Patricia A. WALKER, Plaintiff and Appellant, v. 20TH CENTURY INSURANCE COMPANY, Defendant and Respondent.
Plaintiff, Patricia A. Walker, appeals from a judgment in favor of defendant, 20th Century Insurance Company, after a court trial on a complaint for breach of the implied covenant of good faith and fair dealing and negligence. The issue in this appeal is whether the trial court properly concluded defendant was not required to pay that portion of an excess judgment involving attorneys fees imposed against one of its insureds. The fees had been awarded to plaintiff pursuant to Code of Civil Procedure 1 section 1021.4 in an underlying lawsuit against one of defendant's policyholders based upon the fact the insured had been convicted of felony driving under the influence of alcohol. (Veh.Code, § 23153.) The insured's estate assigned its rights to sue defendant, the insurer, for a breach of the covenant of good faith and fair dealing to plaintiff. We conclude a convicted felon, in this case defendant's insured, may not recover attorney fees imposed in an underlying action pursuant to section 1021.4 as an element of damage pursuant to Civil Code section 3333 in a subsequent suit against an insurer for a breach of the implied covenant of good faith and fair dealing. We are in complete accord with the experienced and knowledgeable trial judge's conclusions in this regard and affirm the judgment.
A. Pleading Allegations
In the complaint, plaintiff alleged she was the assignee of defendant's insured, Sydney Jane Allen, who was at fault in a high-speed collision. Ms. Allen ran a red light and hit plaintiff's car on February 17, 1987. At the time of the accident, Ms. Allen was intoxicated with a blood alcohol level of .26%. Defendant provided liability coverage for bodily injury limited to $100,000 per person for damages arising out of the vehicle Ms. Allen was driving. On January 14, 1988, plaintiff sued Ms. Allen and Michelle Belvedere, the owner of the car. The action resulted in a judgment entered against the estate of Ms. Allen for $455,037.88. Ms. Allen, defendant's insured, had died after the action was filed.
Prior to January 14, 1988, defendant had the opportunity for six months to settle all of plaintiff's claims within the $100,000 policy limits. It was alleged defendant repeatedly and unreasonably refused to accept the policy-limit settlement offers. Defendant had more than sufficient information to evaluate the liability and damages of the case. In the cause of action for breach of the implied covenant of good faith and fair dealing, plaintiff alleged that, notwithstanding the information, defendant breached its duty to its insured, Ms. Allen, by failing to advise her of: the potential for an excess judgment; the resultant conflict of interest; and the availability of independent counsel. Defendant failed to initiate any settlement negotiations and unreasonably rejected and refused plaintiff's repeated policy-limits settlement offers. Plaintiff also claimed defendant negligently and carelessly failed to promptly investigate and process the insured's claims.
Ms. Allen, who was being treated for cancer, died on August 13, 1988. She had only personal assets and the potential cause of action against her insurer for a bad faith violation of the implied covenant of good faith and fair dealing occasioned by its refusal to settle her case. Thereafter, Richard T. Sykes was named as the administrator of Ms. Allen's estate in a probate action.
On March 18, 1992, a judgment in the amount of $455,037.88 was entered against Ms. Allen's estate. As a partial satisfaction of judgment, defendant paid the sum of $100,000 plus interest of $4,411.40 to plaintiff. Defendant made an additional payment of $11,383.38 plus interest of $633.36, to plaintiff when it paid a portion of her costs. Defendant refused to make any additional payments to satisfy the judgment the balance of which was $343,654.50. The complaint alleged that defendant's breach of its duties to its insured, Ms. Allen, during her lifetime caused her estate to be liable for the unpaid judgment plus interest.
The matter proceeded to a court trial on the following stipulated facts. At the time of the accident, Ms. Allen was a permissive driver of an automobile owned by Ms. Belvedere. Ms. Allen entered the intersection illegally against a red light in violation of Vehicle Code section 21453. She had been involved in another accident earlier in the evening where the car she was driving struck another automobile. She left the scene of the accident. Ms. Allen had been involved in another accident on August 14, 1986, when a car she was driving struck another automobile. She was charged with driving under the influence in connection with that accident and was convicted of reckless driving. At the time of the accident in this case, Ms. Allen was an additional insured under the terms of the policy issued by defendant to Ms. Belvedere. Plaintiff, whose vehicle was struck on the driver's side door, suffered serious injuries. Ms. Allen suffered only minor injuries.
By no later than April 1, 1987, defendant obtained a copy of the police report of the accident which reported that Ms. Allen caused the collision when she drove through a red light at a high rate of speed when she had a blood alcohol level above the legal limit. Ms. Allen was arrested for and convicted of driving while under the influence in violation of Vehicle Code section 23153. On May 1, 1987, defendant received a letter from plaintiff's uncle, David Walker, who was a lawyer, dated April 20, 1987. On June 24, 1987, defendant received another letter from Mr. Walker dated June 19, 1987, in which he made an offer to settle plaintiff's claims against Ms. Allen and Ms. Belvedere for $100,000, which was within the limits of the automobile liability insurance policy. On August 27, 1987, defendant received from Mr. Walker an authorization signed by plaintiff for defendant to inspect and copy her employment and medical records. On September 10, 1987, defendant received a letter dated August 31, 1987, from Mr. Walker, reiterating plaintiff's offer to settle within the $100,000 policy limits. Another offer to settle was made by letter dated December 21, 1987, which defendant received on December 30, 1987. Prior to January 14, 1988, defendant did not communicate to Mr. Walker or any other person any acceptance of the offers to settle.
After plaintiff filed the underlying action on January 14, 1988, the offer to settle within the policy limits was withdrawn and defendant engaged counsel to represent Ms. Allen, the insured, and Ms. Belvedere. On March 18, 1992, after a jury trial, judgment was entered against Ms. Allen's estate for $335,000. On April 3, 1992, plaintiff filed a memorandum of costs requesting in part, attorney fees pursuant to section 1021.4 in the amount of $111,655.50. The motion was opposed on the grounds the amount requested was unreasonable. The trial court granted the motion and awarded the attorney fees pursuant to section 1021.4, based on the conviction for driving under the influence of alcohol. On February 11, 1994, Mr. Sykes, the administrator of Ms. Allen's estate, assigned certain causes of action to plaintiff. The estate's claims were premised on the defendant's failure to settle within the insurance policy limits. Further, it was agreed plaintiff would not execute on any property of the estate. Plaintiff further agreed to pay Ms. Allen's estate 15% of the gross amount of any recovery from defendant.
The parties stipulated that defendant's failure to accept the policy limit demands was a breach of the covenant of good faith and fair dealing. They further agreed that defendant was liable for all damages legally caused by the failure to settle unless the doctrine enunciated in Shapero v. Allstate Ins. Co. (1971) 14 Cal.App.3d 433, 439, 92 Cal.Rptr. 244 applied to the facts of the case. The parties previously settled plaintiff's claim for $305,000. The settlement did not include the $111,655.50 in attorney fees awarded pursuant to section 1021.4.
The parties asked the trial court to determine whether: (1) the Shapero doctrine defeated the action for bad faith and negligence; (2) plaintiff can recover under a negligence cause of action; and (3) plaintiff is entitled to recover the underlying attorney fee award from the insurer. The trial court entered a judgment in favor of defendant.2 Relying on Baker v. Mid-Century Ins. Co. (1993) 20 Cal.App.4th 921, 924-925, 25 Cal.Rptr.2d 34, the trial court determined plaintiff was not entitled to recover attorney fees from the insurer because they had been awarded pursuant to section 1021.4. Plaintiff's theory, which was rejected by the trial judge, was that an award for the unpaid section 1021.4 attorney fees was a permissible item of damages under Civil Code section 3333 because the instant action was not based on the contract of insurance. Rather, plaintiff reasoned, the present suit was based on the intervening unreasonable conduct of the insurer in refusing to settle which led to both the excess judgment and the award of attorney fees. Plaintiff filed a timely appeal from the judgment.
A. Standard of Review
Because the case was decided on the basis of undisputed facts which were contained in the parties' stipulation, the matter presents a question of law and on appeal this court is not bound by the findings of the trial court. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799, 35 Cal.Rptr.2d 418, 883 P.2d 960; Brown Group Retail, Inc. v. Franchise Tax Bd. (1996) 44 Cal.App.4th 823, 829, 52 Cal.Rptr.2d 202; Mole-Richardson Co. v. Franchise Tax Bd. (1990) 220 Cal.App.3d 889, 894, 269 Cal.Rptr. 662; Eisenberg, Horvitz & Wiener, Cal. Prac. Guide: Civil Appeals & Writs (1996) §§ 8:106-8:114.6, pp. 8-42-8-46.) The parties do not dispute that plaintiff, as the assignee of the estate's rights, possesses only those of Ms. Allen, the insured, suing for a breach of the implied covenant of good faith and fair dealing. (In re Marriage of Comer (1996) 14 Cal.4th 504, 524, 59 Cal.Rptr.2d 155, 927 P.2d 265; General Motors Accept. Corp. v. Kyle (1960) 54 Cal.2d 101, 113, 4 Cal.Rptr. 496, 351 P.2d 768.)
B. Attorney Fees
1. Section 1021.4
As noted above, the parties stipulated that defendant's conduct in refusing to settle the claim was a breach of the implied covenant of good faith and fair dealing. They further stipulated defendant was liable for all damages legally caused by that misconduct. The sole issue presented in this appeal is whether the trial court properly determined the insurer was not required to pay the attorney fees as an item of damages pursuant to Civil Code section 3333 because they were awarded pursuant to section 1021.4 which provides: “In an action for damages against a defendant based upon that defendant's commission of a felony offense for which that defendant has been convicted, the court may, upon motion, award reasonable attorney's fees to a prevailing plaintiff against the defendant who has been convicted of the felony.”
2. The Holding and Analysis in Baker
We agree with defendant that the disposition of this case is in large part controlled by Baker v. Mid-Century Ins. Co., supra, 20 Cal.App.4th at pages 924-925, 25 Cal.Rptr.2d 34. In Baker, the plaintiff successfully sued the defendant in the underlying action for personal injuries arising out of an automobile accident. The defendant had been convicted of felony driving under the influence of alcohol. The court in the underlying personal injury action imposed $117,000 in section 1021.4 attorney fees as to the defendant. The defendant in the underlying action assigned the attorney fees award to the plaintiff. The plaintiff then sued the defendant's carrier to recover the section 1021.4 attorney fee award. In Baker v. Mid-Century Ins. Co., supra, 20 Cal.App.4th at page 924, 25 Cal.Rptr.2d 34, the Court of Appeal concluded that the risk of liability for attorney fees awarded under section 1021.4 is uninsurable as a matter of law. In so holding, Baker stated: “ ‘California Constitution, article I, section 28, subdivision (b) (the Victims' Bill of Rights) states the “unequivocal intention” of the People of the State of California that persons injured by criminal activity will obtain restitution for losses from the persons convicted of the causative crimes. Section 1021.4 authorizes the court to award reasonable attorney fees to a prevailing plaintiff against the defendant convicted of the felony that has caused the plaintiff's loss. “Restitution ․ may serve the salutary purpose of making a criminal understand that he [or she] has harmed not merely society in the abstract but also individual human beings, and that he [or she] has a responsibility to make them whole.” [Citation.] The purpose to be achieved by section 1021.4 would be defeated if the felony drunk driver could pass the attorney fees penalty along to his or her insurer.’ [Citation.]” (Ibid., quoting Vaillette v. Fireman's Fund Ins. Co. (1993) 18 Cal.App.4th 680, 689, fn. 7, 22 Cal.Rptr.2d 807 [denied plaintiff, who settled the personal injury action within the policy limits, the right to recover attorney fees which were awarded under section 1021.4 on the grounds that the settlement agreement did not give or reserve the plaintiff's right to recover further monies from the insurer]; italics in original.)
In addition, Baker concluded that requiring the insurer to pay the attorney fees awarded under section 1021.4 would violate the express public policy precluding indemnification for willful (Ins.Code, § 533) 3 and criminal acts (Civ.Code, § 1668).4 (Baker v. Mid-Century Ins. Co., supra, 20 Cal.App.4th at p. 925, 25 Cal.Rptr.2d 34.) By analogy, Baker noted that public policy precluded insurers from paying sanctions (§ 128.5) and punitive damages awarded against the insured and concluded: “[T]here is ‘[n]o conceivable justification ․ for allowing an individual to pass on’ to the insurer liability for restitution ordered as punishment in a criminal case. [Citation.]” (Ibid.)
3. Other Authority
In Jaffe v. Cranford Ins. Co. (1985) 168 Cal.App.3d 930, 935-936, footnote 9, 214 Cal.Rptr. 567, in concluding there was no duty to defend an insured who was prosecuted for but found innocent of Medi-Cal fraud and theft, now retired Associate Justice Howard B. Wiener stated that the policy behind Insurance Code section 533, prohibiting an insurer from paying for the willful acts of its policyholder, precluded payment for fines which resulted from a criminal conviction. In California Casualty Management Co. v. Martocchio (1992) 11 Cal.App.4th 1527, 1533, 15 Cal.Rptr.2d 277, the Court of Appeal held in a similar vein: “Insurance Code section 533 does preclude insurance coverage, as a matter of public policy, for a wrongdoer from his act of wrongdoing [citation]; or for fines or restitution imposed as a result of a criminal conviction, or for civil proceedings prosecuted by the state in the exercise of its police power and regulatory authority conferred by statute [citation].” (See also Peterson v. Superior Court (1982) 31 Cal.3d 147, 158-159, 181 Cal.Rptr. 784, 642 P.2d 1305 [act such as drunk driving shows conscious disregard which would require payment by insurer of compensatory damages award but not an award of punitive damages because of public policy]; cf. J.C. Penney Casualty Ins. Co. v. M.K. (1991) 52 Cal.3d 1009, 1021, 278 Cal.Rptr. 64, 804 P.2d 689 [noting that statement in Peterson that even conduct in conscious disregard of the safety of others such as driving under the influence was not willful act within the meaning of Insurance Code section 533 was obiter dictum].) Thus, these decisions support defendant's argument that the restitutionary costs arising out of a criminal conviction are inappropriate for insurance coverage. (Jaffe v. Cranford Ins. Co., supra, 168 Cal.App.3d at p. 935, 214 Cal.Rptr. 567; accord, La Jolla Beach & Tennis Club, Inc. v. Industrial Indem. Co. (1994) 9 Cal.4th 27, 40, 36 Cal.Rptr.2d 100, 884 P.2d 1048 and AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 837, fn. 16, 274 Cal.Rptr. 820, 799 P.2d 1253, citing Jaffe with approval; California Casualty Management Co. v. Martocchio, supra, 11 Cal.App.4th at p. 1533, 15 Cal.Rptr.2d 277.)
Although not controlling, we also find guidance in cases which have concluded that indemnification for punitive damages is barred by statute and public policy. (Peterson v. Superior Court, supra, 31 Cal.3d at pp. 158-159, 181 Cal.Rptr. 784, 642 P.2d 1305; City Products Corp. v. Globe Indemnity Co. (1979) 88 Cal.App.3d 31, 39-40, 151 Cal.Rptr. 494.) For example in Peterson v. Superior Court, supra, 31 Cal.3d at pages 158-159, 181 Cal.Rptr. 784, 642 P.2d 1305, the California Supreme Court concluded that an insurer was required to pay compensatory damages for the injuries which were caused by an intoxicated driver who acted with conscious disregard of the safety of others. However, the Supreme Court also concluded public policy precluded the payment to the third party claimant by the insurer of any punitive damages assessed against the defendant. (Ibid.) Indemnification of punitive damages is barred on public policy grounds because the primary purposes of the award are to punish and deter. (Civ.Code, § 3294; City Products Corp. v. Globe Indemnity Co., supra, 88 Cal.App.3d at p. 41, 151 Cal.Rptr. 494.) In City Products Corp., the Court of Appeal held: “[T]he policy of this state with respect to punitive damages would be frustrated by permitting the party against whom they are awarded to pass on the liability to an insurance carrier. The objective is to impose such damages in an amount which will appropriately punish the defendant in view of ‘the actual damages sustained,’ ‘the magnitude and flagrancy of the offense, the importance of the policy violated, and the wealth of the defendant.’ [Citation.] Consideration of the wealth of the defendant would of course be pointless if such damages could be covered by insurance. The onus of the award would depend entirely upon the amount of insurance coverage and not upon the legally relevant factors.” (Id. at p. 42, 151 Cal.Rptr. 494.) Thus, where a court makes a punitive damage award to deter and punish a party, the liability for the award cannot be passed onto an insurer without violating public policy. (Id. at pp. 41-42, 151 Cal.Rptr. 494.)
Also instructive on whether the insurer is required to pay the attorney fee awarded on the basis of the felony conviction is California Casualty Management Co. v. Martocchio, supra, 11 Cal.App.4th at page 1533, 15 Cal.Rptr.2d 277, where attorney fees were awarded as a sanction under section 128.5 for a malicious prosecution action. There, the Court of Appeal concluded, “Insurance Code section 533 and the public policy it represents bar the attempt to shift a court-imposed sanctions award to an insurer.” (Ibid.) Likewise, in this case, there is no basis to conclude that the risk of liability for the attorney fees awarded under section 1021.4 is insurable or that the liability for the payment of the fees assessed against a convicted insured can be passed on to the insurer without violating public policy. (Ins.Code, § 533; Civ.Code, § 1668; Baker v. Mid-Century Ins. Co., supra, 20 Cal.App.4th at pp. 924-925, 25 Cal.Rptr.2d 34; Vaillette v. Fireman's Fund Ins. Co., supra, 18 Cal.App.4th at p. 689, fn. 7, 22 Cal.Rptr.2d 807; see also California Casualty Management Co. v. Martocchio, supra, 11 Cal.App.4th at p. 1533, 15 Cal.Rptr.2d 277; Jaffe v. Cranford Ins. Co., supra, 168 Cal.App.3d at p. 935, 214 Cal.Rptr. 567.)
4. Legislative Intent and Section 1021.4
Moreover, we disagree with plaintiff that the legislative intent of section 1021.4 would be defeated if the insurer was not held liable for the attorney fees. Such a conclusion is not supported by the legislative history of section 1021.4 which was enacted as part of the Legislature's Crime Victim Restitution Program in 1983 to “assist[ ] crime victims in obtaining restitution through civil actions.” (Stats.1983, ch. 938, § 11, p. 3394.) It was introduced to implement article I, section 28 of the California Constitution, which provided for a criminal victim's right to restitution which was approved by the voters as part of Proposition 8 on June 8, 1982. (Baker v. Mid-Century Ins. Co., supra, 20 Cal.App.4th at p. 923, 25 Cal.Rptr.2d 34; Wood v. McGovern (1985) 167 Cal.App.3d 772, 774, 213 Cal.Rptr. 498.) Article I, section 28 of the California Constitution provides in part: “(a) The People of the State of California find and declare that the enactment of comprehensive provisions and laws ensuring a bill of rights for victims of crime, including safeguards in the criminal justice system to fully protect those rights, is a matter of grave statewide concern. The rights of victims pervade the criminal justice system, encompassing not only the right to restitution from the wrongdoers for financial losses suffered as a result of criminal acts, but also the more basic expectation that persons who commit felonious acts causing injury to innocent victims will be appropriately detained in custody, tried by the courts, and sufficiently punished so that the public safety is protected and encouraged as a goal of highest importance․ [¶] ․ [¶] To accomplish these goals, broad reforms in the procedural treatment of accused persons and the disposition and sentencing of convicted persons are necessary and proper as deterrents to criminal behavior and to serious disruption of people's lives. [¶] (b) Restitution. It is the unequivocal intention of the People of the State of California that all persons who suffer losses as a result of criminal activity shall have the right to restitution from the persons convicted of the crimes for losses they suffer. [¶] Restitution shall be ordered from the convicted persons in every case, regardless of the sentence or disposition imposed, in which a crime victim suffers a loss, unless compelling and extraordinary reasons exist to the contrary. The Legislature shall adopt provisions to implement this section during the calendar year following [the] adoption of this section.” Section 1021.4 implements the constitutional restitution right by awarding attorney fees to those persons who prevail in a civil action for damages against the defendant who has been convicted of a felony. (Sommers v. Erb (1992) 2 Cal.App.4th 1644, 1650, 4 Cal.Rptr.2d 52; Wood v. McGovern, supra, 167 Cal.App.3d at p. 779, 213 Cal.Rptr. 498.)
When the Assembly Bill No. 493 was introduced, it provided for mandatory attorney fees as follows: “Upon motion by the moving party, the court shall award reasonable attorney fees to a prevailing plaintiff in an action for damages based upon the commission of a felony where the defendant has been convicted.” It was amended in the Assembly Committee on Judiciary on April 4, 1983, to provide for the award of fees for successful plaintiffs at the discretion of the court rather that for mandatory fees. (Assem. Com. on Judiciary, Analysis of Assem. Bill No. 493 (1983-1984 Reg. Sess.) as amended Apr. 4, 1983, pp. 1-2.) As originally drafted, the statute raised concerns by insurers and public entities that parties who were not criminally liable could nevertheless be required to pay the attorney fees. As a result, it was urged that the attorney fees liability should be limited to the person convicted of the crime. (Sen. Republican Caucus, Analysis of Assem. Bill No. 493 (1983-1984 Reg. Sess.) as amended July 7, 1983, p. 1; Sen. Democratic Caucus, Analysis of Assem. Bill No. 493 (1983-1984 Reg. Sess.) as amended July 7, 1983, p. 2; Sen. Democratic Caucus, Analysis of Assem. Bill No. 493 (1983-1984 Reg. Sess.) as amended June 21, 1983, p. 2.) On September 7, 1983, the bill was amended in the Senate to read, “In an action for damages against a defendant based upon that defendant's commission of a felony offense for which that defendant has been convicted, the court may, upon motion, award reasonable attorney's fees to a prevailing plaintiff against the defendant who has been convicted of the felony.” This amendment was to clarify that the fees can only be awarded against the person who committed the crime. (Sen. Democratic Caucus, Analysis of Assem. Bill No. 493 (1983-1984 Reg. Sess.) as amended Sept. 7, 1983, p. 2.) Thus, section 1021.4 and the restitution provisions of Proposition 8 were designed to address the felonious conduct of defendants that cause injuries to other persons. (Baker v. Mid-Century Ins. Co., supra, 20 Cal.App.4th at p. 923, 25 Cal.Rptr.2d 34; Sommers v. Erb, supra, 2 Cal.App.4th at p. 1650, 4 Cal.Rptr.2d 52; Gallo v. Superior Court (1988) 200 Cal.App.3d 1375, 1379, 246 Cal.Rptr. 587; Wood v. McGovern, supra, 167 Cal.App.3d at p. 779, 213 Cal.Rptr. 498.) For the foregoing reasons, we conclude the Legislature in enacting section 1021.4 did not intend that the risk of liability for such an award could be passed to the insurer as matters of law and of public policy. Rather, the Legislature intended the convicted felon bear the burden of paying the fee award. (Baker v. Mid-Century Ins. Co., supra, 20 Cal.App.4th at p. 926, 25 Cal.Rptr.2d 34.)
C. Civil Code section 3333
Plaintiff nevertheless argues the section 1021.4 fees are recoverable as an item of damages under Civil Code section 3333 for defendant's unreasonable conduct in refusing to settle which exposed Ms. Allen, its insured to the liability for the attorney fees. Civil Code section 3333 provides: “For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this Code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.” According to plaintiff, the attorney fees are recoverable under this theory pursuant to Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, 433, 58 Cal.Rptr. 13, 426 P.2d 173, which held when an insurance company acts unreasonably in violation of the implied covenant it must provide full compensation to the insured. Plaintiff further cites to Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 573, 108 Cal.Rptr. 480, 510 P.2d 1032, which concluded that full compensation includes all damages proximately caused by the insured's conduct, including attorney fees.
Plaintiff's reliance upon Crisci v. Security Ins. Co., supra, 66 Cal.2d at page 433, 58 Cal.Rptr. 13, 426 P.2d 173 and Gruenberg v. Aetna Ins. Co., supra, 9 Cal.3d at page 573, 108 Cal.Rptr. 480, 510 P.2d 1032, cases not involving fees imposed because the insured committed a felony, is misplaced. Crisci v. Security Ins. Co., supra, 66 Cal.2d at page 433, 58 Cal.Rptr. 13, 426 P.2d 173 stated: “[It is a] [f]undamental ․ principle that for every wrong there is a remedy and that an injured party should be compensated for all damage proximately caused by the wrongdoer. Although we recognize exceptions from these fundamental principles, no departure should be sanctioned unless there is a strong necessity therefor. [¶] The general rule of damages in tort is that the injured party may recover for all detriment caused whether it could have been anticipated or not. (Civ.Code, § 3333, see Hunt Bros. Co. v. San Lorenzo etc. Co. [ (1906) ] 150 Cal. 51, 56[, 87 P. 1093].)” In discussing the liability of insurer in excess of its policy limits for failure to accept a settlement offer within those limits, Crisci stated that it had previously reasoned in Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 659, 328 P.2d 198, that: “[I]n every contract, including policies of insurance, there is an implied covenant of good faith and fair dealing that neither party will do anything which will injure the right of the other to receive the benefits of the agreement; that it is common knowledge that one of the usual methods by which an insured receives protection under a liability insurance policy is by settlement of claims without litigation; that the implied obligation of good faith and fair dealing requires the insurer to settle in an appropriate case although the express terms of the policy do not impose the duty; that in determining whether to settle the insurer must give the interests of the insured at least as much consideration as it gives to its own interests; and that when ‘there is a great risk of a recovery beyond the policy limits so that the most reasonable manner of disposing of the claim is a settlement which can be made within those limits, a consideration in good faith of the insured's interest requires the insurer to settle the claim.’ [Citation.]” (Crisci v. Security Ins. Co., supra, 66 Cal.2d at p. 429, 58 Cal.Rptr. 13, 426 P.2d 173.) Therefore, an insurer who refuses to accept a reasonable settlement within the policy limits in violation of the duty to consider the interests of the policyholder in settling is liable for the entire judgment against the insured even where it exceeds the policy limits. (Gruenberg v. Aetna Ins. Co., supra, 9 Cal.3d at p. 573, 108 Cal.Rptr. 480, 510 P.2d 1032.)
Neither of Crisci nor Gruenberg considered whether it is appropriate to shift the risks of liability for fees incurred because of a felony conviction onto an insurer. As previously noted, Crisci v. Security Ins. Co., supra, 66 Cal.2d at page 433, 58 Cal.Rptr. 13, 426 P.2d 173 stated the right to compensation or redress for a tortfeasor's wrongful conduct is not without exception. So long as a showing of a “strong necessity” for not compensating an insured has been made, then Civil Code section 3333 does not permit recovery. (Ibid.) Civil Code section 3333, the basis of the holding in Crisci, sets forth the measure of damages in a tort action. (Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 1005, fn. 24, 25 Cal.Rptr.2d 550, 863 P.2d 795; Amaya v. Home Ice, Fuel & Supply Co. (1963) 59 Cal.2d 295, 299, fn. 2, 29 Cal.Rptr. 33, 379 P.2d 513, disapproved on another point in Dillon v. Legg (1968) 68 Cal.2d 728, 748, 69 Cal.Rptr. 72, 441 P.2d 912.) In Amaya, the Supreme Court held, “ ‘This section has to do only with the measure of damages for tortious wrong and operates only after such a cause of action has been made out.’ ” (Amaya v. Home Ice, Fuel & Supply Co., supra, 59 Cal.2d at p. 299, fn. 2, 29 Cal.Rptr. 33, 379 P.2d 513; Reed v. Moore (1957) 156 Cal.App.2d 43, 47, 319 P.2d 80; see Laughner v. Bryne (1993) 18 Cal.App.4th 904, 908, 22 Cal.Rptr.2d 671.) There are sufficient public policy and statutory considerations which lead to the conclusion that attorney fees imposed pursuant to section 1021.4 are not recoverable Civil Code section 3333 damages by an insured in a breach of the implied covenant case based upon a failure to settle an underlying lawsuit. Public policy considerations affect determinations of legal cause. (Tibor v. Superior Court (1997) 52 Cal.App.4th 1359, 1373, 61 Cal.Rptr.2d 326 [public policy requires a criminal defendant pursuing a legal malpractice claim prove factual innocence to meet the legal cause requirement]; Nash v. Workers' Comp. Appeals Bd. (1994) 24 Cal.App.4th 1793, 1809, 30 Cal.Rptr.2d 454 [“statutory proximate cause language has been held to be less restrictive than that used in tort law, because of the statutory policy set forth in the Labor Code favoring awards of employee benefits”]; Jackson v. Ryder Truck Rental, Inc. (1993) 16 Cal.App.4th 1830, 1847, 20 Cal.Rptr.2d 913 [“policy analysis remains a part of proximate cause analysis after Mitchell [v. Gonzales (1991) 54 Cal.3d 1041, 1052-1054, 1 Cal.Rptr.2d 913, 819 P.2d 872] ․”]; Maupin v. Widling (1987) 192 Cal.App.3d 568, 573, 237 Cal.Rptr. 521 [“Proximate cause asks the larger, more abstract question: should the defendant be held responsible for negligently causing the plaintiff's injury? [Citation.] Whether a defendant's conduct is an actual cause of a plaintiff's harm is a question of fact, but the existence and extent of a defendant's liability is a question of law and social policy.”]; Jackson v. City of San Diego (1981) 121 Cal.App.3d 579, 588, 175 Cal.Rptr. 395 [“Proximate cause ․ may encompass questions of policy of whether the law will extend the responsibility for the conduct to the consequences which have in fact occurred.”]; Valdez v. J.D. Diffenbaugh Co. (1975) 51 Cal.App.3d 494, 509, 124 Cal.Rptr. 467 [“Proximate cause is not a question of causation; it is simply a policy determination of whether or not the defendant should be held responsible for his acts.”]; see Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 464, 58 Cal.Rptr.2d 899, 926 P.2d 1085 [“ ‘proximate causation usually reflects a policy-based legal filter on “but for” causation’ ”].)
Serious legislatively articulated public policy considerations weigh in against compensation for an element of damages which occurs only upon a felony conviction of the insured. As noted previously, section 1021.4 attorney fees are only recoverable upon the insured's conviction of a felony. In Baker, the Court of Appeal held: “[I]t is the felony conviction of the insured, and only the felony conviction, that allows the victim to claim entitlement to attorney's fees under section 1021.4. In the case of drunk driving, the felony conviction requires proof (1) the defendant drove a vehicle while under the influence of an alcoholic beverage, (2) concurrently committed an unlawful act or neglected a legal duty in driving, and (3) by that act or omission caused injury to a third person. [Citations.]” (Baker v. Mid-Century Ins. Co., supra, 20 Cal.App.4th at pp. 925-926, 25 Cal.Rptr.2d 34; italics in original.) The felony conviction is an essential element of section 1021.4 liability; without the felony conviction no section 1021.4 liability exists under any circumstances. (Ibid.) Further, there is a legislatively declared policy against insured felon's recovering from their insurers for section 1021.4 attorney fees. (Id. at p. 925, 25 Cal.Rptr.2d 34; Sen. Republican Caucus, Analysis of Assem. Bill No. 493 (1983-1984 Reg. Sess.) as amended July 7, 1983, p. 1; Sen. Democratic Caucus, Analysis of Assem. Bill No. 493 (1983-1984 Reg. Sess.) as amended Sept. 7, 1983, p. 2; Sen. Democratic Caucus, Analysis of Assem. Bill No. 493 (1983-1984 Reg. Sess.) as amended July 7, 1983, p. 2; Sen. Democratic Caucus, Analysis of Assem. Bill No. 493 (1983-1984 Reg. Sess.) as amended June 21, 1983, p. 2.) Moreover, the statutory restrictions on insurers compensating for intentional acts of insureds is but part of the public policy that is relevant to the legal cause issue in this case. (Ins.Code, § 533.) Additionally, to compensate a felon who is an insured for fees incurred pursuant to section 1021.4, would be in contravention of the explicit legislative policy set forth in Civil Code section 1668 because such would indirectly exempt a person from their own financial responsibility for injury to another and their property and would be a violation of the law. Also, one of the purposes of restitution statutes in general and section 1021.4 in particular is to make convicted felons “understand” they have harmed society and individual human beings. The restitution statutes have as their further purpose to impress upon the felon the responsibility of making the victim whole. (Baker v. Mid-Century Ins. Co., supra, 20 Cal.App.4th at p. 924, 25 Cal.Rptr.2d 34; Vaillette v. Fireman's Fund Ins. Co., supra, 18 Cal.App.4th at p. 689, fn. 7, 22 Cal.Rptr.2d 807.) That purpose would not be advanced if the felon could recover the sums intended for the victim.
Plaintiff's application of Civil Code section 3333, as interpreted in Crisci, would allow the felonious tortfeasor to recover the very attorney fees which should have been paid to the criminal's victim. Neither Crisci nor Civil Code section 3333 mandate such a result. More critically and in conclusion, we cannot ascribe with good reason an intention on the part of any member of the California Supreme Court or the Legislature to allow Civil Code section 3333 ever to be construed to permit a felon to recover as damages a sum which should have been paid to the crime victim. The law does not allow statutes to be interpreted in such an absurd manner. (California Teachers Assn. v. Governing Bd. of Rialto Unified School Dist. (1997) 14 Cal.4th 627, 643, 59 Cal.Rptr.2d 671, 927 P.2d 1175; People v. Valladoli (1996) 13 Cal.4th 590, 602, 54 Cal.Rptr.2d 695, 918 P.2d 999.)
The judgment is affirmed. Defendant, 20th Century Insurance Company, is to recover its costs on appeal from plaintiff, Patricia A. Walker.
FN1. All further statutory references are to the Code of Civil Procedure unless otherwise indicated.. FN1. All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
2. In the statement of decision, the trial court concluded Shapero did not preclude this action because it was distinguishable from the facts of this case. In Shapero, the Court of Appeal held the estate of an insured had no interest to be damaged by the insurer's failure to settle. This was because the insured, who was killed in an accident that caused the plaintiff's damages, had no assets which could be reached by any excess judgment. (Shapero v. Allstate Ins. Co., supra, 14 Cal.App.3d at p. 438, 92 Cal.Rptr. 244.) In this case, the insured did not perish in the accident but lived and died from lung cancer at a time after the duty under the contract arose. Neither party in the present case raises any issue concerning Shapero.
3. Insurance Code section 533 states: “An insurer is not liable for a loss caused by the wilful act of the insured; but he is not exonerated by the negligence of the insured, or of the insured's agents or others.”
4. Civil Code section 1668 provides: “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”
TURNER, Presiding Justice.