The California "Genuine Dispute Doctrine" Defense to Insurance Bad Faith Claims was analyzed anew in a Case presenting First-Party Bad Faith Claims: Worth Bargain Outlet, Inc. v. AMCO Insurance Co., Download Worth Bargain Outlet, Inc. v. AMCO Insurance Co. (S.D. Cal. Case No. 09CV839, Order Filed July 21, 2010) PUBLIC ACCESS also published as 2010 WL 2898264 (S.D. Cal. July 21, 2010)(Westlaw subscription required to access Westlaw). Pacer, the Online Docket of the Federal Courts, reflects that a Notice of Settlement was filed in this case on August 20, 2010.
The essence of California's Genuine Dispute Doctrine, known in other jurisdictions as a Fairly or Reasonably Debatable Claim Defense, may be distilled in this observation in this Federal Case: "A defendant must be reasonable, but not flawless, in its handling of a claim." Worth Bargain Outlet, Inc. v. AMCO Insurance Co., 2010 WL 2898264 at *8. Perfection is not required.
This Doctrine was developed as a Defense in California because under California law, "[a]n insurer's denial or delay in paying benefits gives rise to tort damages only if the insured shows the denial or delay was unreasonable." Id. [Emphasis added.] Parenthetically, most if not all other Courts in other jurisdictions will agree with this statement. See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" ยง 9:3, "The Question of Bad Faith" (Shepard's/McGraw-Hill Second Edition, West Publishing Company 2010 Supplement).
In California (as elsewhere), Courts have extended the Genuine Dispute Doctrine Defense from "cases involving disputes over interpretation of policy language ... to factual disputes as well." Id.
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