AIMU Weekly Bulletin, Week of June 26 2009
June, 2009
By
Samuel H. Ruby
AIMU Weekly BulletinCOURT REJECTS JURY INSTRUCTIONS ON "GENUINE DISPUTE" DOCTRINE
McCoy v. Progressive West Ins. Co. 171 Cal. App 4
th 785 (2009). A California court of appeal upheld a bad faith verdict against an insurer, finding no error in the trial court's refusal to give certain jury instructions. The parties agreed the jury would be given certain form instructions regarding the insured's bad faith claim. The court instructed the jury with CACI 2331-32, which state the insured must prove the insurer "unreasonably failed to pay policy benefits" and "unreasonably failed to properly investigate the loss and denied coverage / failed to pay insurance benefits." The insurer also asked the trial judge to give certain special instructions patterned after statements in the case law concerning the "genuine dispute" doctrine. The trial court refused to give the special instructions. The court of appeal affirmed. The appellate court determined that while the "genuine dispute" doctrine has often been employed by courts as an analytical aid when determining whether a bad faith claim may fail as a matter of law, there was no known precedent for instructing a jury on what constitutes a "genuine dispute" and the consequence of a "genuine dispute" to an insured's bad faith claim. A "genuine dispute" is simply the opposite of an unreasonable withholding of policy benefits. Thus, the court was correct when a jury is asked to make a finding as to whether the insurer reasonably withheld policy benefits, the answer will subsume the question of whether there was a genuine dispute over coverage. (
Bullivant Houser Bailey PC, Sam Ruby, Spring 2009.)