Matthew Cavallo v. Phoenix Health Plans Inc

Summary

The court held that the trial court improperly instructed the jury on contractual waiver in this first-party insurance bad-faith action because the evidence did not show that Cavallo knowingly and voluntarily relinquished a right, and the instruction could have confused the jury about the nonwaivable duty of good faith and fair dealing. The court also explained that a mitigation instruction may be based on the avoidable-consequences rule, which concerns only damages that could reasonably have been avoided after the tort occurred. The judgment was reversed and the case remanded for a new trial.