February 27, 2018

Court of Appeal reverses $46 million punitive damages award (Victaulic v. American Home Assurance)

In 2015 we reported on the verdict against AIG in this case, which included over $9 million in compensatory damages and $46 million in punitive damages.  We noted that, if the Court of Appeal affirmed the punitive damages award, it would likely be the largest punitive damages award ever upheld in an insurance bad faith case in California.  It would have been the third largest punitive damages award ever upheld in California, in any kind of case.

Yesterday, the Court of Appeal (First Appellate District, Division Two) reversed the judgment due to prejudicial misconduct by the trial court.  The Court of Appeal found, among other things, that the trial court acted improperly by aggressively questioning a witness and then arranging to have the witness invoke the Fifth Amendment in front of the jury, before any cross-examination by the defense.

Horvitz & Levy represented AIG on appeal.  (Congratulations to my colleagues Peter Abrahams, Mitch Tilner, and Emily Cuatto.)  Our practice is not to provide commentary on our own cases, so I won't dig into the merits of this decision. But the case is worth a read for anyone handling a bad faith case with a punitive damages claim.