Procedural Posture

Plaintiffs, an insured and his assignees, appealed a summary judgment entered by the Superior Court of Los Angeles County (California), in favor of defendant insurer on claims for breach of contract and breach of the implied covenant of good faith and fair dealing.

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Overview

The assignees sued the insured and others for personal injuries. The insurer provided a defense to the personal injury action, which resulted in a judgment in excess of the policy limits. The bad faith complaint alleged that the insurer failed to accept reasonable settlement offers within the policy limits. The court held that the insured’s tort claim was untimely under the two-year statute of limitations, Code Civ. Proc., § 339, subd. (1), because he did not authorize the filing of the complaint until after the limitations period for his claim had expired. The assignees’ contract claim for breach of the implied covenant was timely under the four-year limitations period of Code Civ. Proc., § 337, subd. (1); the claim accrued for purposes of Code Civ. Proc., § 312, when the underlying judgment was rendered, and the limitations period was equitably tolled while an appeal was pending. The insured’s retroactive ratification of the filing of the complaint and retroactive assignment did not prejudice the insurer within the meaning of Civ. Code, § 2313, because the limitations period had not expired. Civ. Code, § 3300, authorized recovery of the excess judgment as foreseeable damages.

Outcome

The court reversed as to the assignees’ contractual cause of action for breach of the implied covenant of good faith and fair dealing, affirmed in all other respects, and remanded for further proceedings.

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