Plaintiffs sued Horvitz & Levy LLP’s client, Travelers Commercial Insurance Company, for breach of contract and insurance bad faith after the parties were unable to agree on what it would cost to rebuild plaintiffs’ house after it was destroyed in a wildfire. After the fire, Travelers immediately paid plaintiffs 80 percent of the policy limits for their real property claim, and 50 percent of the policy limits for their personal property claim. But in the ensuing months and years, plaintiffs failed to cooperate and to communicate with Travelers in the claims adjustment process. Plaintiffs and Travelers also had disputes over the total values of plaintiffs’ various categories of claims. In plaintiffs’ bad faith action, the jury found Travelers breached the policy by failing to pay the amounts plaintiffs claimed, but that it did not act in bad faith.
On appeal, plaintiffs argued they were entitled to a new trial on bad faith because the district court erred: (1) by allowing Travelers to introduce evidence that at a mediation plaintiffs demanded several million dollars to settle their claim; (2) by refusing to give a jury instruction that Travelers erroneously named the IRS, which had filed tax liens against plaintiffs, as a payee on a portion of its payment of policy benefits; (3) by allowing Travelers’ expert witness to testify that plaintiffs’ mediation demand showed they were more interested in manufacturing a bad faith action than in resolving their fire loss claim; and (4) by denying prejudgment interest on plaintiffs’ contract damages.
The U.S. Court of Appeals for the Ninth Circuit affirmed in a memorandum opinion. Among other things, the court held plaintiffs’ attorney waived any objection that admission of their mediation demands violated California’s mediation confidentiality statute.