Plaintiff lender sued defendant insurer for breach of contract and breach of the covenant of good faith and fair dealing. The Superior Court County of Los Angeles, California, rendered judgment in favor of the lender, plus prejudgment interest, attorneys’ fees and interest paid on a loan for repairs. Both the lender and the insurer appealed.
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Overview
The lender was named as a loss payee on the debtor’s property insurance. The insurer inspected the building on July 18, 1996. At the end of July of 1996 a street gang invaded the building and caused extensive damage. The insurer refused to pay any money under the policy. The debtor defaulted on its loan, the lender foreclosed and purchased the property under a credit bid at the foreclosure. The lender repaired the damage to the property and sued the insurer for the cost of repairs. The appellate court held that: (1) the lender could only recover the difference between its credit bid and the obligation secured by the trust deed at the time of foreclosure for breach of contract, (2) the lender was properly awarded attorney fees and $ 52,876 for interest paid on the money it borrowed to fund the repairs as compensatory damages, (3) the trial court did not err when it determined that the lender’s performance was excused and that the insurer breached the contract, (4) there was substantial evidence of the insurer’s bad faith, and (5) the award of prejudgment interest was proper because the amount of damage was known.
Outcome
The judgment of the superior court was affirmed.
