California Court of Appeal

In an insurance bad faith action arising from the insurer's denial of full coverage for the flood of plaintiff's printing and graphics design company, judgment of the trial court is affirmed in part, reversed in part and remanded where: 1) the trial court correctly construed the policy as it would lead an ordinary insured to conclude that in the event of a covered loss that forced the complete suspension of its business operation, the policy would provide coverage for any lost profits, and even if there were no lost profits, for ongoing expenses incurred during the period of suspension; and 2) substantial evidence supports an award of punitive damages, but trial court's award of $1.7 million is constitutionally excessive, therefore based on the circumstances of the case, the maximum award of punitive damages consistent with due process is an award based on a 3.8-to-one ratio of compensatory damages in the amount of $500,000.

Appellate Information

• Decided 03/23/2010
• Published 03/23/2010

Judges

Court

• California Court of Appeal

Counsel