Do California Courts Have Authority to Sanction Insurers for Bad Faith Settlement Negotiation?
by Amber Chrystal At least one court, in a recent decision out of California’s second appellate district, has answered no to that question. In Vidrio v. Hernandez, the court reversed an order imposing sanctions on an insurer for failing to negotiate in good faith at a settlement conference. The court held that even if the insurer’s conduct had not been in good faith, there was no authority under California statute, the Rules of Court or any local rule for sanctioning the insurer. The Vidrio case involved personal injury claims brought by two plaintiffs injured in a car accident. Defendant’s insurer, Mercury Insurance Company, provided her with a defense. Plaintiffs’ total claims were approximately $90,000. A mediation was conducted in the case, and defendant served plaintiffs offers of $1,000, which they did not accept. A mandatory settlement conference followed the mediation. Both defendant’s attorney, hired by Mercury, and an adjuster from Mercury attended the settlement conference.
