Plaintiff policyholders appealed judgments from the Superior Court of Los Angeles County (California), which granted summary adjudication in favor of defendants, an insurer and others, on causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair competition under Bus. & Prof. Code, § 17200 et seq.
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Overview
The policyholders alleged bad faith denial or underpayment of valid claims for property damage sustained in wildfires. Some of the policyholders failed to submit sworn proofs of loss, while others submitted a delayed notice of loss. The insurer did not object to the delayed notice of loss and did not present evidence of any prejudice resulting from the failure to provide proofs of loss. The court held that the insurer could not rely on the failure to comply with the proof of loss condition as a defense absent a showing of substantial prejudice. Applying the notice-prejudice rule did not alter the statutory requirements for fire insurance in Ins. Code, §§ 2070, 2071. The insurer forfeited the defense of delay under Ins. Code, § 554, by not specifically objecting to the untimely notice of loss. An unfair competition claim based on bad faith was not barred, even though the alleged conduct might also constitute a violation of Ins. Code, §§ 790.02, 790.03, subd. (h)(5), of the Unfair Insurance Practices Act, as to which there was no private cause of action. An alter ego argument lacked merit because the insurer was adequately capitalized and had assets available to satisfy a judgment.
Outcome
The court affirmed the summary judgment in favor of the insurer as to alter ego and other vicarious liability theories, while reversing in all other respects.