Judy Bamberger v. National Union Fire Ins. Co.

FILED
NOT FOR PUBLICATION
OCT 18 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JUDY BAMBERGER, No. 16-55252
Plaintiff-Appellant, D.C. No.
2:14-cv-06041-MWF-MAN
v.
MARSH USA, INC., DBA Marsh Risk MEMORANDUM*
and Insurance Services,
Defendant,
and
NATIONAL UNION FIRE INSURANCE
COMPANY, a Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Michael W. Fitzgerald, District Judge, Presiding
Argued and Submitted October 6, 2017
Pasadena, California
Before: KLEINFELD, GRABER, and CHRISTEN, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Plaintiff-Appellant Judy Bamberger appeals from district court orders
granting partial summary judgment, and entry of final judgment following a bench
trial, in favor of Defendant-Appellee National Union Fire Insurance Company. We
have jurisdiction under 28 U.S.C. § 1291, and we affirm.
We review de novo an order granting partial summary judgment.
Stratosphere Litig. L.L.C. v. Grand Casinos, Inc., 298 F.3d 1137, 1142 (9th Cir.
2002). “Following a bench trial, we review the district court’s findings of fact for
clear error and its conclusions of law de novo.” Id. “We may affirm for any
reason supported by the record.” Travelers Prop. Cas. Co. of Am. v.
ConocoPhillips Co., 546 F.3d 1142, 1145 (9th Cir. 2008).
1. We affirm summary judgment on Bamberger’s contract claim.
Bamberger has no extant contract damages because National Union reimbursed
Bamberger for her out-of-pocket contribution to the Moradi settlement, plus
interest. Bamberger’s contract damages do not include the amount her excess
insurer contributed to the Moradi settlement. See Pan Pac. Retail Props., Inc. v.
Gulf Ins. Co., 471 F.3d 961, 973–74 (9th Cir. 2006). Emotional distress damages
are generally unavailable in contract actions, Applied Equip. Corp. v. Litton Saudi
Arabia Ltd., 869 P.2d 454, 460 (Cal. 1994), and Bamberger cites no authority
beyond a single outlier case for the proposition that insurance contract actions fall
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outside the general rule. See Crisci v. Sec. Ins. Co. of New Haven, 426 P.2d 173,
179 (Cal. 1967) (permitting emotional distress damages for breach of an insurance
contract where “the breach also constitute[d] a tort”).
2. We affirm partial summary judgment on Bamberger’s bad faith claim for
the period between National Union’s learning of the Moradi action and the state
trial court’s granting Marsh’s motion for summary judgment. During that period,
National Union owed Bamberger no duty to defend. See Cal. Ins. Code
§ 11580.9(d); Signal Cos. v. Harbor Ins. Co., 612 P.2d 889, 894 (Cal. 1980).
National Union did not impermissibly favor Marsh over Bamberger; Bamberger
herself initially denied that she was acting as anyone’s agent or employee at the
time of the accident. National Union breached no recognized disclosure obligation
because National Union disclosed the existence of the policy to Bamberger and her
lawyers, and Bamberger did not show that National Union was on notice that she
was unaware she was a potential insured. See Sarchett v. Blue Shield of Cal., 729
P.2d 267, 276 (Cal. 1987) (recognizing a disclosure obligation “[o]nce it becomes
clear to the insurer that its insured” is ignorant of his or her rights under the
policy). Finally, even if National Union breached a duty to Bamberger, she
suffered no compensable harm because her primary insurer provided a defense and
she opposed Marsh’s motion for summary judgment in the state trial court.
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3. We also affirm partial summary judgment on Bamberger’s bad faith
claim for the period between the state trial court’s granting Marsh’s motion for
summary judgment and the Moradi appeal’s becoming final. National Union could
reasonably rely on the summary judgment ruling to justify its subsequent non-
contribution to the Moradi settlement. See Fillipo Indus., Inc. v. Sun Ins. Co. of
N.Y., 88 Cal. Rptr. 2d 881, 888 (Ct. App. 1999) (stating that “the reasonableness of
the insurer’s decision must be evaluated as of the time it was made”).
4. Finally, we affirm the district court’s judgment following the bench trial
on Bamberger’s bad faith claim for the period after the Moradi appeal became
final. The district court applied the correct legal standard and it did not clearly err
in finding that National Union “simply did not commit a ‘conscious and deliberate
act’ to frustrate Bamberger’s contractual rights.” See Chateau Chamberay
Homeowners Ass’n v. Associated Int’l Ins. Co., 108 Cal. Rptr. 2d 776, 783 (Ct.
App. 2001) (requiring “a conscious and deliberate act” rather than “an honest
mistake, bad judgment or negligence” to support liability for bad faith (quoting
Careau & Co. v. Sec. Pac. Bus. Credit, Inc., 272 Cal. Rptr. 387, 399–400 (Ct. App.
1990))). That judgment also precludes punitive damages.
AFFIRMED.
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