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Keywords

plaintiffdamagesappealtrialpleabad faith

plaintiffdefendantpleabad faithrespondent

Related Cases

State Farm Mut. Auto. Ins. Co. v. Superior Court, 228 Cal.App.3d 721, 279 Cal.Rptr. 116

Facts

On October 10, 1983, Edward Wenz Jr. was driving a van owned by Johnson Kinsey, Inc. when he collided with another vehicle. State Farm, the insurer of the van, filed a complaint for declaratory relief against Johnson Kinsey, claiming that the driver exclusion in the policy excluded Wenz from coverage. Johnson Kinsey countered with a cross-complaint alleging bad faith and seeking damages. The court later found no coverage, but this decision was reversed on appeal. Before the bad faith trial, Johnson Kinsey moved to exclude evidence of State Farm's advice of counsel defense, which the court granted, leading to this writ proceeding.

Petitioner State Farm Mutual Automobile Insurance Company (State Farm) seeks a writ of mandate to vacate the order of respondent Superior Court excluding all evidence of State Farm's advice of counsel defense to a claim of insurance bad faith alleged by real parties in interest Johnson Kinsey, Inc., Edward Allen Wenz, Jr., Mary L. Johnson, Paul Kinsey, James M. Johnson, Blake Bowen and Dorothy Haight (collectively Johnson Kinsey).

Issue

Whether the defense of advice of counsel must be specifically pleaded in an insurance bad faith action.

Rule

The defense of advice of counsel may be shown under a general denial of the complaint and does not constitute 'new matter' that must be specifically alleged in the answer.

An insurer may defend itself against allegations of bad faith and malice in claims handling with evidence the insurer relied on the advice of competent counsel.

Analysis

The court reasoned that the defense of advice of counsel is directly responsive to the allegations of bad faith and malice. Since it addresses an essential element of the plaintiff's claim, it does not need to be specifically pleaded. The court cited previous cases that established that such defenses can be raised under a general denial, thus allowing State Farm to present its evidence.

In response to a plaintiff's allegations of bad faith and malice, a defendant is entitled to show it acted reasonably and with proper cause based on the advice of its counsel.

Conclusion

The court granted the writ of mandate, allowing State Farm to present evidence of its advice of counsel defense in the bad faith action.

Let a peremptory writ of mandate issue directing the superior court to permit State Farm to offer evidence pertaining to its advice of counsel defense.

Who won?

State Farm prevailed in the case because the court determined that the advice of counsel defense does not need to be specifically pleaded, allowing them to introduce relevant evidence.

Writ issued, stay vacated.

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