Donald DeWitt v. Monterey Insurance Company, et al. Court of Appeal, Fourth District (March 13, 2012)

The failure of a liability insurer to perform its implied duty to accept a reasonable settlement offer of a covered claim gives rise to a claim by the insured against the insurer for breach of the covenant of good faith and fair dealing, or a "bad faith" claim, based on the insurer's refusal to settle the third-party claim. This case considered a plaintiff’s burden of proof on the duty to indemnify in connection with a claim that the carrier failed to accept the defense of the action or to accept a settlement offer.

Lisa Capelletti owned an apartment complex in San Diego. Ron Hammett was the property manager. On December 31, 2001, a New Years’ Eve party was held at the property. Erica Howard, a minor, got a ride to the party with Paul Peterson, also a minor. While on the ride back, Peterson lost control of his vehicle and rolled it several times. Howard sustained permanent injuries. She sued Peterson, his family, Capelletti, Hammett and Donald DeWitt. She alleged that DeWitt was the “onsite property manager,” and that he had sold admission to the party, and furnished alcohol to minors, including Peterson, who became “obviously intoxicated.” She alleged Capelletti and Hammett were liable for hiring DeWitt and not monitoring his activities.

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