Shade Foods Inc. v. Innovative Products Sales & Marketing Inc.

MODIFICATION

INSURANCE



In bad faith lawsuit, punitive damages award is excessive where insurer's conduct does not amount to conscious disregard for insured's rights.


SHADE FOODS, INC., Plaintiff and Appellant, v. INNOVATIVE PRODUCTS SALES & MARKETING, INC., Defendant, Cross-complainant and Appellant; ROYAL INSURANCE COMPANY OF AMERICA, Defendant and Appellant; NORTHBROOK NATIONAL INSURANCE COMPANY, Defendant, Cross-defendant and Appellant. No. A080316 (San Francisco County Super. Ct. No. 970035) California Court of Appeal First Appellate District Division One Filed March 29, 2000
ORDER MODIFYING OPINION AND DENYING REHEARING [NO CHANGE IN JUDGMENT]
THE COURT:

        It is ordered that the opinion filed herein on February 28, 2000, and reported in the Official Reports (78 Cal.App.4th 847) be modified in the following particulars:

        1. On page 8821, lines 20 and 21, the second sentence in the second full paragraph, beginning "The claims supervisor" is deleted and the following sentence substituted in its place:

        The claims supervisor, Thibadeau, could not articulate any factual theory for claiming the exclusion.

        2. On page 8832, lines 10 through 13, the second sentence in the first full paragraph, beginning "It made perfunctory" is deleted and the following sentence substituted in its place:

        It made perfunctory visits of both the IPS and Shade plants and did not provide its loss control engineer with an opportunity for a meaningful investigation.

        3. Part (2) of the sentence commencing at the bottom of page 8853 with "In exchange for" is modified to delete "a release from Shade as a co-insured under its commercial general liability policy," and the following language substituted in its place: "a release of IPS by Shade." The sentence now reads:

        In exchange for the payment, Northbrook would expect the following: (1) a release from General Mills, (2) a release of IPS by Shade, (3) a reservation of rights, and (4) a release from Shade running in favor of Northbrook with respect to any first party claims.

        4. On page 8874, lines 12 through 14, the sentence beginning "It is also clear" is deleted and the following sentence substituted in its place:

        It is also clear that Northbrook properly requested Shade's release of IPS, a co-insured under the commercial general liability policy.

        5. On page 9095, footnote 17, the name "Royal" is changed to "Shade" so the footnote now reads:

17

We reject Shade's contention that the measure of damages under Brandt v. Superior Court, supra, 37 Cal.3d at page 819, includes attorney fees incurred in this appeal. (Burnaby v. Standard Fire Ins. Co. (1995) 40 Cal.App.4th 787 [47 Cal.Rptr.2d 326].)
        There is no change in the judgment.

        All petitions for rehearing are denied.

Date: March 28, 2000



1        See Daily Appellate Report of March 1, 2000, page 2149, column 1, lines 3 thru 5, first full paragraph.

2        See Daily Appellate Report of March 1, 2000, page 2149, column 1, lines 4 thru 8, fifth full paragraph.


3        See Daily Appellate Report of March 1, 2000, page 2150, column 1, lines 8 thru 14, fourth full paragraph.

4        See Daily Appellate Report of March 1, 2000, page 2150, column 2, lines 15 thru 17, second full paragraph.

5        See Daily Appellate Report of March 1, 2000, page 2158, column 2, footnote 17 at the bottom.


Trial Court
        San Francisco County Superior Court

Trial Judge
        Honorable Paul Alvarado

For Plaintiff and Appellant
Shade Foods, Inc.
        Joseph A. Hearst, Esq.

        Pillsbury, Madison & Sutro LLP
        Reginald D. Steer, Esq.

For Defendant, Cross-complainant and Appellant
Innovative Products Sales & Marketing, Inc.
        Emerich, Pedreira & Fike
        David A. Fike, Esq.

For Defendant and Appellant
Royal Insurance Company of America
        Musick, Peeler & Garrett LLP
        Cheryl A. Orr, Esq.

        Lynch, Gilardi & Grummer
        Richard S. Gilardi, Esq.

        Ginsburg, Stephan, Oringher & Richman, P.C.
        Harry W.R. Chamberlain II, Esq.

        Stephan, Oringher, Richman & Theodora, P.C.
        Harry W.R. Chamberlain II, Esq.

For Defendant, Cross-defendant and Appellant
Northbrook National Insurance Company
        Ropers, Majeski, Kohn & Bentley
        Susan H. Handelman, Esq.