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Probably the most highly effective weapons an insurance coverage firm can use to defeat a nasty religion declare is the “real dispute” doctrine. Beneath this doctrine, so long as there was a real dispute concerning protection or the quantity owed, the insurer can’t be held answerable for having withheld the disputed coverage advantages even when it later turned out they have been owed. Chateau Chamberay Owners Ass’n v. Related Int’l Ins. Co., 90 Cal.App.4th 335 (2001). Traditionally, this protection has been utilized mostly in revealed circumstances involving disputes over unsettled authorized points or the place the insurer’s place was supported by a certified skilled. See e.g., Fraley v. Allstate Ins. Co., 81 Cal.App.4th 1282 (2000); Guebara v. Allstate Ins. Co., 237 F.3d 987 (ninth Cir. 2001); Opsal v. USAA, 2 Cal.App.4th 1197 (1991).
Just lately, nonetheless, a printed determination expanded the usage of the doctrine to disputes over basic damages. In Hovsepyan v. GEICO Gen. Ins. Co., — F.Supp.3d —, 2022 WL 2873059, at *7 (E.D. Cal. July 21, 2022), the district courtroom famous that the worth of a claimant’s basic damages is “a matter on which there legitimately could also be a large distinction of opinion”.[1] Subsequently, the courtroom held, the insurer couldn’t be answerable for dangerous religion primarily based on a dispute over basic damages although the claimant in the end was awarded greater than the insurer supplied.
In Hovsepyan, three insureds have been injured in an accident attributable to an uninsured motorist. The insureds submitted claims for uninsured motorist advantages to their insurer, GEICO. Nevertheless, whereas each side agreed on the worth of the insureds’ medical specials, they may not attain an settlement on the overall damages – the insureds claimed a complete of over $100,000 basically damages, whereas GEICO evaluated these claims to be value about $26,000. Due to the events’ dispute over basic damages, the UM claims proceeded to arbitration. The arbitrator awarded the insureds a complete of about $54,000 for his or her ache and struggling, which was over 100% greater than GEICO had supplied for these damages.
After GEICO paid the award, the insureds sued for dangerous religion. In response, GEICO filed a movement for abstract judgment contending that the dangerous religion declare failed beneath California’s “real dispute” doctrine, amongst different grounds.[2] The Court docket granted GEICO’s abstract judgment movement.
The Court docket famous that the “discrepancy between the events’ respective settlement positions previous to the uninsured motorist arbitration are attributable to variations of their valuation of basic, ‘ache and struggling’ damages.” The Court docket held that “[e]valuating such damages is an inherently subjective course of” that justified software of the real dispute doctrine. (Id. at *6.) In arriving at this conclusion, the Court docket adopted the reasoning in an unpublished federal case, Holenda v. Infinity Choose Ins. Co., No. CV13-07128R (CWx), 2014 WL 559381 (C.D. Cal. Feb. 13, 2014), by which the district courtroom arrived at an identical conclusion:
With respect to basic damages specifically, Holenda acknowledged their subjective nature, noting that “[t]ranslating ache and anguish into {dollars} can, at finest, be solely an arbitrary allowance, and never a technique of measurement.” Id., citing Beagle v. Vasold, 65 Cal. second 166, 172, 53 Cal.Rptr. 129, 417 P.second 673 (1966). The courtroom additional famous that the quantity to be awarded for such damages is “a matter on which there legitimately could also be a large distinction of opinion” (id., citing Seffert v. Los Angeles Transit Traces, 56 Cal. second 498, 508, 15 Cal.Rptr. 161, 364 P.second 337 (1961)), and “are inherently topic to real dispute.” (Holenda, at *4.)
Hovsepyan at *6. Hovsepyan’s software of the real dispute doctrine to basic damages is important. It’s because the decision of uninsured/underinsured motorist claims usually hinge on disputes over the worth of basic damages. Previous to Hovsepyan, there was no revealed precedent in California on this vital difficulty. Thus, this determination ought to present steerage for evaluating future dangerous religion circumstances involving disputes over basic damages.
FOOTNOTES
[1] The Hovsepyan determination is at present being appealed earlier than the Ninth Circuit.
[2] GEICO additionally asserted a statute of limitations protection that was an impartial foundation for the movement. That protection, though profitable, will not be addressed on this article.
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