Auto Draft

Plaintiff insurer appealed the judgment from the Superior Court of Contra Costa County (California), granting plaintiff’s summary judgment motion for declaratory relief, finding plaintiff did not have a duty to defend or indemnify defendant insured, but awarding defendant compensatory damages and punitive damages because plaintiff’s defense of defendant in an underlying action was conducted improperly.

Overview

Plaintiff insurer sought declaratory relief to establish it did not have a duty to defend defendant insured in an antitrust action. The trial court found in favor of plaintiff but awarded defendant damages. On appeal, plaintiff contended that jury instructions were incorrect, evidentiary rulings were prejudicial, and insufficient evidence existed to justify punitive damages. The court found that an instruction on plaintiff’s right to withdraw from defendant’s defense would have been inappropriate because plaintiff never attempted to withdraw, and because the issue before the jury was whether the defense that was provided was conducted in good faith. Evidence that the summary adjudication order granting defendant’s declaratory relief was subject to appeal was properly admitted because it was misleading to inform the jury of the order without explaining that it was reviewable. The court ruled that the punitive damages award was not justified because evidence of plaintiff’s improper conduct did not support a finding that plaintiff was aware of, and willfully disregarded, adverse consequences to defendant. Thus, the court affirmed the judgment but reversed the punitive damages award.

Outcome

Expert witness designation included employment lawyer for all parties during pretrial discovery. The court affirmed the judgment of the trial court that granted plaintiff insurer declaratory relief, and reversed the award of punitive damages to defendant insured. The court held that punitive damages were not justified because insufficient evidence existed to show plaintiff acted with malice in conducting the defense of defendant.

Procedural Posture

Appellant surgeon appealed a decision of the Superior Court of Los Angeles County (California), which sustained the general demurrer of respondents, hospital and individual physicians, to appellant’s fourth amended complaint for five causes of action based on respondent hospital’s disclosure of a peer review committee evaluation to an affiliated health insurer.

Overview

Appellant surgeon was employed by respondent hospital. The hospital’s board of directors adopted a peer review committee’s evaluation of appellant’s medical performance and sent a copy of the report’s recommendations to an affiliated health insurer. Appellant brought suit against respondents, alleging breach of contract. After appellant’s fourth amended complaint, the trial court granted respondents’ demurrer. On appeal, the court affirmed, holding that the trial court was entitled to conclude that appellant’s breach of contract cause of action was a sham. Appellant revised the allegations from that of an express to an implied contract in his numerous amended pleadings. The court held that the court properly sustained, without leave to amend, the demurrer to appellant’s breach of contract cause of action. Appellant failed to sufficiently allege a cause of action for negligent breach of confidential relationship. Among the elements appellant failed to sufficiently plead was an economic relationship with a third party. Respondents’ disclosure to an affiliated health insurer breached no duty and, therefore, constituted no tort. Expert witness designation included employment lawyer for all parties during pretrial discovery.

Outcome

The judgment sustaining the demurrer to appellant surgeon’s fourth amended complaint without leave to amend was affirmed because appellant’s cause of action was properly ruled to be a sham. Respondents, hospital and individual physicians, had no duty not to disclose a peer review report.