum of $5,000.00 prior to the time of plaintiff's ultimate verdict and judgment. The complaint alleged that plaintiff Hodges is the successor in interest to Baurmann upon an alleged claim against Standard arising out of said excess judgment, and at the time of pretrial plaintiff obtained an amendment of the complaint to show that the trustee in bankruptcy (of the insured Baurmann) had made an assignment of the cause of action to plaintiff. Upon the trial before the court sitting without a jury, the court gave judgment in favor of plaintiff and against Standard and Medlen for the sum of $19,307.93, together with interest and costs, and defendants appeal from such judgment.
In addition to the chronology of the legal actions mentioned above it is important to note certain relevant facts as follows:
(a) After the personal injury action (Hodges v. Baurmann) was filed in March 1954, the insurer Standard sent a letter dated March 30, 1954, to Baurmann, the insured, the form of which is generally known as an 'excess letter.' This letter advised the insured that the plaintiff Hodges was seeking damages of $50,817.61, the sum in excess of the policy, and that while the insurance company was entitled to defend the action by counsel of its own choice, the insured, if he thought it advisable, might employ counsel of his own to be associated with the insurer's counsel.
(b) Prior to the filing of the personal injury action Standard made an investigation of the accident, taking statements from the insured (and members of insured's family who were occupants of the car) and a representative of Standard also interviewed an officer of the California Highway Patrol (not a witness). After an interview with the insured Baurmann the claims supervisor reported to his company (Standard):
'The assured makes a very good appearance and seemed very truthful in regards to the signal being in his favor, and in the event it was just changing to amber as he entered the intersection he feels that the claimant failed to make any stop at the intersection and jumped the signal and entered it without due caution.'
(c) On December 17, 1953, the claims adjuster for Standard, the defendant Medlen, made a memorandum:
'On the afternoon of December 16th, I contacted Mr. Neil Heily at this office regarding this case and told him that we had again interviewed our insured and his passengers and we could find no evidence whatsoever that his client, Hodges, was doing anything else but running a red light.
'It is possible that this case is worth $150.00 to $200.00, maybe $250.00, but knowing Heily I feel he will probably file.'
And in a report dated December 18, 1953. he reported to his company:
'Our named insured and three members of his family were traveling in a general northerly direction on 101-A. All state that our insured entered the intersection of 101-A and 101 with the green light, further claiming that #2 ran the signal and was struck on the right side by our insured car.
* * *
* * *
'I have indicated to Attorney Heily that this case may have a bare nuisance value but as contained in my memo for File 12-17-53, our chances of settling cases with Mr. Heily before have been practically nil.'
(d) Depositions of plaintiff Hodges and the insured Baurmann were taken on June 23, 1954, prior to the first trial. The injuries of plaintiff as shown by his deposition were summarized in a report to the company as follows:
'Insofar as his injuries were concerned, the plaintiff testified that his right shoulder, arm and side were injured. At the time of the deposition, he complained of a continued pain in his right shoulder and arm. However, he had not been to a physician for treatment for nine months prior to the deposition.
(e) On August 20, 1954, before the first trial, Freeman A. Reed, the claims manager of Standard, sent a memo on the case to the home office as follows:
In the report to the claims manager, the agent of the company gave his opinion of the settlement value:
(f) The insured Baurmann (as defendant in the personal injury actions) was represented by the attorney selected by the insurer, Charles H. Lynch. Mr. Lynch had extensive experience in personal injury work since 1933 and testified that on the subject of liability he considered it a '50-50 case' because of the type of accident. Before the first trial he thought the chances were slightly better than '50-50' because of the cross-complaint filed by the insured. Also, after each of the first two trials and even though the judge in each case had granted a new trial to the plaintiff, he felt that he would still win the case. Before the third trial, Mr. Lynch's opinion was, On the question of damages Lynch's opinion was that if liability was assumed, the case was worth from $2,500.00 to $3,500.00. *
(g) The offer made by the plaintiff's attorney, Mr. Heily, was made to the adjuster, defendant Medlen, but this was never communicated by Mr. Heily to Standard's and insured's attorney, Mr. Lynch. Plaintiff made only the one offer of $5,000.00 and this was never withdrawn (until the verdict in the third trial) or modified.
(h) Baurmann never made any complaint as to the method of handling the case by Standard. He testified at each trial of the personal injury action and his testimony in substance was that the signal was in his favor and that the plaintiff Hodges had run the red light. Standard, in defending the personal injury action, always accepted the testimony of Baurmann as they had never discovered any evidence which substantiated the plaintiff's version or which indicated the insured was negligent, and plaintiff's only independent witness (a Mr. Raines) who was produced after the first trial was, in Mr. Lynch's opinion, 'successfully impeached.'
(i) After the third trial which resulted in judgment for plaintiff in...
To continue reading
Request your trial
-
California Shoppers, Inc. v. Royal Globe Ins. Co.
...13, 426 P.2d 173, citing Davy v. Public National Ins. Co., 181 Cal.App.2d 387, 396, 5 Cal.Rptr. 488, and Hodges v. Standard Acc. Ins. Co., 198 Cal.App.2d 564, 574, 18 Cal.Rptr. 17.) As for the origins of the mistake, it is now well settled that the implied covenant of good faith and fair de......
-
Madrigal v. Allstate Ins. Co.
...Cal. (1969) 1 Cal.App.3d 688, 696, ; Davy v. Public National Ins. Co. , supra , at p. 400, 5 Cal.Rptr. 488 ; Hodges v. Standard Accident Ins. Co. (1961) 198 Cal.App.2d 564, 574, .)Walbrook Ins. Co. v. Liberty Mut. Ins. Co. , 5 Cal.App.4th 1445, 1454–55, 7 Cal.Rptr.2d 513 (1992) (brackets in......
-
Merritt v. Reserve Ins. Co.
...into account and give as much consideration to the assured's interests as it gives to its own. See also, Hodges v. Standard Accident Ins. Co., 198 Cal.App.2d 564, 18 Cal.Rptr. 17; Palmer v. Financial Indem. Co., 215 Cal.App.2d 419, 30 Cal.Rptr. 204; Kelley v. British Coml. Ins. Co., 221 Cal......
-
San Juan Teachers Assn. v. San Juan Unified Sch. Dist.
...agreement. (Citations.)' (N.L.R.B. v. Almeida Bus Lines, Inc. (1st Cir. 1964) 333 F.2d 729, 731; see, Hodges v. Standard Accident Ins. Co. (1961) 198 Cal.App.2d 564, 578, 18 Cal.Rptr. 17.) Lastly, the Board attacks the court's finding that the Board's policy was to refuse to meet and confer......
-
CHAPTER 6
...& Indem. Co., 228 Cal. App. 2d 178 (1964); Palmer v. Fin. Indem. Co., 215 Cal. App. 2d 419 (1963); Hodges v. Standard Acc. Ins. Co., 198 Cal. App. 2d 564 (Cal. Ct. App. 1961); Davy v. Pub. Nat. Ins. Co., 181 Cal. App. 2d 387 (1960); Ivy v. Pac. Auto. Ins. Co., 156 Cal. App. 2d 652 [320 P.2d......
-
Liability Insurance and Contractual Aspects of Settlement.
...to the insurer when it rejected the settlement offer. Nat'l Union, 2018 WL 5095267, at *2 (citing Hodges v. Std. Accident Ins. Co., 18 Cal. Rptr. 17, 24 (Ct. App. 1961)). Concentrating solely on the information available to the insurance company at the time it declined to settle is essentia......