Written by Samuel Lopez, an ardent advocate for truth and justice, relentlessly delving into the complex world of legal issues. Read more about his work here.
A Partial Reversal Sets the Stage
In a riveting twist of events, a California state appellate panel has overturned part of the earlier victories secured by an insurance company and claims adjuster in a $3 million wrongful death settlement dispute. The court found there are still triable issues of fact regarding whether they violated their policy or neglected their duty to defend the victims.
Transguard Insurance Co. of America Inc. and its adjuster, Reliant General Claims Services Inc., initially secured a victory in a wrongful death lawsuit filed by Maria and Trinidad Gomez Sr. Their son, Trinidad Jr., was tragically killed by a woman insured by Transguard and her son. But the appellate panel ruled on Thursday that these companies hadn’t sufficiently proven their right to summary judgment on the claims.
The Bad Faith Claim: Dead in the Water?
However, the appellate panel declined to resuscitate the family’s bad faith claim against the insurers for not settling the underlying claims. Justice Rashida A. Adams penned for the panel that there was no “unreasonable” conduct by the respondents concerning the settlement of the Gomezes’ claims. The Gomezes, reportedly, had severed settlement negotiations after the insurers introduced what they deemed as “new and unacceptable terms” in response to their first offer.
Unraveling the Initial Settlement Offer
According to the ruling, the Gomezes initially proposed a settlement in July 2016, offering to resolve their claims against the drivers, Leticia Carrillo and Sergio Morales, as long as the policy limits didn’t exceed $600,000. The insurers responded by agreeing to settle up to the $15,000 limit of Carrillo’s Transguard auto policy.
The family, however, rejected this counteroffer the following month, arguing it would obligate them to release pending claims against the city where the accident occurred when they’d only agreed to settle their wrongful death claims.
Jury’s Verdict and The Fallout
In April 2019, a jury awarded the Gomezes a $3 million verdict. Subsequently, Carrillo and Morales transferred their coverage rights to the Gomezes, in exchange for the suspension of the judgment’s enforcement. The family then sued Reliant and Transguard, claiming they had unreasonably refused to settle the claims and had breached their contract by not sufficiently defending Carrillo and Morales or paying post-judgment interest.
Breach Claims: Back to Square One
Although the panel concurred with the trial court’s decision on the bad faith claim, it disagreed on the breach claims, concluding that Reliant and Transguard hadn’t convincingly proven their early victories. The panel sent the case back to the trial court, instructing it to issue a new order retaining the breach claims.
Justice Adams wrote, “Respondents have not established they are entitled to summary adjudication on the breach of contract claim based on the duty to defend.”
Interest Payment: A Grey Area
While the insurers managed to evade interest on the full $3 million award, they couldn’t avoid the obligation to pay post-judgment interest entirely. Justice Adams further noted that nothing in the policy’s wording suggested an offer to settle would entirely absolve respondents of their commitment to their insureds to pay interest on ‘damages awarded in a suit.’
Duty to Defend: The Pendulum Swings
The Gomezes maintained that the insurers failed in their duty to defend Carrillo and Morales by not providing them separate legal representation, as a potential conflict of interest existed between them as defendants. The family asserted that Carrillo was ready to testify that she had not permitted Morales to use her car, a defense that could’ve exonerated her but she retracted after consulting with the counsel.
Carrillo subsequently filed her own complaint against the insurers in December 2020.
Legal Representation
The Gomezes are represented by Garo Mardirossian and Armen Akaragian of Mardirossian Akaragian LLP and by Jeffrey I. Ehrlich of The Ehrlich Law Firm. Transguard is represented by Edward F. Donohue III of Hinshaw & Culbertson LLP. Reliant is represented by Christopher P. Wesierski and Abe G. Salen of Wesierski & Zurek LLP.
A Deep Dive into the Implications
While this case remains specific to the involved parties, its outcomes carry broader implications. It underlines the importance of ensuring fairness in insurance settlements and the critical role of insurance companies in acting in good faith. It also accentuates the inherent complexities in insurance disputes and the necessity for consumers to fully understand their policy coverage.
As we anticipate the next phase of this saga, one thing remains clear: the ongoing legal tussles highlight the need for transparency, good faith, and fairness in dealing with insurance claims – a lesson for all insurance companies and policyholders. And, as always, the quest for justice prevails.
The case is Gomez et al. v. Reliant General Claims Services Inc. et al., Case Number B314207, in the Court of Appeal of the State of California, Second Appellate District.
