SHADE FOODS, INC., Plaintiff and Appellant, v. INNOVATIVE PRODUCTS SALES & MARKETING, INC., Defendant, Cross-complainant and Appellant; ROYAL INSURANCE COMPANY OF AMERICA, Defendant and Appellant; NORTHBROOK NATIONAL INSURANCE COMPANY, Defendant, Cross-defendant and Appellant., 78 Cal. App. 4th 847

Summary

Defendant insurers appealed the award of compensatory and punitive damages to two insureds, plaintiff and cross-complainant. Under Cal. Civ. Code § 3294(a), punitive damages could be plausibly justified by a finding of "oppression" or "malice." However, in § 3294(a), "oppression" and "malice" required a finding of "despicable" conduct on the part of defendants. The record failed to establish by clear and convincing evidence the sort of contemptible conduct that could be described as "despicable." Therefore, the judgments for punitive damages were reversed. Furthermore, each defendant was fully liable for the losses up to the policy limits, and liability should have been allocated severally among the defendants in accordance with the "other insurance" clause in the policies. However, the trial court erroneously imposed joint and several liability; consequently, the judgments for compensatory damages were partially reversed and the case was remanded for proper allocation of liability. ...