... Liability Insurer's Coverage conduct apparently held beside the point in California Case of alleged Bad Faith in Settlement--at least in terms of what a Bad Faith Plaintiff must prove in such a Case.
In the case of Download Vaid-Raizada v. Lexington National Insurance Co. (C.D. Cal. Order Filed 08.12.09), attached Official Slipsheet Opinion at 6-7, a United States District Judge interpreted California Third-Party Bad Faith Law in the context of a Third-Party Bad Faith Claim involving an alleged failure to settle. In particular, the Federal Court interpreted California's fairly and reasonably debatable defense and limited it to Coverage in that specific context.
As the Federal Judge read California Insurance Law, "tort recovery for breach of the implied duty to settle does not require Plaintiff to prove that Defendant's coverage position was unreasonable; rather, it requires Plaintiff to prove that Defendant refused a reasonable settlement offer." Download Vaid-Raizada v. Lexington National Insurance Co. (C.D. Cal. Order Filed 08.12.09) at 7. [Emphasis by the Court.]
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