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Sprague v. California Pacific Bankers & Insurance Ltd.12/27/2001
l reputation, if any, loss of business opportunities, if any, are sufficient in and of themselves to afford a basis for recovery.
Over Plaintiffs' objection, the court instructed the jury, in relevant part, as follows:
The fact that an insured makes no out-of-pocket payments and incurs no personal liability because of a covenant not to execute[,] does not necessarily mean that the insured suffers no damage. The entry of a final judgment against the insured may constitute damage to him or her. Intangible harms are remedial in suits of this kind; factors such as damage to credit and general reputation, if any, loss of business opportunities, if any, are sufficient in and of themselves to afford a basis for recovery.
Compensation must be reasonable. You may award plaintiffs only such damages as will fairly and reasonably compensate the Millards for the injuries or damages legally caused by defendants' negligence, fraud, or bad faith. You are not permitted to award a party speculative damages, which means compensation for loss or harm which, although possible, is conjectural or not reasonably probable. In this case, general damages are those damages which fairly and adequately compensate the Millards for factors such as damage to credit, general reputation, and loss of business opportunities. Special damages are those damages which can be calculated precisely or can be determined by you with reasonable certainty from the evidence.
Plaintiffs contend that the trial court was wrong when it stated that " he entry of a final judgment against an insured may constitute damage to him or her," rather than that "mere entry of a final judgment against the insured constitutes actual damage to him or her." We agree with the trial court's instruction. McClellan does not eliminate the plaintiffs' burden of proving actual damage.
C.
Plaintiffs assert that the trial court reversibly erred when it modified, over Plaintiffs' objection, Plaintiffs' special jury instruction based on the case of Sentinel Insurance v. First Insurance, 76 Hawai i 277, 875 P.2d 894 (1994). In Sentinel Insurance, the Hawaii Supreme Court stated that when an insurer refuses to perform its contractual duty to defend, "the insured is entitled to negotiate a reasonable and good faith settlement of the underlying claim which amount may then be utilized as presumptive evidence of the breaching insurer's liability. Isaacson v. California Ins. Guar. Ass'n., 44 Cal. 3d 775, 791, 750 P.2d 297, 308, 244 Cal. Rptr. 655, 666 (1988)." Id. at 296, 875 P.2d at 913. In other words, the amount of a reasonable and good faith settlement is presumptive evidence of the breaching insurer's liability.
In Phase Two of the trial, Plaintiffs requested that the jury be instructed as follows:
When Insurer breaches its duty to defend, it waives its right to approve of any settlement, and the insured is entitled to negotiate a reasonable and good faith settlement of the underlying claim, which amount may then be utilized as presumptive evidence of breaching insurer's liability. Where the insured seeks indemnification after the insurer has breached its duty to defend, coverage is rebuttably presumed, and the insurer bears the burden of proof to negate coverage, and where relevant, carries traditional burden of proof that exclusionary clause applies.
(Emphasis added.) The trial court refused to give the part of the instruction emphasized in bold print above and instructed the jury, in relevant part, as follows:
When an insurer breaches its duty to defend, it waives its right to approve of any settlement and the insured is entitled to negotiate a reasonable and
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