United States District Court, S.D. California
WILLIAM Q. HAYES, District Judge.
The matter before the Court is Defendant National Union's Motion for a New Trial and/or for Judgment to be Entered in its Favor ("Motion for New Trial and/or Judgment"). (ECF No. 169).
On June 10, 2011, Plaintiff LMA initiated this action by filing a Complaint in this Court against Defendant National Union Fire Insurance Company of Pittsburgh, PA ("National Union"). (ECF No. 1). In connection with Defendant's refusal pay $3.75 million toward the settlement of an underlying litigation pursuant to an umbrella insurance policy, Plaintiff asserted two claims for relief: (1) breach of contract, and (2) breach of the implied covenant of good faith and fair dealing ("bad faith claim"). Plaintiff sought punitive damages as to the bad faith claim, and demanded a jury trial.
On February 15, 2013, the Court issued an Order denying Defendant's Motion for Summary Judgment. (ECF No. 37).
On November 14, 2013 through November 21, 2013, a jury trial was conducted as to Plaintiff's two claims. (ECF Nos. 114, 115, 124, 136, 138). On November 20, 2013, Defendant filed a Motion for Judgment as a Matter of Law Re: All Contractual Issues, and a Motion for Judgment as a Matter of Law Re: Bad Faith and Punitive Damages. (ECF Nos. 127, 128). During trial, the Court took the motions under submission. (ECF No. 136).
On November 22, 2013, the jury unanimously found in favor of Plaintiff on its breach of contract claim and bad faith claim. (ECF No. 140). The jury further found that there was not clear and convincing evidence that Defendant engaged in conduct with malice or oppression.
On December 2, 2013, Plaintiff filed a Motion for Entry of Final Judgment, accompanied by exhibits. (ECF No. 145).
On March 28, 2014, after receiving briefing from the parties, the Court issued an Order denying Defendant's Motions for Judgment as a Matter of Law, and granting in part and denying in part Plaintiff's Motion for Entry of Final Judgment. (ECF No. 162).
On April 7, 2014, the Court entered Final Judgment on behalf of Plaintiff and against Defendant for the sum of $3, 750, 000, together with fees and costs of $1, 216, 580.99, and prejudgment interest of $1, 113, 987.44, for a total of $6, 080, 568.43. (ECF No. 164). The Court awarded post-judgment interest pursuant to 28 U.S.C. § 1961, and retained jurisdiction for the limited purpose of considering any future request for fees and/or costs pursuant to Brandt v. Superior Court, 37 Cal.3d 813, 817 (1985). On May 5, 2014, Defendant filed the Motion for New Trial and/or Judgment. (ECF No. 169). On May 23, 2014, Plaintiff filed an opposition. (ECF No. 171). On June 5, 2014, Defendant filed a reply. (ECF No. 175).
II. Motion for Judgment as a Matter of Law
A. Standard of Review
Federal Rule of Civil Procedure 50 provides:
If a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue, the court may... resolve the issue against the party; and... grant a motion for judgment as a matter of law against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue.
Fed. R. Civ. P. 50(a)(1); see also id. 50(b) ("No later than 28 days after the entry of judgment... the movant may file a renewed motion for judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59. In ruling on the renewed motion, the court may: (1) allow judgment on the verdict, if the jury returned a verdict; (2) order a new trial; or (3) direct the entry of judgment as a matter of law."). "Judgment as a matter of law is appropriate when the evidence, construed in the light most favorable to the nonmoving party, permits only one reasonable conclusion, which is contrary to the jury's verdict. Conversely, if there is such relevant evidence as reasonable minds might accept as adequate to support the jury's conclusion, " a motion for judgment as a matter of law must be denied. Hagen v. City of Eugene, 736 F.3d 1251, 1256 (9th Cir. 2013) (quotations omitted).
B. Contractual Issues
Defendant moves for judgment as a matter of law as to "all contractual issues." (ECF No. 169 at 10). Defendant contends that the Court erred in its application of Diamond Heights Homeowners Association v. National American Insurance Co., 227 Cal.App.3d 563 (1991) to this case. Defendant contends that Diamond Heights is distinguishable from the facts of this case and "inconsistent with California Supreme Court authority." Id. at 14. Defendant contends that, even if Diamond Heights applies, the jury's verdict is not supported by the evidence because there "was no evidence of a reasonable risk to LMA, " "National Union was given less than 24 hours to agree to the Ambu-LMA settlement, " and National Union "specifically advised LMA of its intent to reserve rights." Id. at 15.
Plaintiff contends that the motion should be denied because " Diamond Heights has never been overruled and the facts of Diamond Heights are directly on point." (ECF No. 171 at 9). Plaintiff contends that it is not relevant whether there was evidence of "a reasonable risk to LMA, " and even if it is relevant, there was evidence that Ambu was demanding $28 million, an amount in excess of policy limits. Id. at 14. Plaintiff contends that there was ample evidence that National Union had sufficient time to undertake the defense and that the settlement was reasonable.
For the reasons discussed in the Court's February 15, 2013 Order denying the Motion for Summary Judgment, the Court finds the rationale and holding of Diamond Heights and Fuller-Austin Insulation Co. v. Highlands Ins. Co., 135 Cal.App.4th 958 (2006) apply to this case. See ECF No. 37. Viewing the evidence presented at trial in the light most favorable to Plaintiff, and drawing all reasonable inferences in Plaintiff's favor, the Court finds that "there [was] such relevant evidence as reasonable minds might accept as adequate to support the jury's conclusion" that Plaintiff was entitled to prevail on its claim for breach of contract. Hagen, 736 F.3d at 1256 (quotation omitted). The motion for judgment as a matter of law regarding the contractual issues is denied.
C. Bad Faith and Punitive Damages
Defendant moves for judgment as a matter of law with respect to Plaintiff's bad faith claim and request for punitive damages. Defendant contends that "when an insurer is obligated to pay under a policy based upon waiver or estoppel-not based on a breach of a policy term-bad faith and punitive damages cannot lie." (ECF No. 169 at 16 (citing Calfarm Ins. Co. v. Krusiewicz, 131 Cal.App.4th 273, 285-86 (2005)). Defendant contends that the evidence as to whether National Union acted in bad faith or unreasonably "is overwhelmingly in National Union's favor." Id. Defendant contends that "[e]ven if the settlement itself was deemed to be reasonable-which National Union denies-it certainly cannot be said that National Union acted unreasonably in deciding to proceed to trial, when the chance of a defense verdict in favor of LMA was a coin toss, '... and there was no reasonable ...