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Kransco v. American Empire Surplus Lines Insurance Company6/22/2000
implied covenant of good faith and fair dealing "is governed by tort principles" whereas a policyholder's breach of the same covenant "is not a tort" and thus "an insurer's breach of the covenant of good faith and fair dealing is not directly comparable with the insured's contractual breach." (Maj. opn., ante, at p. 13.) The majority insists that allowing a defense of comparative bad faith "misleadingly equates an insured's contractual breach of the reciprocal covenant of good faith and fair dealing with an insurer's tortious breach of the covenant" and "is confusing and inconsistent insofar as it acknowledges an insured's breach of the covenant is not actionable in tort, but nonetheless can give rise to tort consequences because the insurer may assert it as a defense in a bad faith action to lessen responsibility for its own tortious conduct." (Maj. opn., ante, at p. 19, fn. omitted.)
In so arguing, the majority badly misses the point of comparative fault. Comparative fault is not about offsetting equivalent tort claims that parties have against each other for damages each has suffered. Rather, comparative fault is about the equitable apportionment of a single loss that only one of the parties has suffered. In the comparative fault context, it not necessary that the plaintiff's fault be "directly comparable with" the defendant's fault. Nor is it necessary that the party who suffered the loss at issue engaged in conduct that breached a duty to the other party, resulted in loss to the other party, or would be legally actionable in tort if it did result in loss to the other party.
The source of the majority's confusion may be traced back to the term "contributory negligence." As the late Dean Prosser has explained, "It is perhaps unfortunate that contributory negligence is called negligence at all. `Contributory fault' would be a more descriptive term. Negligence as it is commonly understood is conduct which creates an undue risk of harm to others. Contributory negligence is conduct which involves an undue risk of harm to the actor himself. Negligence requires a duty, an obligation of conduct to another person. Contributory negligence involves no duty, unless we are to be so ingenious as to say that the plaintiff is under an obligation to protect the defendant against liability for the consequences of the plaintiff's own negligence." (Prosser and Keeton on Torts (5th ed. 1984) ยง 65, p. 453, fns. omitted.)
What Dean Prosser says of contributory negligence is equally true of comparative negligence, comparative bad faith, and indeed of comparative fault in all its varieties as applied to a plaintiff. Because a plaintiff's comparative fault is conduct that contributed to the plaintiff's own loss, it is conduct that has resulted in self- inflicted harm. Because a plaintiff's comparative fault is invoked only to prevent the plaintiff from shifting all of the plaintiff's own loss onto another party, the plaintiff's conduct need not involve breach of any duty owed to another. It is sufficient that the plaintiff's conduct involved an unreasonable risk of self-inflicted injury and is at least partly responsible for the injury suffered. Thus, comparative negligence is self-directed negligence and comparative bad faith is, in essence, self-directed bad faith. Comparative bad faith means only that in determining whether a policyholder has acted unreasonably during third party litigation, a jury may properly consider the policyholder's contractual obligations to the carrier under the policy. To avoid confusion occasioned by the terms "negligence" and "bad faith," it would be better to use the term comparative fault as a substitute for both.
In real life situations, of course, conduct fre
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