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Plut v. Fireman's Fund Insurance Co.11/30/2000
CERTIFIED FOR PUBLICATION
Reversed in part and affirmed in part.
Appellants John and Karen Plut challenge the trial court's adjustments to an award of damages after a jury found respondent Fireman's Fund Insurance Company (Fireman's Fund) liable for breach of insurance contract and bad faith. We affirm in part and reverse in part.
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
The Pluts bought a house in Rancho Palos Verdes in 1975. In 1989, Fireman's Fund issued the Pluts a homeowners policy, effective from June 1989 to July 1990. The policy limits were $522,000 for the dwelling and $261,000 for personal property.
In February 1990, the Pluts hired Roto-Rooter Service & Plumbing Company (Roto-Rooter) to service their drains. In the course of Roto-Rooter's work, it removed a toilet in a first floor bathroom. On March 1, 1990, the Pluts awoke and discovered that the first floor was flooded. They notified Roto-Rooter, which accepted responsibility for the damages. They then reported the loss to Fireman's Fund, indicating that Roto-Rooter had promised to "take care of everything."
The Pluts hired Interior Services, Inc. (ISI) to store and restore their personal belongings, including numerous antiques. In June 1990, the Pluts learned that the truck containing their belongings had been stolen. Shortly thereafter, the police recovered some of the items, but ISI denied the Pluts access to the recovered items until November 1991, thus impairing their ability to inventory their losses.
After mistakenly filing a claim with another insurance company, the Pluts made claims for water loss and theft with Fireman's Fund in late November 1991. In a recorded statement, John Plut told Fireman's Fund on December 6, 1991, that the Pluts intended to sue both Roto-Rooter and ISI. On the same date, the Pluts and Fireman's Fund entered into a non-waiver agreement, which recites that the parties intended to preserve their rights pending Fireman's Fund's investigation of the claim. Fireman's Fund eventually paid the Pluts a total of $71,378.42.
The Pluts sued Roto-Rooter and ISI in January 1992. Fireman's Fund did not participate in this action or its settlement, although the Pluts apprised Fireman's Fund of developments in the action, and invited it to send a representative to a settlement conference. In September 1995, the Pluts made an additional claim to Fireman's Fund for water loss and theft.
The Pluts reached separate settlements with Roto-Rooter and ISI in November 1996. The Pluts settled their action against Roto-Rooter for $200,000, and against ISI for $400,000. The settlement against ISI expressly recited that the Pluts would not assign any rights of recovery to Fireman's Fund. From the settlement funds of $600,000, the Pluts received $380,000, and the remainder paid their attorney fees and litigation costs incurred in the action against Roto-Rooter and ISI.
On March 10, 1997, Fireman's Fund informed the Pluts that it was denying their claims for theft and damage to personal property because it believed that the claims were untimely and not discovered within the policy period. On April 22, 1997, the Pluts filed their complaint against Fireman's Fund, alleging causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing.
Trial by jury began on September 8, 1998. On October 5, 1998, the jury returned verdicts in favor of the Pluts on their claims for breach of contract and bad faith, and assessed damages in the amount of $536,876.50. The jury made special findings that the Pluts had suffered $486,876.50 in damages as the result of Fireman
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