Nicole Nunn, Petitioner v. Mid-Century Insurance Company, a California Corporation, Respondent

Summary

The court held that an excess judgment entered against an insured establishes actual damages for an assigned bad-faith failure-to-settle claim even when the judgment is stipulated and accompanied by a covenant not to execute. It rejected the rule that damages require payment or personal exposure, reasoning that an excess judgment may harm the insured and that otherwise an insurer could avoid responsibility for bad-faith conduct. The insurer may still contest fraud, collusion, and the reasonableness of the stipulated amount at trial. Justice EID, dissenting, would have held that a pretrial stipulated judgment entered while the insurer was defending the insured cannot bind the insurer.