What Unreasonable Behavior of the Insurer Gives Rise to Bad Faith in California?

Denise Sze | Property Insurance Coverage Law Blog | October 6, 2017

In a past blog, I explored how the interpretation of California Civil Instruction (CACI) 2334 is impacting the law. This week, we look at the CACI instruction to analyze how an insurer’s “unreasonable” behavior is deciphered to potentially give rise to a bad faith verdict in California.

CACI 2330 states:

In every insurance policy there is an implied obligation of good faith and fair dealing that neither the insurance company nor the insured will do anything to injure the right of the other party to receive the benefits of the agreement.

To fulfill its implied obligation of good faith and fair dealing, an insurance company must give at least as much consideration to the interests of the insured as it gives to its own interests.

To breach the implied obligation of good faith and fair dealing, an insurance company must, unreasonably or without proper cause, act or fail to act in a manner that deprives the insured of the benefits of the policy. It is not a mere failure to exercise reasonable care. However, it is not necessary for the insurer to intend to deprive the insured of the benefits of the policy.

The jury instruction comes up for interpretation. In order to find bad faith, the insurance company must act “unreasonably.” Yet, mere failure to exercise “reasonable” care is not bad faith. Therefore, the interpretation of what is unreasonable or reasonable behavior of the insurer is the key to interpreting whether an insurer has breached the implied good faith and fair dealing, and committed bad faith. In Bernstein v. Travelers Insurance Company,1 “unreasonable” in concept is a self-conscious disconnect (a large, unabridged gap) between, on the one hand, what the insurer is communicating to, demanding of, and paying its insured and, on the other hand, what the insurer thought it owed and would owe under the claim.

In Chateau Chamberay Homeowners Association v. Associated International Insurance Company,2 the court held an insurer’s conduct is “unreasonable” when a refusal to discharge a contractual responsibility is prompted by a conscious and deliberate act which unfairly frustrates the agreed common purpose and disappoints the reasonable expectation of the other party depriving the party of the benefits of the agreement. The analysis of an insurer’s reasonable or unreasonable performance, depends on whether claims were handled per the Insurance Code, abided by an insurer’s own claims handling practice guides, or if the insurer had self-interest over the interests of the client/customer.

Unreasonableness or reasonableness is largely a subjective standard but CACI 2330 is clear in stating bad faith is not a “mere failure to exercise reasonable care,” which tells us that inadvertent errors or some passage of time by itself may not be a breach rising to bad faith.

Often my clients ask whether their cases and situations surrounding the handling of their claims rise to bad faith. Because the standard is subjective—and almost one of a sliding scale of how egregious or unreasonable an act or failure to act may be—it’s often safe to say that jurors are reluctant to find bad faith until there is a clear bright-line showing that the insurer acted in an inexcusable manner that puts the insured into a position of disadvantage.
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1 Bernstein v. Travelers Ins. Co., (N.D. Cal., 2006) 447 F.Supp.2d 1100, 1108.
2 Chateau Chamberay Homeowners v. Associated Inter. Ins. Co., (2001) 90 Cal.App.4th 335, 346.

When Your “Private” Project Suddenly Turns into a “Public” Project. Hint: It Doesn’t Necessary Turn on Public Financing or Construction

Garret Murai | California Construction Law Blog | September 27, 2017

In 1931, during the Great Depression, the federal government enacted the Davis-Bacon Act to help workers on federal construction projects. The Davis-Bacon Act, also known as the federal prevailing wage law, sets minimum wages that must be paid to workers on federal construction projects based on local “prevailing” wages. The law was designed to help curb the displacement of families by employers who were recruiting lower-wage workers from outside local areas. Many states, including California, adopted “Little Davis-Bacon” laws applying similar requirements on state and local construction projects.

California’s current prevailing wage law requires that contractors on state and local public works projects pay their employees the general prevailing rate of per diem wages based on the classification or type of work performed by the employee in the locality where the project is located, as well as to hire apprentices enrolled in state-approved apprentice programs and to make monetary contributions for apprenticeship training.

Sometimes, however, it can be difficult to determine whether a project is a public works project or a private works project, even when you intentionally try to structure it as a project in which prevailing wages are not required, as one developer found out in the case of Cinema West, LLC v. Baker, California Court of Appeals for the First District, Case No. A 144265 (June 30, 2017).

Cinema West, LLC v. Baker

The Disposition and Development Agreement

In 2004, the City of Hesperia (City) began acquiring vacant property in its downtown area for the development of a “Civic Plaza,” which was to include a city hall, public library, other governmental buildings and “complimentary retail, restaurant, and entertainment establishments.”

In 2010, the City entered into a disposition and development agreement (DDA) with Cinema West, LLC (Cinema West) to develop a “12-screeen digital cinema immediately west of the Civic Plaza Park.” Under the terms of the DDA:

  1. The City was to convey 54,000 square feet of real property to Cinema West for $102,529;
  2. Cinema West was to construct as 38,000 square foot, 12-screen digital theater on the site which was to be operated for a minimum of ten years; and
  3. The City was to construct a parking lot, water retention system and off-site improvements including curbs, gutters and sidewalks for the theater.

In addition, under the terms of the DDA and other related documents:

  1. The City was to provide an interest-bearing loan to Cinema West in the amount of $1,546,363 equal to the City’s estimated cost to build the parking lot, water retention system and off-site improvements ($1,443,834), in addition to the fair market value of the property conveyed to Cinema West ($102,529) which was forgivable over ten years. This amount was later increased by $250,000 on account of rising steel prices and the City’s adoption of new building codes; and
  2. The was to provide a one-time payment of $102,529 as consideration for the ten-year operating agreement.

The DDA stated that the City was not “providing any financial assistance to [Cinema West] in connection with [Cinema West’s] acquisition of the Site or development of the Project thereon” and that Cinema West “is paying fair market value to acquire the Site and is responsible for paying the full costs of all improvements to be constructed on the Site”

The Department of Industrial Relations Decision and Superior Court Writ Proceeding

In November 2012, as construction of the theater and parking lot were nearing completion, the International Brotherhood of Electrical Workers Local 477 (Union) submitted a request to the Director of the California Department of Industrial Relation (DIR) for public works coverage determination for the project.

In response,Cinema West submitted a letter arguing that the theater was a private project not subject to California’s prevailing wage statutes because: (1) Cinema West purchased the property for fair market value; (2) no public financial assistance was involved; (3) there was “no evidence to suggest that the parking lot was built because it was needed to serve the Project”; (4) their was no “no public funding” associated with the  ten-year “forgivable loan”; and (5) the one-time operating agreement payment was never consummated.

The DIR disagreed. First, although under the DDA Cinema West was to construct the theater and the City was to construct the parking lot, water retention system and off-site improvements, the DIR construed  construction of the theater and construction of the parking lot and related improvements as a “single complete and integrated theatre complex” and thus a “public work” subject to prevailing wages. Second, the DIR construed the City’s ten-year “forgivable loan,” one-time operating agreement payment, and construction of the parking lot and related improvements as “public subsidies” also making the project a “public work” subject to prevailing wages.

In April 2013, Cinema West filed an administrative appeal which was denied by the DIR in June 2013. Thereafter, Cinema West filed a petition for writ of mandate under Code of Civil Procedure section 1085 with the Sonoma County Superior Court to challenge the DIR’s decision. As part of its writ, Cinema West submitted evidence that was not part of the administrative record, including statements in its verified petition and three declarations. At the hearing on Cinema West’s writ, the trial court sustained the DIR’s objections to Cinema West’s extra-record evidence and denied Cinema West’s writ concluding that the evidence “in” the record was undisputed and that based on that evidence alone the project was a public works.

Cinema West appealed.

The Court of Appeals Decision

On appeal, the Court of Appeals noted that “[t]he conditions of employment on construction projects financed in whole or in part by public funds are governed by the prevailing wage law,” that “[t]he overall purpose of the prevailing wage law is to protect and benefit employee on public works projects,” and that the public works statutes are “liberally construed to further its purpose.”

The Court of Appeals further noted that Labor Code section 1720 “broadly” defines “public works” to mean “construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds” including “work performed during the design and preconstruction phases of construction, including, but not limited to, inspection and land surveying work, and work performed during the post construction phases of construction, including, but not limited to, all cleanup work at the job site.”

Further, explained the Court of Appeals, the term “paid for in whole or in part out of public funds” has been broadly interpreted:

It encompasses both direct and indirect subsidies, including “[t]he payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer”; “[p]erformance of construction work by the state or political subdivision in execution of the project”; “[t]ransfer by the state or political subdivision of an asset of value for less than fair market price”; “[f]ees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state or political subdivision”; “money loaned by the state or political subdivision that is to be repaid on a contingent basis”; and “[c]redits that are applied by the state or political subdivision against repayment obligations to the state or political subdivision.” (§ 1720, subd. (b)(1)-(6).) The statute excepts from this otherwise broad definition of public funding “a public subsidy to a private development project that is de minimis in the context of the project.”

Cinema West’s Extra-Record Evidence

Addressing Cinema West’s extra-record evidence first, the Court of Appeals noted that “[i]t is well established that the use of extra-record evidence is limited and generally improper since review is normally confined to the record.” And, here, held the Court:

Cinema West implies that there is an exception to the extra-record evidence rule when the court deems the administrative record inadequate or the agency’s efforts to develop a record wanting, but it cites no authority for this proposition. Nor does it explain what criteria the court should consider in determining the adequacy of such record or efforts. Regardless, Cinema West has failed to demonstrate any inadequacy in the PWL coverage proceedings before the Director or in the record there developed. The coverage determination was initiated by the Union, which submitted documentation pertaining to the Hesperia theater and parking lot development. The documents the Union submitted consisted entirely of public records pertaining to the development. While characterizing the Union’s evidence as “one-sided,” Cinema West does not contend that any of the documents submitted by the Union are not genuine, and the City submitted copies of many of the same documents in response to the Director’s request. It does not suggest any pertinent documents are missing from the record. And contrary to Cinema West’s suggestion that the Union’s proffered evidence was all that was submitted, the record reflects that both the City and Cinema West were provided notice of the proceedings and given the opportunity to submit any documents in their possession bearing on the issues. The Director twice requested documents from the City, indicating her intent to have a complete record.

It was in this context that the trial court found Cinema West had the opportunity, but chose not to, submit any evidence in the initial proceeding or the appeal. Cinema West makes much of the fact that it sought and was denied a hearing on its administrative appeal but, as the trial court observed, a hearing was “not a prerequisite for an interested party to submit evidence.” The trial court’s implied finding that the Director did not preclude Cinema West from submitting evidence and the court’s express finding that Cinema West’s failure to do so was its own choice are supported by substantial evidence.

A Public Works Project Under the Labor Code

Next, addressing Cinema West’s arguments that the project was not a public work subject to the prevailing wage laws, the Court held that the project was a public works for two reasons.

First, the theater and the parking lot and related improvements, while constructed separately by Cinema West and the City, should be considered a single project for the following reasons:

  1. The DDA indicated that the parking lot was directly related to the theater and specifies that “[t]he Parking Lot Improvements will be designed and constructed by [City] as necessary to serve the proposed 12-screen theater with 1,800 seats and any other uses contemplated by [City] . . .”;
  2. Cinema West and the City used the same engineering firm to prepare the plans for the design of both the theater and parking lot;
  3. The DDA provided that following the City’s construction of the parking lot Cinema West was obligated to “maintain the Parking Lot Improvement pursuant to the CC&Rs and the reciprocal access and parking agreement, including the cost of utilities (water and electricity)”; and
  4. The theater and parking lot were built together on the same vacant parcel of land.

Second, responding to Cinema West’s argument that “not a penny of public funds was received by Cinema West in connection with the construction of the Theater,” because it was unable to perform some of the requirements of the operating agreement and therefore did not receive or accept the ten-year “forgivable loan” or the one-time operating agreement payment, the Court of Appeals held:

Even if . . . Cinema West never receives any of the promised payments, the DDA and related agreements call for the loans and one-time payment to be made and the one-time payment is not conditional. We agree with the trial court that allowing a developer to accept public benefits and, if a later determination is made that the project is a public work, disclaim public benefits to avoid paying prevailing wages would seriously undermine the [public works law (PWL)]. It would incentivize gamesmanship on the part of local government bodies and developers whereby projects would be publicly subsidized but constructed without PWL compliance. If an investigation later revealed the violation, the developer could still avoid paying prevailing wages and statutory penalties by repaying or disclaiming the public subsidy. And if the developer chose instead to retain the subsidy because its value exceeded the cost of post hoc PWL compliance and penalties, employees would be worse off because the passage of time and transitory nature of construction work increase the likelihood that some employees could not be found. Such a rule would discourage voluntary compliance and place undue burdens on the Department’s limited enforcement personnel. This cannot have been the Legislature’s intent.

Conclusion

Cinema West is a cautionary reminder for developers and contractors that even if a government entity does not directly construct or finance a project, but merely constructs necessary yet appurtenant parts of a larger project and does not directly finance a project but instead provides conditional loans that may never be received, a project may nevertheless be found to a be a public works project subject to prevailing wages. Cinema West also provides an important procedural reminder, that when submitting evidence in an administrative proceeding, provide all evidence on which you intend to rely on or you may be stuck with the “record” in any subsequent writ or appeal.

California Supreme Court Affirms California Fair Plan Ass’n v. Garnes, and Preserves Homeowners’ Interests

Stephanie Poll | Property Insurance Coverage Law Blog | August 17, 2017

The California Department of Insurance recently issued a press release announcing that the California Supreme Court affirmed the homeowner reimbursement protections recently decided in California Fair Plan Association v. Garnes.1 Back in June, my colleague Kevin Pollack wrote about the recent decision and whether actual cash value means fair market value or replacement cost minus depreciation in, Does Actual Cash Value Mean Fair Market Value or Replacement Cost Minus Depreciation.

Last week, the California Supreme Court refused to consider the insurance industry’s petition to overturn a lower court’s decision that insurers must pay to repair a home even if the repair costs exceed the home’s market value. There, a house fire occurred and the homeowner submitted a claim for $320,549 to her insurer, California Fair Plan Association. This amount represented the cost to repair the damaged home, less depreciation. Garne’s FAIR fire insurance policy had a limit of $425,000, yet Fair Plan denied the claim and only paid $75,000, which was determined to be the fair market of the property in 2011 (in large part due to the mortgage-driven recession).

The supreme court’s refusal to consider the proposal ended an ongoing battle and cemented an important decision that protects homeowners’ interests. Insurance Commissioner Dave Jones stated: “This is an important win for homeowners who should have confidence their insurer will deliver on its promises regardless of housing value fluctuations.”2 Jones filed an amicus brief in support of Garnes, arguing the Insurance Code entitled Garnes to be reimbursed. The lower court agreed and relied on Jone’s interpretation of the Insurance Code when ruling in Ms. Garne’s favor.

The Insurance Commissioner appeared as an amicus curiae, or friend of the court. Jones’ interest was in protecting consumers and ensuring the Insurance Code is properly interpreted and enforced. Our friends over at United Policyholders also filed an amicus brief supporting Garnes and advocating for homeowners’ rights.
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1 California Fair Plan Ass’n v. Garnes, No. A143190, 2017 WL 2303165 (Cal. Ct. App. May 26, 2017).
2 http://www.insurance.ca.gov/0400-news/0100-press-releases/2017/release082-17.cfm

California Court of Appeal: Inserting The Phrase “Ongoing Operations” In An Additional Endorsement Is Not Enough to Preclude Coverage for Completed Operations

Gary Barrera | California Construction Law Blog | September 11, 2017

In a victory for additional insureds, a California appeals court held, in Pulte Home Corp. v. American Safety Indemnity Co., Cal.Ct.App. (4th Dist.), Docket No. D070478 (filed 8/30/17), that an insurer’s denial of coverage for completed operations based on the inclusion of the phrase “ongoing operations” in an additional insured endorsement, was improper. Additionally, an insurer wishing to limit coverage under an additional insured endorsement to ongoing operations must do so via clear and explicit language.

Pulte Home Corp. v. American Safety Indemnity Co.

In the Pulte case, Pulte Home Corp. was the general contractor and developer for two residential housing projects beginning in 2003 and sold in 2005 and 2006.  During construction, Pulte entered into subcontracts that obligated the subcontractors to name Pulte as an additional insured on their policies for completed operations.  One of the insurers, American Safety, issued three types of additional insured endorsements with substantially similar language.  The first endorsement provided coverage for “liability arising out of ‘your [the named insured subcontractor’s] work’ which is ongoing and which is performed by the [named insured subcontractor] for [Pulte]” on or after the endorsement’s effective date.  The second endorsement provided coverage for “liability arising out of ‘your [the named insured subcontractor’s] work’ and only as respects ongoing operations performed by the [named insured subcontractor] for [Pulte]” on or after the endorsement’s effective date.  The third endorsement provided coverage for “liability arising out of ‘your [the named insured subcontractor’s] work’” performed at the project designated in the endorsement and only for “ongoing operations performed by the [named insured subcontractor]” on or after the endorsement’s effective date.

In 2011 and 2013, two construction defect lawsuits were filed against Pulte by homeowners on each project. Pulte tendered its defense of the lawsuits to American Safety.  American Safety denied Pulte’s tenders, in part, on the grounds that coverage under the additional insured endorsements was limited to ongoing operations, and that the lawsuits alleged liability arising out of completed operations.  Pulte sued American Safety for bad faith.  The trial court ruled that American Safety’s denial of Pulte’s tenders was improper and that the additional insured endorsements were ambiguous because they did not effectively exclude coverage for completed operations.

The Appeal

On appeal, American Safety argued that the additional insured endorsements excluded coverage for completed operations because the inclusion of the phrase “ongoing operations” after the phrase “your work” was a limitation on “your work” and eliminated completed operations coverage. American Safety also argued that the endorsements limited coverage to the time frame of the subcontractors’ ongoing operations, and since the homes were sold as completed units, ongoing operations had already concluded.

The Court of Appeal rejected American Safety’s arguments. First, the court held that American Safety’s contention that there were no allegations of ongoing operations incorrectly focused on when the homeowners sustained financial damage through their purchase of the defective homes, and not when the homes became physically damaged.  The court opined that the property damage could have occurred while the subcontractor’s operations were ongoing but after the homes had been sold, and since the property damage became evident after the work was completed, American Safety was placed on sufficient notice that some of the subcontractors’ work could have been ongoing and/or completed during its policy periods, since the homes were built in phases.

Next, the Court of Appeal reaffirmed the trial court’s ruling that the additional insured endorsements were ambiguous because they combined coverage for ongoing and completed operations in a single clause, and failed to expressly limit coverage to the time of the subcontractors’ ongoing operations. The court held that the endorsements’ language allowing coverage for “liability arising out of ‘your [the named insured subcontractor’s] work’” could reasonably be read as a grant of coverage for liability arising out of the named insured’s completed operations.  The court ruled that the mere linking of the phrase “ongoing operations” to the “liability arising out of ‘your work’” clause did not explicitly restrict coverage to ongoing operations.  The court explained that if the “ongoing operations” language was intended by American Safety to preclude coverage for completed operations, the endorsements had to expressly state that coverage was limited to claims arising out of work performed during the policy period.

The Court of Appeal also noted the subcontracts’ requirement that Pulte be named as an additional insured for completed operations. The court observed that at the time American Safety issued the additional insured endorsements and at the time of Pulte’s tenders, it was aware that the subcontracts obligated the subcontractors to name Pulte as an additional insured for completed operations.  The court ruled that based on American Safety’s knowledge of this information, it should have taken into account Pulte’s reasonable expectations of coverage in interpreting its policy, but it did not do so, thereby failing to give equal consideration to its interests and its insureds’ interests.

Conclusion

The Pulte decision should provide developers and general contractors with powerful ammunition against insurers’ attempts to deny completed operations coverage merely because the endorsements contain the phrase “ongoing operations,” without taking into account whether the wording of the endorsement is ambiguous. Pulte makes it clear that insurers intending to limit coverage to ongoing operations must ensure that their endorsements contain clear and unambiguous language to that effect. Pulte is also noteworthy from the perspective of a developer and general contractor because if a subcontractor’s insurer has knowledge of the subcontractor’s contractual obligation to add the developer or general contractor to its policies of insurance as an additional insured for completed operations, it obligates the insurer to consider the developer or general contractor’s reasonable expectations of coverage when evaluating an additional insured tender.

Assignment of Contingent Benefits in California

Lawrence Moon | Property Insurance Coverage Law Blog | September 10, 2017

In Assignment of Unaccrued or Contingent Benefits, I discussed the distinction between assignments of Contingent Benefits and assignments of Noncontingent Benefits under a property insurance policy. For purposes of this blog, a Contingent Benefit is a benefit or payment that is either not yet fixed in amount or the carrier is not yet obligated to provide because additional, specific conditions of the policy have not yet been fulfilled or excused. Noncontingent Benefits are those for which all of the applicable conditions have been fulfilled or excused and the carrier’s obligation to provide the benefits (such as a payment) has accrued. An example of a Noncontingent Benefit is a policyholder’s right to receive payment of the Actual Cash Value (ACV) of a claim after the insurance company has been notified of the loss and the policyholder has cooperated with the carrier’s evaluation of the loss. An example of a Contingent Benefit regarding a replacement cost property insurance policy is the right to receive the depreciation holdback (sometimes called the replacement cost holdback) prior to completion of the underlying repairs. In other words, the carrier’s obligation to pay the depreciation holdback is contingent upon, and does not arise unless and until, the underlying repairs are completed.

I noted in my previous blog that in 2015, the Supreme Court of California pointed out that insurance companies had only recently begun to challenge the validity of assignments of Contingent Benefits. In this blog, I will discuss how the Supreme Court of California handled that question—that is, the validity of assignments of Contingent Benefits—in Fluor Corporation v. Superior Court, 61 Cal.4th 1175, 354 P.3d 302 (2015).

The specific question presented to the California Supreme Court in Fluor was whether a statute that has been on the books in California since 1872 had any effect on the court’s prior ruling regarding the validity of assignments of Contingent Benefits under common law principles. In its 2003 decision in Henkel Corp. v. Hartford Accident & Indemnity Co., 29 Cal.4th 934, 62 P.3d 69 (2003), the court ruled that, based on common law principles, the policyholder under a liability policy that contained a provision prohibiting assignments could not assign the right to invoke coverage under the policy, even after a loss, until the loss had “been reduced to a sum of money due or to become due.” In other words, in Henkel, the court ruled that, under common law principles, the policyholder’s assignment of a Contingent Benefit under a liability policy was not valid or enforceable, despite the fact that the respective loss had already occurred.

Henkel remained the law in California with respect to post-loss assignments of Contingent Benefits until the court was asked to review the same question in Fluor—except in Fluor, the court was asked to consider that question in light of section 520 of California’s Insurance Code. That section states: “An agreement not to transfer the claim of the insured against the insurer after a loss has happened, is void if made before the loss.” Although section 520 was in effect at the time the court decided Henkel, neither party addressed section 520 and the court did not consider that statute when it reached its decision based on common law principles.

In a lengthy opinion in which it analyzed the history of California’s insurance code and the treatment of assignments of insurance benefits, specifically regarding liability policies, the California Supreme Court ruled in Fluor that section 520 prohibits carriers from refusing to honor post-loss assignments of Contingent Benefits, as well as Noncontingent Benefits. The court further held that section 520 supersedes common law principles applicable to assignments, including the principles it relied on when it decided Henkel twelve years before.

The court noted that the principle reflected in the decisions of other courts that have upheld the validity of post-loss assignments of Contingent Benefits have been “described as a venerable one, born of experience and practice, facilitating the productive transformation of corporate entities, and thereby fostering economic activity.” Interestingly, the court surmised that although section 520 of California’s Insurance Code has been in effect for over 145 years, it had not previously been asked to address its application to assignments of Contingent Benefits apparently because insurers had only “recently beg[u]n to disallow and contest such assignments [and therefore,] . . . there was little cause for insureds to think about, much less rely on, section 520.”

Although the decision in Fluor concerned a post-loss assignment of benefits under a liability policy, the court at least suggested that section 520 applies to first party, as well as third party, policies. Therefore, policyholders under property insurance policies should be able to rely on section 520. The California Supreme Court decision in Fluor suggests that post-loss assignments of Contingent Benefits under property insurance policies are valid in California, as in the other states I mentioned in my prior blog.

In an upcoming blog, I’ll discuss how we addressed the issue of post-loss assignments of Contingent Benefits in the Arizona cases we are handling, and how the courts in Arizona have ruled on that question.

Sometimes courts express general principles that go beyond the specific case they are deciding and which are worth noting in other contexts, even on a personal level. In that regard, the California Supreme Court stated the following in its last footnote in Fluor, in which it addressed the fact that neither party in Henkel had raised section 520 in their briefs, although that statute clearly applied to the dispute and would have changed the outcome of it:

Of course, this still does not explain why section 520 was not discussed by the parties — especially the plaintiff or its amicus curiae — in Henkel itself. And yet as observed . . . such omissions occasionally happen. This reminds us that even with access to computer research technology, any human enterprise cannot be perfect; and that it is better that wisdom, or at least controlling authority, come to our attention late, rather than not at all.

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