California Court Sheds New Light On Litigation Privilege In Groundbreaking Insurance Bad Faith Case

  MONTEREY, CALIFORNIA - 09/05/2018 (PRESS RELEASE JET)

A San Diego ruling that denied an insurer’s attempt to claim information as litigation privilege sets a new precedent for bad faith lawsuits.

San Diego, CA - Aug. 28, 2018 - In a significant decision made by a San Diego federal judge, the efforts of Golden Eagle Insurance Company to strike portions from a bad faith lawsuit on the basis of mediation and litigation privilege were rejected. 

This ruling marks an important victory for the rights of insurance consumers throughout California. In essence, the court ruling prevents insurance carriers that cause unnecessary delays, fail to properly investigate its insured’s claims, and make unreasonably low settlement offers from hiding behind mediation and litigation privilege to avoid claims brought about as a result of its bad faith tactics.

The ruling stems from a 2011 case in which plaintiff Gregory Harman was injured in a car accident. Harman, through his attorneys, demanded a settlement in the sum of $674,525 from his insurer, Golden Eagle Insurance Company, under his automobile insurance policy’s uninsured motorist coverage. Golden Eagle refused to make any offer of settlement in response to Harman’s demand. After months of delay, Golden Eagle made an unreasonably low offer forcing Harman to litigate the case all the way through arbitration, from which Harman’s attorneys won an arbitration award of $676,546, more than $2,000 above the initial demand.

Because Golden Eagle failed to adequately investigate Harman’s claims ultimately causing years of delay, Harman’s attorneys also filed suit against Golden Eagle for breaching its duty of good faith and fair dealing with its own insured. Golden Eagle filed a motion asking the court to remove select paragraphs of the complaint on the grounds of both mediation privilege and litigation privilege.

Harman’s lead attorney, Todd Reeves from the personal injury firm of Dunnion Law in California, argued these privileges did not warrant removal of the claims from the complaint. Reeves argued the information Golden Eagle sought to remove represented conduct and thus the mediation privilege did not apply. Reeves further argued that under California law, litigation privilege was not applicable in a claim against an insurance company for bad faith.

The court agreed with Reeves on both accounts. According to the district court, the paragraphs at issue in Harman’s complaint could remain to demonstrate the insurance company’s “underlying course of conduct” throughout the mediation in order to “prove [Golden Eagle’s] breach of the good faith covenant.” In short, the court ruled Golden Eagle’s conduct should not be removed from the complaint, but some facts did need to be removed by amending two paragraphs related to the mediation. 

The court also sided with Reeves stating that litigation privilege did not apply at all to the challenged portions of Harman’s complaint. The district court explained that litigation privilege does not apply when the insured is “attempting to introduce evidence of the insurer’s litigation conduct in bad faith insurance cases.” 

“Consumers should have confidence that the insurance carrier they’ve paid to cover them will act in good faith, and deal with them fairly,” said Connell Dunnion, Esq., and CEO of Dunnion Law. “When that doesn’t happen, Dunnion Law has the legal experience to help protect the consumers’ interests, and hold the insurance carrier accountable, as we did with Golden Eagle Insurance.”

Dunnion Law, a prominent personal injury firm based in California, has helped thousands of individuals fight insurance companies to obtain the compensation they deserve. For more than 40 years, their fearless and experienced attorneys have provided the aggressive legal representation needed to hold insurance companies and individuals accountable for the harm caused to their clients. For more information about Dunnion Law and their team, please call (831) 373-8035 or, visit their website at https://www.dunnion.com.