TROOLINES v. FARMERS INSURANCE GROUP (1987)

Plaintiff, Michael Troolines, appeals from a judgment of dismissal following the sustaining of a demurrer to his second amended complaint without leave to amend.   Troolines sued defendant ¹ for breach of the covenant of good faith and fair dealing implied in his automobile insurance policy and for negligent infliction of emotional distress.   We reverse.

FACTS

In reviewing an order sustaining a demurrer we assume all well pleaded facts are true.  (Lopez v. Southern California Rapid Transit Dist. (1985) 40 Cal.3d 780, 784, 221 Cal.Rptr. 840, 710 P.2d 907.)   The complaint alleges Troolines purchased an automobile insurance policy from Farmers which included coverage for bodily injury resulting from a hit and run accident.   On June 18, 1983, while the policy was in effect, Troolines was injured in a hit and run accident.   Troolines “immediately notified [Farmers] of his intent to make a claim under the uninsured motorist portion of the policy.”   The following activities then took place:

The gravamen of Troolines' “bad faith” claim is Farmers unreasonably delayed settling his claim.   Farmers' negligence in handling his claim allegedly resulted in physical and mental injury to Troolines.

DISCUSSION

I. THE FACTS PLED DO NOT ESTABLISH FARMERS' CONDUCT WAS REASONABLE AS A MATTER OF LAW

Unreasonable delay in settling an insurance claim constitutes bad faith.   (McCormick v. Sentinel Life Ins. Co. (1984) 153 Cal.App.3d 1030, 1048–1051, 200 Cal.Rptr. 732.)   In support of its demurrer to the bad faith claim, Farmers argues the trial court could find from the facts pled in Troolines' complaint Farmers' conduct was reasonable as a matter of law.   We disagree.

 Whether a delay in paying an insurance claim is an “unreasonable” delay is a question of fact.  (Paulfrey v. Blue Chip Stamps (1983) 150 Cal.App.3d 187, 194, 197 Cal.Rptr. 501.)   Seldom, if ever, can it be resolved at the pleading stage.   Its resolution depends on evidence of the diligence of the parties in complying with their respective obligations, the nature of the claim and the existence of genuine doubt, from the evidence, as to liability or the damages suffered.  (Fleming v. Safeco Ins. Co. of America, Inc. (1984) 160 Cal.App.3d 31, 36–38, 206 Cal.Rptr. 313;  McCormick v. Sentinel Life Ins. Co., supra, 153 Cal.App.3d at pp. 1039–1051, 200 Cal.Rptr. 732;  Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 921, 148 Cal.Rptr. 389, 582 P.2d 980.)   The mere passage of time is not determinative.   In Blake v. Aetna Life Ins. Co. (1979) 99 Cal.App.3d 901, 922–924, 160 Cal.Rptr. 528, a 16–month delay in paying benefits was found reasonable under the circumstances while in Fleming, supra, an 18–month delay was found unreasonable under the circumstances.  (160 Cal.App.3d at pp. 36–37, 206 Cal.Rptr. 313.)   In McCormick, supra, we reversed a summary judgment in favor of the insurer where the delay was nearly a year.  (153 Cal.App.3d at p. 1040, 200 Cal.Rptr. 732.)

 There is no rational basis for a court to declare one time period is reasonable per se and another time period is unreasonable per se.   The cases cited above demonstrate each case must be determined on its own facts.   Therefore, the trial court erred in sustaining the demurrer to the bad faith cause of action.   Our holding in no sense implies, of course, that a delay of this duration necessarily is unreasonable and therefore constitutes bad faith.   That question can only be resolved upon hearing all the evidence and learning all the circumstances.

II. THE COMPLAINT STATES A CAUSE OF ACTION FOR NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS BECAUSE IT ALLEGES FACTS WHICH COULD REASONABLY ELICIT A SERIOUS EMOTIONAL RESPONSE

Courts have long been concerned the tort of negligent infliction of emotional distress could be misused to pursue feigned or trivial injuries.  (See Molien v. Kaiser Foundation Hospitals (1980) 27 Cal.3d 916, 925, 167 Cal.Rptr. 831, 616 P.2d 813.)   To prevent this, courts have employed a number of gatekeepers whose job it is to screen out fictitious claims and claims seeking redress for mere bad manners.   These “guarantees of genuineness” have included a requirement of physical injury, Vanoni v. Western Airlines (1967) 247 Cal.App.2d 793, 795–797, 56 Cal.Rptr. 115;  physical impact, see Cook v. Maier (1939) 33 Cal.App.2d 581, 584, 92 P.2d 434, and presence within the “zone of danger” of physical impact, Amaya v. Home Ice, Fuel & Supply Co. (1963) 59 Cal.2d 295, 299–302, 29 Cal.Rptr. 33, 379 P.2d 513.

In more recent decisions our Supreme Court has abandoned these rigid requirements ostensibly in favor of flexible guidelines.  (See Dillon v. Legg (1968) 68 Cal.2d 728, 740–741, 69 Cal.Rptr. 72, 441 P.2d 912;  Molien v. Kaiser Foundation Hospitals, supra, 27 Cal.3d 916, 922–923, 167 Cal.Rptr. 831, 616 P.2d 813;  but see Kossel v. Superior Court (1986) 186 Cal.App.3d 1060, 1064, 231 Cal.Rptr. 183.)   The high court has also distinguished cases involving conduct that creates a risk of causing primarily physical harm, e.g., Dillon v. Legg, supra, from cases involving conduct that creates a risk of causing primarily mental harm, e.g., Molien v. Kaiser Foundation Hospitals, supra, and developed different guidelines for each type of case.   (Comment, Molien v. Kaiser Foundation Hospitals:  California Expands Liability, etc. (1981) 33 Hastings L.Rev. 291, 293–300.)

 In cases involving conduct that creates a risk of causing primarily mental harm, such as the case before us, the plaintiff must be the direct victim of the negligent conduct, the harm must be reasonably foreseeable and the plaintiff must suffer serious mental distress.  (Molien, supra, 27 Cal.3d at pp. 923, 928, 167 Cal.Rptr. 831, 616 P.2d 813;  Kossel, supra, 186 Cal.App.3d at pp. 1064–1067, 231 Cal.Rptr. 183.)

There is no question Mr. Troolines has alleged sufficient facts to satisfy the first two requirements.   He is the insured party and it is reasonably foreseeable Farmers' breach of the implied covenant of good faith and fair dealing could result in emotional distress.  (Cf. Williams v. Transport Indemnity Co. (1984) 157 Cal.App.3d 953, 965, 203 Cal.Rptr. 868.)

 The issue before us is whether the complaint sufficiently alleges “facts which could reasonably elicit serious emotional response.”  (Accounts Adjustment Bureau v. Cooperman (1984) 158 Cal.App.3d 844, 848, 204 Cal.Rptr. 881;  see also Bogard v. Employers Casualty Co. (1985) 164 Cal.App.3d 602, 618, 210 Cal.Rptr. 578.)   We hold a well pleaded complaint for breach of the covenant of good faith and fair dealing implied in a contract for liability insurance provides the guarantee of genuineness necessary to support a cause of action for negligent infliction of emotional distress.

In Molien our Supreme Court cited two bad faith insurance cases, Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, 58 Cal.Rptr. 13, 426 P.2d 173, and Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032, as examples of where the guarantee of genuineness arises when the plaintiff asserts an independent cause of action apart from personal injury.   (27 Cal.3d at p. 927, 167 Cal.Rptr. 831, 616 P.2d 813.)   The very nature of a tort action for a liability insurer's bad faith provides the necessary assurance the insured's claim of emotional distress is genuine.   In a contract for liability insurance the insured seeks protection “against the risks of accidental losses, including the mental distress which might follow from the losses.   Among the considerations in purchasing liability insurance, as insurers are well aware, is the peace of mind and security it will provide in the event of an accidental loss, and recovery of damages for mental suffering has been permitted for breach of contracts which directly concern the comfort, happiness or personal esteem of one of the parties.”  (Crisci v. Security Ins. Co., supra, 66 Cal.2d at p. 434, 58 Cal.Rptr. 13, 426 P.2d 173.)   Thus, Farmers' conduct as alleged in the bad faith cause of action raised a special likelihood of genuine and serious mental distress for purposes of the emotional distress cause of action.

In a letter brief after oral argument Farmers cited Soto v. Royal Globe Ins. Co. (1986) 184 Cal.App.3d 420, 229 Cal.Rptr. 192.

Farmers claimed Soto was a case holding no cause of action for negligent infliction of emotional distress could be stated based upon an insurer's simple refusal to settle a claim.   We disagree with Farmers' interpretation of Soto.   The court held members of the insured's family could not recover from the insurance company for negligent infliction of emotional distress based on failure to pay a claim promptly.   The family members were not direct victims of the insurer's conduct (184 Cal.App.3d at p. 432, 229 Cal.Rptr. 912) nor the indirect victims of a shockingly abnormal event.  (Id., at p. 433, 229 Cal.Rptr. 912, citing Ochoa v. Superior Court (1985) 39 Cal.3d 159, 168, 216 Cal.Rptr. 661, 703 P.2d 1.)   In the case before us Mr. Troolines, the only plaintiff, alleges he was the direct victim of Farmers' conduct and that his claim is based on more than “garden-variety negligence.”   (Id., 184 Cal.App.3d at p. 434, 229 Cal.Rptr. 912.)

DISPOSITION

The judgment is reversed.   Appellant is awarded costs.

FOOTNOTES

1.   Defendant's correct name is Farmers Insurance Exchange.

JOHNSON, Associate Justice.

LILLIE, P.J., and THOMPSON, J., concur.