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Supreme Court of California
March 29, 1979
S.F. No. 23843
[*883] [**331] [***844] Subdivision [****2] (h) of section 790.03 of the Insurance Code, ] a provision of the Unfair Practices Act (Ins. Code, § 790 et seq., hereinafter called the act) provides that insurers are prohibited from engaging in certain unfair claims settlement practices set forth in the section. 1 The [*884] sole issue in this proceeding is whether an individual who is injured by the alleged negligence of an insured may sue the negligent party's insurer for violation of the subdivision. [**336] [***849]
[****3] Ruth M. Keoppel (plaintiff) filed an action for personal injuries incurred as a result of a fall when she slipped at a food market. She joined as defendants Royal Globe Insurance Company (defendant), which had issued a policy of liability insurance to the market, and Robert E. Hunt [**332] [***845] Company (Hunt), an independent adjusting company which provided adjustment services to Royal Globe and was alleged to be its agent. According to the complaint, defendant violated subdivision (h)(5) of the act in that it had refused "to attempt in good faith to effectuate a prompt, fair, and equitable settlement" of plaintiff's claim although "liability . . . [had] become reasonably clear," and Hunt had advised plaintiff not to obtain the services of an attorney, in violation of subdivision (h)(14). Plaintiff sought damages for physical and emotional distress, as well as punitive damages. 2
[****4] Defendant demurred to the complaint and filed a motion for judgment on the pleadings on the grounds that the California Insurance Commissioner (commissioner) has the exclusive power to enforce subdivision (h), that a third party claimant has no standing to bring an action under the subdivision because it was intended by the Legislature only to protect the interests of the insured, and that plaintiff may not sue both the insured and the insurer in the same lawsuit. The trial court overruled the demurrer and denied the motion. Defendant seeks a writ of mandate, directing the trial court to vacate its orders.
CA(1a)(1a) We hold that ] a third party claimant may sue an insurer for violating subdivisions (h)(5) and (h)(14), but that the third party's suit may not be brought until the action between the injured party and the insured is concluded.
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23 Cal. 3d 880 *; 592 P.2d 329 **; 153 Cal. Rptr. 842 ***; 1979 Cal. LEXIS 236 ****
ROYAL GLOBE INSURANCE COMPANY, Petitioner, v. THE SUPERIOR COURT OF BUTTE COUNTY, Respondent; RUTH M. KEOPPEL et al., Real Parties in Interest
Subsequent History: [****1] Petitioner's application for a rehearing was denied May 16, 1979. Clark, J., Richardson, J., and Manuel, J., were of the opinion that the application should be granted.
Disposition: Let a writ of mandate issue to direct the trial court to vacate its orders and to enter judgment for defendant.
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