In McCoy v. Progressive West Ins. Co., B199978 (Cal. Ct. App. Feb. 26, 2009) [here], the appellate court upheld the jury's verdict finding bad faith arising from Progressive's denial of the insured's vehicle theft claim.
In March 2004, the insured's Ford Mustang was stolen in Las Vegas. When recovered, the Mustang, having been burned and damaged, was of no value. Progressive denied the claim in March 2005, even though it had no specific evidence that the insured was involved in the theft of his own car. Progressive, however, relied on various factors to support its belief that the insured had orchestrated the theft of his car. The insured had told his brother he wanted to get rid of his car. He had also told his wife and brother he wanted to upgrade to a Cobra Mustang. The insured and a friend had driven two cars to Las Vegas. The wheels on the recovered Mustang appeared to be the originals. Finally, the ignition was unaltered, meaning a proper key must have been used to drive the car away.
The jury returned a verdict in favor of the insured, determining Progressive acted in bad faith, and the insured was entitled to punitive damages of $100,000.
On appeal, the Court of Appeal determined the trial court's failure to give jury instructions on "genuine dispute" was not error. The trial court found the genuine dispute doctrine was subsumed within the instructions given. Those instructions stated, among other things, that when an insurer unreasonably and in bad faith withholds payment on a claim of its insured, it is subject to liability in tort.
Further, evidence of a prior accident in which the insured was involved was properly excluded because it was more prejudicial than probative. Excluding the entire claims file was also upheld. The trial court allowed the parties to offer individual portions of the claims file into evidence. Finally, the finding of bad faith was supported because the jury had implicitly found the denial of the claim was unreasonable.
