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Bad Faith Blog

We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.

Bad Faith Blog
September 25, 2016

Proper Brandt Fees Usage to Calculate Punitive Damages in California Bad Faith Cases

Summary: Stonebridge Life provided hospital indemnity coverage to Nickerson who was hospitalized for 109 days after a severe leg fracture. The trial court directed a verdict for Nickerson on the breach of contract claim, entered judgment on the jury verdict for breach of the implied covenant of good faith and fair dealing, and imposed a $19,000,000 punitive damages award. The parties stipulated to attorneys’ fees (Brandt fees) of $12,500 to be imposed by the trial court post-verdict. The trial court reduced the punitive damages award to $350,000, 10 times the compensatory damages, but did not include the Brandt fees in that calculation. The California Supreme Court reversed and found the Brandt fees were incurred to recover the insurance benefits so were properly a component of compensatory damages. Accordingly, they were properly included when calculating the ratio of punitive to compensatory damages to determine whether the punitive damages award satisfied due process.