On June 11, the U.S. Court of Appeals for the Ninth Circuit issued a groundbreaking decision on California bad faith insurance law, Du v. Allstate Insurance (Du I). The court stated that the duty to settle includes the duty to effectuate settlement even in the absence of a settlement demand. The court also stated that the “genuine dispute” doctrine does not apply to third-party (liability) claims. Policyholders’ counsel hailed the decision as establishing that imposing a duty on insurers proactively to settle whenever a substantial likelihood exists of recovery in excess of the policy limits.
Four months later, on Oct. 5, the Ninth Circuit reissued the Du v. Allstate opinion (Du II) without oral argument. The groundbreaking pronouncements are completely absent from this new decision nothing on duty to settle; nothing on genuine dispute. Surprisingly, the court’s holding in both opinions remains the same; that is, the trial court did not abuse its discretion in refusing to give a modified CACI 2337 jury instruction because there was no evidentiary foundation for it. Therefore the decision on behalf of the insurer was affirmed.
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