Defendant insurer sought review of a judgment from the Superior Court of Santa Clara County (California), which was in favor of plaintiff investors in an insurance bad faith action that involved claims for emotional distress and punitive damages resulting from breach of the implied convent of good faith and fair dealing/failure to settle, fraud, negligent misrepresentation, wrongful cancellation, and violation of Cal. Ins. Code § 790.03(h).
On review, the court reversed the judgment in favor of plaintiff investors on their claim for breach of covenant/refusal to settle in their insurance bad faith action against defendant insurer, directing the entry of judgment for defendant because plaintiffs failed to prove the requisite settlement offer within policy limits. The court also reversed the judgment for plaintiffs on the fraud claims and directed judgment for defendant because plaintiffs failed to show detrimental reliance on a falsity or that defendant had a duty to defend under the challenged provisions in the policies. The court then reversed the judgment on the negligent misrepresentation claim and directed a judgment in defendant’s favor, finding that plaintiffs had failed to establish the requisite reliance. Although the court concluded by reversing the judgments on the wrongful cancellation and the Cal. Ins. Code § 790.03(h) claims and the emotional distress and punitive damage awards, the court declined to enter judgment for defendant on those issues, given that the stipulated judgments were sufficient to support the assignments from the insured tortfeasors in plaintiffs’ favor.
The court reversed the judgments in favor of plaintiff investors on all causes of action and directed the entry of judgment in favor of defendant insurer on the breach of covenant/failure to settle, fraud, and negligent misrepresentations claims because plaintiffs failed to establish the requisite elements of those claims. The court declined to enter judgment for defendant on the wrongful cancellation, statutory violation, or damage claims. Appellant was represented by a business attorney.
Plaintiff franchisor sued defendant franchisee alleging (1) trademark infringement, (2) false designation of origin, (3) injunctive relief, (4) breach of written contract, (5) specific performance, and (6) accounting. The franchisee filed counterclaims under Cal. Corp. Code § 31201, Cal. Bus. & Prof. Code §§ 17200 et seq., and 17500 et seq., fraud, unjust enrichment, and declaratory relief. The franchisor moved to stay the counterclaims.
The franchisor terminated the parties’ franchise agreement for cause, alleging that the franchisee failed to pay royalties and promotion fees, follow franchise policies and procedures, maintain franchise quality standards, and provide timely financial reporting regarding monthly sales. The franchisor alleged the franchisee expressly agreed that upon termination of the franchise agreement, it would allow the franchisor to assume the management of the location and immediately and permanently stop using the franchisor’s marks. According to the franchisor, the franchisee refused to do any of these things. The franchisee asserted that the franchisor fraudulently induced it to enter into the franchise agreement. The district court found that no exceptional circumstances existed that warranted a stay. At least some of the franchisor’s causes of action, the franchisee’s defenses, and its counterclaims involved common questions of law and fact. Therefore, the policy favoring “conservation of judicial resources and comprehensive disposition of litigation” would be furthered by hearing these claims together. The litigation could not be divided neatly and without overlap.
The motion to stay the counterclaims was denied.