Boykin v. State Farm General Ins.

Filed 4/21/06 Boykin v. State Farm General Ins. Co. CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Tulare County. Patrick J. O'Hara and Gerald F. Sevier, Judges.

Law Office of Sassoon Sales, Sassoon Sales for Plaintiffs and Appellants.

Hughes & Nunn, Randall M. Nunn, E. Kenneth Purviance and Melissa K. Mixer for Defendant and Respondent.

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The trial court sustained defendant insurer's demurrer to plaintiff policyholders' complaint for breach of contract and of the implied covenant of good faith and fair dealing. Leave to amend the complaint was denied. The policy was a homeowners' policy and the loss was caused by fire. The insurer paid a claim and subsequently paid more to satisfy an arbitration award in favor of plaintiffs, but plaintiffs continued to pursue a bad-faith claim in court. The only contested issue on appeal is whether the trial court erred in ruling that plaintiffs failed to allege facts sufficient to plead a cause of action for bad faith.

We reject the trial court's view that no bad faith claim lies in any case in which the insurer paid an arbitration award after complying with an arbitration procedure required by the policy. The ways in which an insurer can commit bad faith despite that compliance are myriad. We also reject defendant's argument that the judgment should be affirmed on the alternative ground that the complaint, combined with judicially noticeable facts, established the defense that a genuine dispute existed between the parties regarding the amount of the loss, so defendant's failure to pay more could not have been caused by bad faith. The complaint does not establish that defense as a matter of law and the additional facts defendant relies on are not judicially noticeable. Finally, we accept plaintiffs' concession that their breach-of-contract claim is barred by the arbitration award under principles of res judicata.

The demurrer was erroneously sustained with respect to the bad faith claim. We reverse the judgment and the order sustaining the demurrer with respect to that claim and otherwise affirm.

FACTUAL AND PROCEDURAL HISTORIES

The home of plaintiffs Silas and Thelma Boykin, insured by defendant State Farm General Insurance Company, was damaged by a fire in November 2000. A year later, plaintiffs filed an action for breach of contract against defendant in San Diego Superior Court. In April 2002, after defendant paid approximately $317,000 on the claim, the parties engaged in mediation. Defendant offered an additional $157,000 at the mediation, but plaintiffs rejected the offer.

Defendant then filed a petition to compel â€