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Mayer Hoffman McCann, P.C. v. Camico Mutual Insurance Co.

United States District Court, N.D. California

May 19, 2017

MAYER HOFFMAN MCCANN, P.C., Plaintiff,
v.
CAMICO MUTUAL INSURANCE COMPANY, Defendant.

          ORDER GRANTING IN PART DEFENDANT'S MOTION FOR JUDGMENT AS A MATTER OF LAW; ORDER RE: JURY INSTRUCTIONS AND VERDICT FORM Re: Dkt. No. 173

          SUSAN ILLSTON United States District Judge

         This order resolves defendant's motion for judgment as a matter of law and informs the parties regarding the substantive instruction and verdict form regarding reformation that the Court intends to provide to the jury.

         At the close of evidence, defendant filed a motion for judgment as a matter of law on plaintiff's claims for breach of contract, breach of the covenant of good faith and fair dealing, reformation, and declaratory relief, and on defendant's counterclaims for declaratory relief and reimbursement. Plaintiff has filed an opposition, and defendant has filed a reply.

         After careful consideration of the parties' arguments and the evidence in this case, the Court GRANTS defendant's motion as to plaintiff's claims for breach of contract and breach of the covenant of good faith and fair dealing. The Court concludes that defendant did not deny plaintiff any policy benefits that were due under the policy as written, and thus that there was no breach of contract.[1]

         Plaintiff acknowledges that the policy as written does not provide coverage, but plaintiff contends that particular language in the reinstatement endorsement is unenforceable because (1) it is ambiguous and not plain, clear and conspicuous; (2) the coverage provided was illusory; and (3) defendant failed to properly disclose the limitation contained in the endorsement. Based on the evidence at trial, the Court finds that as a matter of contract interpretation the language of the reinstatement endorsement is not ambiguous, and that it is plain, clear and conspicuous. The Court also finds as a matter of law that the coverage provided was not illusory. Finally, the Court finds that under the facts of this case, whether the limitation was properly disclosed to plaintiff does not go to whether defendant breached the clear and unambiguous language of the policy. Instead, the issue of disclosure is relevant to the Court's consideration of plaintiff's claim for reformation.

         For the same reasons, the Court finds as a matter of law that there was no bad faith. See Waller v. Truck Ins. Exch. Inc., 11 Cal.4th 36, 44 (1995) (holding there is no bad faith liability where there is no breach of insurance contract); R & B Auto Center, Inc. v. Farmers Group Inc., 140 Cal.App.4th 327, 352-54 (2006) (affirming dismissal of bad faith claim where there was no coverage under policy even where insured seeking reformation because “[s]ince it is reasonable to deny the claim at the time, if the policy is later reformed to provide retroactive coverage, the insurer may not be held liable for bad faith for failing to have the foresight to know that the policy would not be reformed”); O'Keefe v. Allstate Indemn. Co., 953 F.Supp.2d 1111, 1116 (S.D. Cal. 2013) (same).

         The Court finds it appropriate to seek advisory findings from the jury regarding plaintiff's claim for reformation. The Court's intended reformation instruction is as follows:

         REFORMATION -- ELEMENTS

         To obtain reformation of an insurance policy, the following essential elements must be shown:

         1. an antecedent (usually oral) agreement between insured and insurer as to which there was no mistake;

         2. the insurance policy as drafted contains terms materially different from the parties' antecedent agreement; and

         3. that difference was the result of:

a. fraud (party drafting contract intentionally inserted different terms); or
b. mutual mistake (neither party aware that contract contained ...

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