NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. v. Furth, Fahner, Bluemle & Mason

• Decision Date: 25 February 1983
• Docket Number: No. C-82-5115 SC.,C-82-5115 SC.
• Citation: 558 F. Supp. 94
• Court: U.S. District Court — Northern District of California
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Plaintiff, v. FURTH, FAHNER, BLUEMLE & MASON, Defendant.

558 F. Supp. 94

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Plaintiff, v. FURTH, FAHNER, BLUEMLE & MASON, Defendant.

No. C-82-5115 SC.

United States District Court, N.D. California.

February 25, 1983.

Duane C. Musfelt, Lewis, D'Amato, Brisbois, & Bisgaard, San Francisco, Cal., for plaintiff.

James Blake, Morrison & Foerster, San Francisco, Cal., for defendant.

ORDER RE MOTION FOR JUDGMENT ON THE PLEADINGS

CONTI, District Judge.

Plaintiff brought this action for declaratory relief against a San Francisco law firm to which it had issued a policy of insurance, alleging that it has no obligation to defend or indemnify its insured in GHD Associates, Inc. v. Frederick P. Furth, Inc. et al., Civil Action No. 796803, currently pending in the Superior Court of the State of California for the City and County of San Francisco. Defendant then filed counterclaims for declaratory relief, breach of contract, breach of covenant of good faith and fair dealing, and breach of fiduciary duty, and sought to recover its attorneys' fees in this action as compensatory damages for plaintiff's alleged breach of its covenant of good faith and fair dealing. This matter is now before the court on plaintiff's motion for judgment on the pleadings striking defendant's prayer for attorneys' fees. For the reasons set forth below, the motion will be denied.

Under California law, attorneys' fees are not recoverable by a prevailing party absent an agreement between the parties or a statute allowing such recovery. Cal.Code Civ.P. § 1021. A prevailing party on a cause of action sounding in tort, however, can recover damages for all detriment "proximately caused" by that tort. Cal.Civil Code § 3333. An insurer's breach of its covenant of good faith and fair dealing is both a breach of contract and a tort. Johansen v. California State Auto. Assn. Inter-Ins. Bureau, 15 Cal.3d 9, 18, 123 Cal. Rptr. 288, 538 P.2d 744 (1975); Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 574, 108 Cal.Rptr. 480, 510 P.2d 1032 (1974). Therefore, if the cost of establishing an insurer's breach of its covenant of good faith and fair dealing in court constitutes detriment "proximately caused" by that breach, defendant may recover its attorneys' fees in this action as compensatory damages should it prevail on its counterclaim and prove that plaintiff has committed such a breach.

Although the cost of establishing the commission of a tort in court is generally not considered detriment proximately caused by the tort, the court finds that the general rule would not apply in this case....