By Stephen Raucher and Michael Sohigian
2016: A Year of Key Developments
2016 was an active year in insurance law in California. With respect to bad faith, the California Supreme Court decided that Brandt fees are included when calculating punitive damages, and the Second District Court of Appeal (the "Second District") upheld the imposition of bad faith liability against an insurer that had offered policy limits, but failed to act reasonably after the settlement offer was made. The results of other bad faith cases decided in California were less friendly to policyholders.
In other developments, the Fifth District Court of Appeal (the "Fifth District") expanded the application of the efficient proximate cause doctrine to benefit policyholders. The Fifth District also allowed an insurer to pursue a claim assigned to it by the defendant in a subrogation matter against the defendants’ allegedly negligent insurance broker.