THE PRUDENTIAL INSURANCE COMPANY OF AMERICA v. SMAUS (1987)

INTRODUCTION

Petitioners Prudential Insurance Company (Prudential) and the Times Mirror Company (Times Mirror), defendants below, petition for a writ of mandate challenging the denial by the Superior Court for the County of Los Angeles (Superior Court) of a portion of their motion for summary adjudication of issues. Petitioners contend that Torri K. Smaus, plaintiff and real party in interest (plaintiff), cannot recover punitive damages on her causes of action for breach of the implied covenant of good faith and fair dealing and for breach of statutory duties under Insurance Code section 790.03 because, as tort causes of action, both are barred by the applicable statute of limitations, and, as contract causes of action, plaintiff is prevented from recovering punitive damages pursuant to Civil Code section 3294.

This court ordered plaintiff to show cause why a peremptory writ of mandate should not issue, and the matter is now before us for decision. We find petitioners' contentions are correct and issue a peremptory writ of mandate.

FACTS

As her husband's dependent, plaintiff was covered for major medical expenses by a Prudential group policy issued to Times Mirror, her husband's employer. The policy defined “qualified dependent” as including an employee's wife, but excluding a “legally separated spouse.” Plaintiff and her husband were divorced on March 11, 1982. Thereafter, plaintiff submitted claims to Times Mirror for benefits under the Prudential group policy for medical expenses incurred during April and May, 1982, for treatment of her left knee, including hospitalization for a diagnostic arthroscopy. Times Mirror denied her claims for the reason that she was no longer covered. When plaintiff requested that the denial be reviewed, the claims were referred to Prudential.

After its review, Prudential notified plaintiff that the denial had been confirmed and advised her that she could request an appeal of this denial. Following plaintiff's second request for review, Prudential's law department confirmed the denial as proper. On September 8, 1982, Prudential wrote to plaintiff again confirming the denial of her claims. Thereafter, the only communications between plaintiff and petitioners consisted of letters dated September 30, 1982, and October 5, 1982, from Times Mirror returning the bills plaintiff had submitted with her claims, a letter of October 17, 1983, in which plaintiff's attorney requested a copy of the medical insurance contract between Times Mirror and Prudential and petitioners' response to the attorney's request.

Plaintiff claims that prior to her surgery, she requested and received claim forms for insurance benefits from Times Mirror and that the hospital, surgeon and anesthetist confirmed with petitioners that she had coverage.

On February 15, 1985, plaintiff filed her complaint alleging six causes of action: (1) breach of the implied covenant of good faith and fair dealing, (2) breach of fiduciary duties, (3) common law fraud, (4) breach of statutory duties, (5) fraudulent misrepresentation, and (6) negligent misrepresentation.

Petitioners filed a motion for summary judgment on the first and fourth causes of action on the grounds that both were barred by the two-year statute of limitations provided by Code of Civil Procedure section 339, subdivision (1). The Superior Court denied the motion, stating, in part, “Since these actions (causes of action) sound both in tort and contract, the longer contract statute of limitations must apply, at least for purposes of summary judgment. The defendant cites no compelling authority otherwise, and the Frazier Case [Frazier v. Metropolitan Life Insurance Co.] (169 CA [Cal.App.] 3d 90) [214 Cal.Rptr. 883] seems to leave to plaintiff an election as to which theory (tort or contract) she wishes to pursue. If she elects contract (abandoning tort damages) this action will have been filed within the four year statute of limitations. If she elects to pursue tort damages the statute of limitations would bar the action since there was no continuing tort (the statute had commenced to run on 9–8–82, and the action was not filed until 2–15–85). This motion for summary judgment is not the procedure to force this election since it seeks a judgment on a pleading which could survive if the proper election is made.”

Subsequently, petitioners filed a motion for an order of summary adjudication of certain issues, specifying that:

“1. To the extent that plaintiff's First and Fourth Causes of Action constitute causes of action sounding in tort, both causes of action are governed by the two-year statute of limitations provided by Code of Civil Procedure (‘C.C.P.’) § 339(1).

“2. To the extent that plaintiff's First and Fourth Causes of Action constitute causes of action sounding in contract, both causes of action are governed by the four-year statute of limitations provided by C.C.P. § 337.

“3. Plaintiff's First and Fourth Causes of Action accrued no later than September 8, 1982.

“4. Plaintiff may not recover punitive damages on either her First or Fourth Cause of Action because:

“a. As tort causes of action, both causes of action are barred in their entirety by the applicable statute of limitations; and

“b. As contract causes of action, plaintiff is prevented from recovering punitive damages because Civil Code § 3294, which defines and limits the circumstances under which punitive damages may be recovered, does not permit their recovery on a cause of action for breach of contract.”

The Superior Court granted the motion for summary adjudication of issues 1, 2 and 3,¹ and denied the motion as to issues 4, 4a and 4b, parenthetically stating, “The causes of action for breach of the covenant of good faith and the breach of statutory duty are a form of special contract action in which punitive damages are allowed, and are governed by the 4–year statute of limitations.”

Petitioners request a writ of mandate ordering the Superior Court to vacate its original order to the extent that it denied their motion as to issues 4, 4a and 4b and to grant their motion in its entirety.

DISCUSSION

If, upon motion for summary adjudication of issues, all the papers submitted by the parties show that there is no triable issue as to material facts the court is required to grant the motion as to those issues which are without substantial controversy. (Code of Civ .Proc., § 437c, subdivisions (c) and (f).)² The court is required to consider all the evidence set forth in the papers, except where objections are properly sustained, and all inferences reasonably deducible from such evidence “ ‘The moving party bears the burden of furnishing supporting documents that establish that the claims of the adverse party are entirely without merit on any legal theory.’ (Lipson v. Superior Court [1982] 31 Cal.3d [362] at p. 374 [182 Cal.Rptr. 629, 644 P.2d 822].) ‘The affidavits of the moving party are strictly construed, and those of his opponent liberally construed, and doubts as to the propriety of summary judgment [or the summary adjudication of issues] should be resolved against granting the motion.’ (Slobojan v. Western Travelers Life Ins. Co. (1969) 70 Cal.2d 432, 436–439 [74 Cal.Rptr. 895, 450 P.2d 271].)” (Mann v. Cracchiolo (1985) 38 Cal.3d 18, 35–36, 210 Cal.Rptr. 762, 694 P.2d 1134.)

Petitioners challenge the denial of their motion in regard to the issue of punitive damages, which they contend are not recoverable by plaintiff in this action. Because the determination of the propriety of the Superior Court's order in regard to this issue is dependent in part on its ruling in regard to the accrual of plaintiff's causes of action, we will first consider plaintiff's contention regarding this issue.

Plaintiff contends the Superior Court correctly ruled when it denied petitioner's motion in regard to the issue of punitive damages, arguing that, “[w]hile the theory of the court may have been incorrect the decision was not.” Plaintiff argues that she is entitled to bring her cause of action for breach of the covenant of good faith and fair dealing under a tort theory even if governed by a two-year statute of limitation period, because there remains a triable issue of fact as to when her cause of action accrued.

This contention is without merit. The subject of the petition for the writ of mandate is the denial of petitioner's motion in regard to issues 4, 4a and 4b only. Therefore, the Superior Court's adjudication of issue 3, that plaintiff's causes of action accrued no later than September 8, 1982, is not open to review.³ (See In re Marriage of Wilson (1974) 10 Cal.3d 851, 853, 112 Cal.Rptr. 405, 519 P.2d 165; American Enterprise, Inc. v. Van Winkle (1952) 39 Cal.2d 210, 216, 246 P.2d 935.)

In any event, plaintiff's contention is based upon an erroneous interpretation of the law regarding the accrual of a cause of action for breach of the covenant of good faith and fair dealing. Plaintiff asserts that the cause of action does not accrue until the damages, in her case, the physical effects of emotional trauma, develop. Aldaco v. Tropic Ice Cream Co. (1980) 110 Cal.App.3d 523, 168 Cal.Rptr. 59, relied on by plaintiff for this proposition, is inapposite because it concerned an action for negligent infliction of emotional distress, manifested by physical injury suffered as a result of plaintiffs' seeing their son's injuries.⁴ The court held that the parents' cause of action accrued when the physical manifestation of the emotional trauma appeared. However, the basic principle of accrual is, as the court stated, that “[a] cause of action in tort accrues when the wrongful act is committed and the last element essential to a cause of action has occurred.” It went on to state, “ ‘[T]he period cannot run before plaintiff possesses a true cause of action, by which we mean that events have developed to a point where plaintiff is entitled to a legal remedy․’ “ (Id., at p. 526, 168 Cal.Rptr. 59, citations omitted.)

A cause of action accrues when a party has a legal right to sue on it. (Carr v. Progressive Ins. Co. (1984) 152 Cal.App.3d 881, 889, 199 Cal.Rptr. 835.) Uncertainty as to the amount of damage which will eventually be proved does not toll the period of limitations. (Davies v. Krasna (1975) 14 Cal.3d 502, 514, 121 Cal.Rptr. 705, 535 P.2d 1161.)

Plaintiff's cause of action for breach of the implied covenant accrued when her claims were denied. (Neff v. New York Life Ins. Co. (1947) 30 Cal.2d 165, 172–173, 180 P.2d 900.)⁵ Any resulting physical effects are only part of her damages, which include, as alleged in her complaint, “damages under said certificate of insurance plus interest,” “financial and economic loss, loss of credit and loss of credit standing, anxiety, worry, mental, emotional and physical distress, as well as out-of-pocket expenses and other incidental damages․”

1. Plaintiff is Not Entitled to Recover Punitive Damages on Her First Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing.

We turn then to petitioners' contention. In denying their motion as to issues 4, 4a and 4b, the Superior Court held that both the first and fourth causes of action constitute, “a form of special contract action in which punitive damages are allowed, and are governed by the four-year statute of limitations.” The question is whether punitive damages may be recovered on a breach of contract cause of action if that cause of action involves an alleged breach of the implied covenant.

Civil Code section 3294, which defines and limits the circumstances under which exemplary, or punitive, damages may be recovered, provides, in pertinent part:

“(a) In an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to actual damages, may recover damages for the sake of example and by way of punishing the defendant.”

An action against an insurance company for breach of implied covenant of good faith and fair dealing which arises out of an insurance contract sounds in tort or in contract and plaintiff is at liberty to make an election. (Frazier v. Metropolitan Life Ins. Co . (1985) 169 Cal.App.3d 90, 101, 214 Cal.Rptr. 883.) If she chooses to proceed on a contract theory, she is entitled to the four year statute of limitations permitted by Code of Civil Procedure section 337, subdivision 1, on the breach of the implied covenant, including damages for emotional distress based upon that breach. (Id., at p. 102, 214 Cal.Rptr. 883.)

However, if, in order to avoid the time-bar of the one and two-year tort statutes of limitations, plaintiff elects to proceed under a contract theory, she is precluded from recovering punitive damages. (Id., at pp. 105–107, 214 Cal.Rptr. 883.)

In Frazier, supra, plaintiff brought an action against a life insurance company after the company refused to pay to plaintiff an accidental death benefit for the death of her husband. The jury found that plaintiff's husband's death resulted from accidental means and that the insurer had breached its covenant of good faith and fair dealing in failing to pay. Plaintiff was awarded damages for emotional distress and punitive damages in addition to the death benefit. The Court of Appeal struck the award for punitive damages, explaining that in light of the fact plaintiff's causes of action in tort were barred by the statute of limitations applicable to torts, she was not entitled to an award of punitive damages under Civil Code section 3294, which provides for an award of punitive damages only in actions not arising from contracts.

The Frazier court relied on the only case based on California law at that time, “dealing squarely with the question,” McDowell v. Union Mutual Life Insurance Co. (C.D.Cal.1975) 404 F.Supp. 136, 145. (Id., 169 Cal.App.3d at p. 106, 214 Cal.Rptr. 883.) In adopting its reasoning, the Frazier court quoted from McDowell:

“ ‘Defendants maintain that an action based on contract cannot give rise to a claim for punitive damages. Plaintiffs respond that the courts in California have found authority to award punitive damages in such actions. But none of the cases cited by the plaintiffs support this position. In Crisci [v. Security Insurance 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, 573, 108 Cal.Rptr. 480, 510 P.2d 1032] for example, the court found that the plaintiffs had elected to sue in tort, and the court thus upheld awards for punitive damages even though the tort involved was a tortious breach of contract․ The unqualified language of Crogan v. Metz (1956) 47 Cal.2d 398, 408 [303 P.2d 1029] ․ applies here: “[Punitive damages] may not be granted in an action based on a breach of contract even though the defendant's breach was wilful or fraudulent.” Indeed this result follows from the language of Civil Code § 3294, “In an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, express or implied, the plaintiff ․ may recover damages for the sake of example and by way of punishing the defendant.” (Italics added.)

“ ‘Alternatively the plaintiffs argue that their bad faith cause of action can be upheld on a tort theory. Assuming that plaintiffs' cause of action were read to arise in tort, punitive damages are appropriately pleaded, if, but only if, the complaint can survive an attack based on the statute of limitations.’ “ (Ibid.; quoting from McDowell, supra, at p. 145.)

“Although McDowell is only a federal district court case which is not binding but merely persuasive as to applicable California law, we adopt its reasoning in view of the categorical statutory language of Civil Code section 3294. We fail to find any California case allowing punitive damages when the complaint is based only on a contract theory of action. When the action proceeds under alternate tort theories in addition to a contract action, then punitive damages may be awarded under the alternative tort theory. (Wetherbee v. United Insurance Co. (1968) 265 Cal.App.2d 921 [71 Cal.Rptr. 764]; Walton v. Anderson (1970) 6 Cal.App.3d 1003 [86 Cal.Rptr. 345]; Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376 [89 Cal.Rptr. 78]; Miller v. National American Life Ins. Co. (1976) 54 Cal.App.3d 331 [126 Cal.Rptr. 731].) But if the tort cause of action is time-barred, then unlike Wetherbee, Walton, Fletcher, and Miller, but like McDowell, plaintiff must proceed solely on her contract theory; and she may not also proceed on the time-barred tort theory to obtain punitive damages (see Fletcher, supra, [10 Cal.App.3d] at p. 400 [89 Cal.Rptr. 78] ).” (Id., 169 Cal.App.3d at pp. 106–107, 214 Cal.Rptr. 883.)

In Umann v. Excess Insurance Company (1987) 190 Cal.App.3d 1532, 236 Cal.Rptr. 89, the First District of the Court of Appeal came to the opposite conclusion, holding that a plaintiff who sues for breach of covenant of good faith and fair dealing after the statute of limitations expired on tort actions but before the statute has expired on contract actions may seek punitive damages. In so holding, the court explained: “We read Civil Code section 3294, which prohibits punitive damages in cases of breach of contract, to be inapplicable here where the breach sounds in both tort and contract. The breach also constitutes a tort and plaintiff is entitled to recover ‘extra-contract’ damages, a recovery measure widely recognized in bad faith litigation.” (Id., at p. 1544, 236 Cal.Rptr. 883.)

In our view, in light of the clear mandate of the Legislature as expressed in Civil Code section 3294 and the statutes of limitations, we can find no justification for this unwarranted extension of recovery of punitive damages to bad faith actions based solely on breach of contract.

Consistent with the reasoning of Frazier v. Metropolitan Life Ins. Co., supra, 169 Cal.App.3d 90, 214 Cal.Rptr. 883, we hold that plaintiff's cause of action for breach of the implied covenant of good faith and fair dealing is time-barred as a tort cause of action; plaintiff must proceed solely on her contract theory and is precluded from recovery of punitive damages.

2. Plaintiff is Not Entitled to Recover Punitive Damages on Her Fourth Cause of Action for Breach of Statutory Duties.6

Plaintiff contends that she is entitled to recover punitive damages on her fourth cause of action for breach of statutory duties pursuant to Insurance Code section 790.03⁷ of the Unfair Trade Practices Act (Ins.Code, § 790, et seq.) because the three-year statute of limitations, Code of Civil Procedure section 338, subdivision (1), applies to such a cause of action.

There is no case authority directly dealing with the question of the applicable statute of limitations on a cause of action for breach of Insurance Code section 790.03. Plaintiff urges that Code of Civil Procedure section 338, subdivision (1), provides a three-year statute of limitations for “[a]n action upon a liability created by statute, other than a penalty or forfeiture.” However, in this particular case, plaintiff's cause of action for breach of Insurance Code section 790.03 is not founded upon a liability created by statute, but is based upon a contract. (See Miller & Lux v. Batz (1901) 131 Cal. 402, 63 P. 680.) “The fact that the obligation is evidenced by statute does not render the plaintiff's cause of action one ‘created’ by statute.” (Id. at p. 404, 63 P. 680.)

“A liability created by statute is one in which no element of agreement enters. It is an obligation which the law creates in the absence of an agreement.” (Gardner v. Basich Bros. Construction Co. (1955) 44 Cal.2d 191, 194, 281 P.2d 521.)

“ ‘[T]he nature of the right sued upon, not the form of the action or the relief demanded, determines the applicability of the statute of limitations.’ (Jefferson v. J.E. French Co. (1960) 54 Cal.2d 717, 718 [7 Cal.Rptr. 899, 355 P.2d 643].)” (Richardson v. Allstate Ins. Co. (1981) 117 Cal.App.3d 8, 12, 172 Cal.Rptr. 423 [held that a tort action against an insurer for bad faith is subject to the two-year limitations period, and the cause of action for breach of Insurance Code section 790.03 was timely filed no matter which statute of limitations applied].)⁸

As with plaintiff's bad faith action, the right sued upon is either personal (a tort action) or financial (a contract action). We hold that the same statutes of limitations apply to plaintiff's cause of action for breach of Insurance Code section 790.03 as for breach of the covenant of good faith and fair dealing. Since in this case both causes of action are barred if brought as torts, plaintiff must proceed on a contract theory and is precluded from recovering punitive damages.

DISPOSITION

Petition granted. Let a peremptory writ of mandate issue ordering the Superior Court to vacate that portion of its order of September 26, 1986, denying the motion for summary adjudication of issues 4, 4a and 4b, and to grant the motion for summary adjudication of these issues.

I respectfully dissent.

I agree with the rationale of the Court of Appeal, First District, Division Five, in its decision in Umann v. Excess Insurance Co. (1987) 190 Cal.App.3d 1532, 236 Cal.Rptr. 89 (referred to by the majority, ante at p. 431).

The court in Umann stated at page 1544, 236 Cal.Rptr. 89: “We read Civil Code section 3294, which prohibits punitive damages in cases of breach of contract, to be inapplicable here where the breach sounds in both tort and contract. The breach also constitutes a tort and plaintiff is entitled to recover ‘extra-contract’ damages, a recovery measure widely recognized in bad faith litigation. (Kornblum et al., Cal.Prac.Guide, Bad Faith (TRG 1986) § 11.39, p. 11–9; Crisci v. Security Ins. Co. [1967] 66 Cal.2d [425,] at p. 434 [58 Cal.Rptr. 13, 426 P.2d 173].) Recently, our Supreme Court allowed plaintiff to recover attorney fees in his action for breach of the duty of good faith and fair dealing as a measure of tort damages. (Brandt v. Superior Court (1985) 37 Cal .3d 813, 817 [210 Cal.Rptr. 211, 693 P.2d 796].) In doing so, the court restated the rule that “ ‘if an insurer, in discharging its contractual responsibilities, ‘fails to deal fairly and in good faith with its insured by refusing, without proper cause, to compensate its insured for a loss covered by the policy, such conduct may give rise to a cause of action in tort for breach of an implied covenant of good faith and fair dealing.’ [Citation.]” ‘ (Id., at p. 817[210 Cal.Rptr. 211, 693 P.2d 796.) The recovery of ‘tort damages' is proper in cases of breach of the duty of good faith and fair dealing; we hold that plaintiff should be entitled to claim punitive damages in this case.” (Emphasis in original.)

Following the holding in Umann, I would deny the petition seeking a peremptory writ of mandate in its entirety.

FOOTNOTES

1.  In granting this portion of the motion, the Superior Court stated, “The court has already so found per court order of 6/17/86,” referring to the ruling on petitioner's motion for summary judgment. Because a court is without power to make formal, binding findings on a motion for summary judgment (Perry v. Farley Bros. Moving & Storage, Inc. (1970) 6 Cal.App.3d 884, 889, 86 Cal.Rptr. 397), these issues were not finally adjudicated until the Superior Court acted on the motion for summary adjudication.

2.  Code of Civil Procedure section 437c provides in pertinent part:“(c) The motion shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. In determining whether the papers show that there is no triable issue as to any material fact the court shall consider all of the evidence set forth in the papers, except that to which objections have been made and sustained by the court, and all inferences reasonably deducible from such evidence, except summary judgment shall not be granted by the court based on inferences reasonably deducible from such evidence, if contradicted by other inferences or evidence, which raise a triable issue as to any material fact.“․“(f) When the moving party moves for summary adjudication of issues, either by itself or as an alternative to summary judgment, if it appears that the proof supports the granting of such motion as to some but not all the issues involved in the action, or that one or more of the issues raised by a claim is admitted, or that one or more of the issues raised by a defense is conceded, the court shall, by order, specify that such issues are without substantial controversy. Moreover, upon that motion, the court shall, by written or oral order, specify those issues raised by the motion as to which there exists a material, triable controversy, and refer to the evidence which establishes a triable issue of fact regarding each of those issues. At the trial of the action the issue so specified shall be deemed established and the action shall proceed as to the issues remaining.”“․“(1) A summary judgment entered under this section is an appealable judgment as in other cases. Upon entry of any order pursuant to this section except the entry of summary judgment, a party may, within 10 days after service upon him of a written notice of entry of the order, or within such further time not exceeding 20 days as the trial court may for good cause allow, petition an appropriate reviewing court for a peremptory writ․” (This section was subsequently amended, effective January 1, 1987 [Stats.1986, c. 540, § 3].)

3.  The period in which a party could petition for a peremptory writ to challenge the summary adjudication of this issue has expired. (Code Civ.Proc., § 437c, subd. (l ).) Plaintiff argued the issue of accrual extensively in opposition to the motion for summary adjudication.

4.  Plaintiff's reliance on dicta in Purcell v. Colonial Insurance Co. (1971) 20 Cal.App.3d 807, 97 Cal.Rptr. 874, is also misplaced.

5.  Plaintiff claims that she “was not given an unconditional denial but invited to submit additional information.” She fails, however, to cite anything in the record to support such a claim.

6.  Petitioners contend that this issue was summarily adjudicated by the Superior Court in granting their motion in regard to issues 1 and 2. The ruling, however, does not necessarily preclude the possibility that yet another statute of limitations applies to the fourth cause of action for breach of Insurance Code section 790.03. Therefore, we address this issue, raised by plaintiff in the Superior Court and in response to this petition.

7.  Insurance Code section 790.03 provides, in part relevant to the complaint in issue:“The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance.“․“(h) Knowingly committing or performing with such frequency as to indicate a general business practice any of the following unfair claims settlement practices:“(1) Misrepresenting to claimants pertinent facts or insurance policy provisions relating to any coverages at issue.“(2) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policles.“(3) Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.“(4) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured.“(5) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.“․“(13) Failing to provide promptly a reasonable explanation of the basis relied on in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement.”

8.  In Richardson v. GAB Business Services, Inc. (1984) 161 Cal . App.3d 519, 207 Cal.Rptr. 519, holding that Insurance Code section 790.03 is not applicable to self-insured defendants, the court stated:“It appears to us that the actionable wrong of ‘bad faith’ contained in section 790.03 is a codification of the earlier tort of bad faith, which historically is a breach of the duty of good faith and fair dealing which is implied in every contract. (Universal Sales Corp. v. Cal. etc. Mfg. Co. (1942) 20 Cal.2d 751 [128 P.2d 665]; Brown v. Superior Court (1949) 34 Cal.2d 559 [212 P.2d 878]; Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654 [328 P.2d 198]; Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425 [58 Cal.Rptr. 13, 426 P.2d 173].) Section 790.03 merely enumerates those practices which are actionable and extends the causes of action to third party claimants, such as a third party's tort claim against a liability insurance carrier for a tortfeasor. Thus, the insurance contract itself is the basis for holding insurance companies and those engaged ‘in the business of insurance’ to a higher standard when negotiating and settling claims.” (Richardson v. GAB Business Services, Inc., supra, at p. 524, 207 Cal.Rptr. 519.)See also General Insurance Company v. Mammoth Vista Owner's Association, Inc. (1985) 174 Cal.App.3d 810, 822, 220 Cal.Rptr. 291.

LUI, Acting P.J., filed a dissenting opinion.