Filed 5697

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Filed 5697 Powered By Docstoc
					Filed 5/6/97



                                      FIRST APPELLATE DISTRICT

                                                DIVISION TWO


         Plaintiff and Respondent,

v.                                                                   A071513

UNITED SERVICES AUTOMOBILE                                           (Alameda County
ASSOCIATION,                                                         Super. Ct. No. 709993-9)

         Defendant and Appellant.

                                             I. INTRODUCTION
         This appeal arises out of a “bad faith” action brought by David Clayton (Clayton)
against his long-term insurance company United Services Automobile Association (USAA)
based upon USAA‟s conduct in attempting to settle for a fraction of the policy limits
Clayton‟s underinsured motorist claim for the death of his 15-year-old, only child in an
automobile accident. The jury awarded Clayton $429,310 in compensatory damages (of
which $400,000 was alotted as compensation for emotional distress) and $3.9 million in
punitive damages. USAA appeals urging numerous grounds for reversal of the judgment or
reduction of the damages. In the published portion of the opinion, we reject USAA‟s

*        Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with
the exception of parts II, III A, III B, III C, III D, III E, III F, III G, III H and III J.

contention that the trial court erred in failing to instruct the jury that it was permitted to
award emotional distress damages only if Clayton‟s distress flowed from a substantial
economic loss caused by USAA‟s conduct. In the unpublished portions of the opinion, we
reject USAA‟s remaining claims and affirm the judgment.
       Plaintiff and respondent Clayton was the father of 15-year-old Zachary Clayton
(Zach), a tenth grade student at the Head-Royce School in Oakland. Clayton and Zach‟s
mother, Virginia Felch (Felch), were divorced. Zach lived alternate months with each
parent. Zach, who was an only child, had a very deep and loving relationship with both his
       On May 8, 1990, Zach was riding home from school in a car driven by his
classmate, Johnny Wang. Wang was exceeding the speed limit when an oncoming car,
driven by Rosalie Brusca, crossed the center line. The two cars collided head on; Zach was
killed. He was not negligent in any way. Zach‟s parents were devastated by his death.
       After the immediate shock of Zach‟s death had eased slightly, Clayton began to try
to make sense out of what had happened and to “create some kind of balance in my life.”
Part of the search for balance involved wrestling with the issue of “how you try to attach
dollars to losing your son.” Realizing that the American civil justice system was based on
financial remuneration for wrongs, he concluded that, part of achieving an “overall fair
result,” was to seek “fair” treatment in the insurance area.
       Clayton contacted USAA, the company which had provided him with automobile
insurance for 23 years. Claims examiner Richard Billhimer (Billhimer) was helpful in
settling claims for Zach‟s medical bills and funeral expenses.
       One of Clayton‟s USAA policies provided $300,000 underinsured motorist (UIM)
coverage. Billhimer told Clayton that once the other insurers had paid their policy limits, if
the claim for Zach‟s was valued higher than $125,000, USAA would cover the claim up to
the $300,000 policy limit.

       Accordingly, Clayton made claims against Safeco, Brusca‟s insurer, and California
State Automobile Association (CSAA), Wang's insurance company. Each company paid
the policy limits -- $25,000 from Safeco and $100,000 from CSAA. CSAA paid the full
policy limits even though the company believed that Wang was less than half responsible
for the accident.
       Clayton then made a claim under his UIM policy. Several questions arose about the
UIM coverage. The main one was whether Zach‟s death was covered under Clayton‟s
policy, Felch‟s identical USAA policy, or both. Billhimer did some research and told
Clayton, who was not then represented by counsel, that, under a case called Safeco v.
Gibson, Zach was covered only under his policy because Zach was living with Clayton
when he died. Billhimer refused Clayton‟s request for a copy of the decision or for the
opportunity to speak to the USAA attorney who was advising Billhimer.
       During his discussions with Billhimer, Clayton inquired about what method USAA
would use to value his UIM claim. Billhimer said that USAA would look at past
settlements and jury verdicts in similar cases involving wrongful death of children, as well
as other factors.
       In fact, Billhimer conducted practically no investigation into the value of Clayton‟s
claim. Although Jury Verdicts Weekly and O‟Brien‟s Evaluator, a similar insurance
industry publication, were circulated within the USAA office, Billhimer did not consult
them. Moreover, although he knew that the value of Clayton‟s claim depended on Zach‟s
character and disposition and the quality of his relationship with his parents, he never
questioned Clayton or Felch about these issues and knew little about Zach or his
relationship with his parents. Billhimer did not even know that Zach was an only child, a
factor that significantly increased the value of the claim.
       Billhimer‟s claim file contained only two documents relevant to valuation. One was
a newspaper article about the accident which also briefly described a Head-Royce
memorial assembly held after Zach‟s death. The other was a report by deVries &
Company, an independent adjusting company that USAA had hired to investigate the

accident. The deVries investigator opined that a wrongful death claim for Zach‟s death
might be worth more than $350,000. Billhimer thought the report was wrong.
         With the little information that he had, Billhimer consulted with USAA litigation
attorney Richard Werner. Werner advised him to place a $50,000 reserve on the claim.
The reserve was the amount of money USAA would set aside to cover the claim. Werner
told Billhimer to present the case to the Casualty Committee in order to get sufficient
authority to offer Clayton and Felch up to $50,000 in new money to settle the claim.
Billhimer‟s usual settlement authority was $8,000 and his supervisor‟s was $15,000.
         With no information other than what Billhimer reported, the Casualty Committee
rejected the request for $50,000 settlement authority and limited Billhimer to a $15,000
settlement offer. With the $125,000 previously paid by Safeco and CSAA, USAA valued
the claim at a total of $140,000, less than half the $300,000 UIM coverage under Clayton‟s
policy. According to John Flood, chairman of the Casualty Committee meeting, the fact
that Zach came from a broken home “not a normal family relationship,” reduced the value
of the claim. At trial, Flood conceded that USAA‟s file contained none of the information
that a good investigation would have produced.1
         In July 1991, after the Casualty Committee rejected his request for increased
settlement authority, Billhimer talked to Clayton about USAA‟s valuation of his claim. He
said the $125,000 that Clayton and Felch had received from Safeco and CSAA was a fair
valuation, but that USAA was prepared to offer another $10,000 “to show good faith.”
         In the meantime, Clayton had become familiar with settlements and verdicts in other
child wrongful death cases. Shortly after Zach‟s death, Clayton was contacted by Mike
Plishner, whose son Aaron, a 16-year-old Head-Royce student, was killed in an automobile
accident six months earlier. Plishner told Clayton that they had received a $500,000

1        Nonetheless, Flood attached a negative interpretation to virtually every bit of information he later learned.
Thus, Zach‟s therapy to deal with his parents‟ divorce was viewed as being “under psychiatric treatment.” The fact
that Zach spent a lot of time with his friends on weekends reduced the "solace, comfort, [and] society” that he
provided to his parents. Zach‟s status as an only child might mean that his parents “didn‟t want to have any more
children” and, presumably, loved Zach less.

insurance settlement after Aaron‟s death and he sent Clayton a compilation of jury verdicts
involving the wrongful death of children. The verdicts were considerably higher than the
Plishners‟ $500,000 settlement.
       Clayton rejected USAA‟s $10,000 offer. He told Billhimer that $135,000 was not a
“fair result.” It was only about a quarter of the Plishners‟ $500,000 settlement, despite the
“incredibly, eerily similar” nature of the two accidents. It was also far below the wrongful
death jury verdicts sent by Plishner. Finally, $135,000 was much less than CSAA must
have valued the claim when it paid the full policy limits of $100,000 although its insured
was less than half responsible.
       Billhimer was “just dismissive” toward Clayton‟s information about the Plishner
settlement. He kept repeating that the Plishner case “must be different” and must have
“extenuating circumstances.” Billhimer told Clayton that if he didn't accept USAA‟s offer,
he could go to arbitration. Clayton felt as if he were talking “to a brick wall.”
       Clayton felt “betrayed” by USAA. However, Clayton wanted to avoid litigation.
That wouldn‟t have been the “right way to go about” achieving fairness in relation to
Zach‟s death. Instead, Clayton thought that, if he could just talk to the “right people” at
USAA, “somebody would understand what was the fair way to resolve this” and would
come up with a “fair answer.”
       Consequently, on September 13, 1991, Clayton sent an emotional four-page letter to
USAA‟s chief executive officer, General McDermott, at the company‟s home office in San
Antonio, Texas. In the letter, Clayton described his sense of betrayal and anguish at his
own insurance company‟s failure to fairly value the devastating loss of his son. He also
detailed the Plishner case.
       The letter concluded with three specific requests:
       “I would like a full explanation of why only my policy covers this situation. Zach
lived equally with Virginia [Felch] and me about a month at a time in homes that are a mile

or two apart. We each have relevant coverage and we each have suffered a very great
         “I would like to understand the essential differences between the Zach Clayton and
Aaron Plishner tragedies that produces such different results.”
         “I would like you and those of your employees who become involved to know a
little about Zach,” who was “lovable and fun and funny and prickly and daring and difficult
and devilish and thoughtful and irreverent . . . and finally . . . a person of surprising integrity
and loyalty.” Clayton enclosed a video of the Head-Royce memorial service for Zach,
several newspaper articles, and a photograph of Zach as the best man at Clayton‟s second
         The letter ended, “And perhaps you will choose a different way to get to a fair
         USAA‟s treatment of Clayton‟s “presidential complaint,” as USAA called it,
followed the company‟s customary pattern. Rather than assigning a new employee to take
a fresh look, the home office routinely referred such letters back to the manager in the
regional office that had originally handled the claim.
         Billhimer‟s immediate supervisor, Gene Eberle, drafted the response to Clayton‟s
letter. Eberle knew very little about the case -- only that Zach was a student at a certain
school, that he was 15 years old and that “he came from a divorced family.” In fact, Eberle
knew only what he had read six months earlier in the newspaper article in the file. He did
not know Zach was an only child. He did not know any details of Zach‟s relationship with
his parents. He did not know about Clayton‟s response to Billhimer‟s $10,000 offer and he
had not heard of the Plishner settlement before reading Clayton‟s letter.
         Despite his limited knowledge, Eberle did nothing to learn more about the claim.
Billhimer‟s desk was just a “two second” walk from his own, but Eberle did not talk to
Billhimer (or anyone else) about the issues raised in Clayton‟s letter. He made no inquiry
about the Plishner case and did not view the videotape. Eberle believed that $125,000 was
a fair amount of money because Zach “was 15 years of age, his father and mother were

divorced, he was a student at the local high school . . . [and] he really had no career in mind
other than maybe photography.”
       Eberle‟s draft response answered Clayton‟s question about the two-policy issue by
citing the Safeco case. Eberle did not know, however, that Billhimer had conceded that
Safeco was inapplicable and had given Clayton a different explanation of why only
Clayton‟s policy applied. Eberle refused to comment about the Plishner case, saying “[a]ll
claims are different. . . .” He falsely implied that he had viewed the video by stating: “The
newspaper articles and visual material that you have provided reflect that Zachary was very
       Eberle forwarded his draft to Carl Campagna, a senior claims attorney, who made a
few editorial changes without checking the file or watching the video. Campagna sent the
draft to Lewis Dickey, executive director of claims for the Western Regional Office.
Dickey approved the letter without making any changes, because he assumed that Eberle
had consulted with Billhimer before preparing it. Dickey did not talk to anybody about the
case. He did not watch the video. He made no effort to learn about the Plishner case,
which he regarded as irrelevant. Dickey forwarded the draft to Donald Meyers, assistant
vice president for claims for the Western Regional Office. Meyers knew nothing about the
case. He did not talk to anybody about it and did not view the video. He simply signed the
letter and sent it to Clayton on October 8, 1991.
       While the response to Clayton‟s letter was being drafted and reviewed, the Legal
Committee of the Western Regional Office reviewed the claim. The Legal Committee
reaffirmed that only Clayton‟s policy applied and approved the earlier $140,000 valuation.
Carl Campagna, senior claims attorney, who presided at the meeting, explained: “One of
[Zachary‟s] . . . hobbies was photography, but frankly there was no indication he was going
to be another Ansel Adams. [¶] There was a newspaper clipping that said he was
interested in basketball, but there was no indication he was going to be a basketball player.
He was an okay student. That‟s the best we had to go on.”

       Campagna also admitted that, even if the committee had evaluated the case higher,
it would not have increased Billhimer‟s settlement authority until Clayton “gave up his
contention” that a second policy might apply. “Before we can enter into meaningful
settlement discussions with the insured, he has to recognize and accept that only one policy
limit applies to this loss,” Campagna wrote on October 3, 1991.
       Clayton was deeply disappointed with USAA‟s answer to his letter. It was “an
empty response.” “I didn‟t think when I got the answer[that] I had gotten a fair result. . . .
It was not a fair process.” He further testified that the process was “gnawing at me.” For
Clayton, “to get a fair result and have everything that involved Zach treated in a fair way”
was crucial to making peace with his son‟s death.
       From October 1991 until May 1992, Clayton and Felch talked about whether to
pursue the claim through arbitration. They were not yet ready to go ahead. “[W]e waited
until we were comfortable to move forward, had the strength to move forward.”
       In May 1992, Clayton and Felch retained attorney Richard A. Seltzer. Seltzer
promptly wrote to Billhimer, requesting “the institution of arbitration proceedings.” Seltzer
proposed that the parties arbitrate the value of the claim and, if it was more than the
$300,000 policy limits, that the issue of whether there was coverage under one or two
policies be resolved in a declaratory relief action. USAA agreed to Seltzer‟s proposal,
because USAA took the position that coverage issues should be resolved in court, not by
       USAA retained Dennis Moriarty, a noted insurance defense attorney, to represent the
company in arbitration. Moriarty had recently handled several cases involving the wrongful
death of children, including one which resulted in an $850,000 verdict. He kept current on
trends in jury verdicts by reading Jury Verdicts Weekly.
       On September 8, 1992, Moriarty‟s office took the depositions of Clayton and Felch.
Clayton found the deposition a “difficult emotional experience,” because he had to relive
the emotions he experienced when he learned that Zach had been killed.

       Three days later, on September 11, 1992, Moriarty sent Billhimer a letter
summarizing the two depositions. He gave a lengthy and detailed account of Zach‟s close
relationship and myriad activities with both his parents and the deep loss they suffered with
his death. He stated that “both claimants will make very presentable and sympathetic
witnesses on their own behalf if this matter proceeds to arbitration.” At trial, Moriarty
described Clayton and Felch as “devoted parents,” who had a “very close relationship,” “a
real valued relationship,” with their “very special son.”
       In a second letter to Billhimer, also dated September 11, 1992, Moriarty set forth
the results of his recent review of jury verdicts in child wrongful death cases. The verdicts
ranged from $30,000 to $6 million, with an average verdict of over $1 million and a median
verdict of nearly $600,000. Based on those verdicts and the fact that Zach was an only
child, Moriarty revised his initial assessment of the case and stated his opinion that the case
was worth the full $300,000 policy limits. After deducting the $125,000 received from the
other insurers, he recommended a settlement offer of $175,000.
       After obtaining the Legal Committee‟s authorization for a $175,000 settlement
offer, Billhimer still needed approval from the USAA home office for such a large
settlement. In a report to the home office on September 29, 1992, he justified his request
by asserting that, since the $10,000 offer in May 1991, “we have seen a dramatic increase
in settlement awards for death cases involving minors. We are now seeing awards in the
300K to 500K range and some into the millions.” The report also noted that Zach was both
Clayton‟s and Felch‟s only child, a point not mentioned anywhere in the file until
Moriarity‟s letters.
       At trial, Billhimer admitted that he had no specific information about an increase in
the level of settlements or jury verdicts. Other USAA witnesses admitted that there was no
“dramatic” increase in verdict levels during the relevant time frame.
       On October 5, 1992, a committee in USAA‟s home office met and approved the
request for $175,000 authority. The claim was settled for the full $175,000 a few days
before the arbitration hearing, after Clayton and Felch rejected Moriarty‟s attempt to get

them to settle for $100,000-125,000. As part of the settlement, Clayton and Felch retained
their right to bring an action against USAA for bad faith handling of the claim.
       On December 18, 1992, Clayton filed this action against USAA, alleging breach of
the covenant of good faith and fair dealing. A month-long trial began on May 4, 1995.
       In motions in limine, USAA moved to exclude (1) evidence of jury verdicts in other
cases and (2) a 17-minute edited version of the videotape of the Head-Royce memorial
       The trial court, the Honorable Jacqueline Taber, ruled that evidence of jury verdicts
in other cases was admissible “for the notice given to people who read those verdicts.”
Jury verdict information was also admissible to impeach an expert‟s opinion about whether
USAA‟s offer was reasonable. The court explained: “He says that‟s his opinion. Where
did you get your opinion, sir, from an astrologer? Or did you get it from some jury
       The court ruled that the videotape was also admissible. “This is evidence that was
available to the defendant to evaluate the claim.” The court agreed to watch the tape in
order to decide whether any parts should be excluded. After viewing the tape, the court
ruled that the entire tape was more probative than prejudicial.
       Besides his own testimony and that of USAA employees, Clayton presented the
testimony of three expert witnesses. The first expert to testify was Gary Gwilliam, a
plaintiffs‟ personal injury attorney who has handled about a hundred bad faith cases. In
Gwilliam‟s opinion, Clayton‟s claim was “grossly misevaluated, an undervalued lawsuit.” It
was “very easy,” “a no-brainer” for USAA to realize that “this is a case clearly worth in
excess of $300,000 by any valuation.” USAA should have promptly told Clayton that he
deserved the full policy limits of $175,000 and should have paid it without forcing him to
hire an attorney. The fact that there was a dispute about whether one or two policies
applied did not affect USAA‟s duty to deal fairly with Clayton under his policy.

       USAA‟s evaluation was particularly “inexcusable” because this case involved the
death of a child. It is “very disturbing” to a parent not to have his child valued fairly by an
insurer, to be told: “Your child is not worthy of this.”
       Gwilliam said that verdicts well in excess of a million dollars for the death of a
minor were “a standard thing,” “within the norm,” and that settlements of $600-700,000
were “[p]retty typical” even in disputed cases where, unlike the Clayton case, there was
comparative fault by the youngster. Gwilliam said his firm used Jury Verdicts Weekly to
“keep our finger on the pulse of what juries are doing . . . because elsewise how can we
advise our clients of the reasonable value of cases?”
       According to Gwilliam, USAA‟s $10,000 offer was a “low-ball offer.” USAA knew
that its offer was not realistic but hoped that “they could just buy this guy off” because
Clayton “would not like to get involved in reliving the tragedy of the loss of his son.” In his
opinion, USAA increased its offer to $175,000 to prevent the arbitrator from setting a high
value, which could be used against it in a bad faith case. Gwilliam called the increase from
$10,000 to $175,000 “a very unusual swing unless there has been a pattern of low-balling.”
       Gwilliam testified that USAA was also in bad faith in failing to interview Zach‟s
parents, relatives, and teachers to find out about Zach and what his death meant to his
parents. “How else could they value what his life was about? How could they put a
valuation on it . . . if they didn't know what kind of a young man he was, if they didn‟t know
what the loss meant to the parents . . .?”
       The response to Clayton‟s presidential complaint also showed USAA‟s bad faith,
Gwilliam asserted. USAA just “passed [the letter] up the line.” Having been alerted by the
letter to the Plishner settlement, USAA should have investigated the Plishner case to see if
there were similarities that might affect USAA‟s valuation. Instead, “[t]hey simply said:
All claims are different, we can‟t look at that” and then “brushed him off,” essentially
saying: “if you don‟t like it, go get a lawyer and go to trial.” That was not “an appropriate
response to this grieving parent who was reaching out to his own company to ask them to
deal with him fairly.”

       Bernard Martin, an insurance adjustor for 42 years, also testified on Clayton‟s
behalf. He explained that valuation of a child wrongful death case requires a thorough
investigation of the character and disposition of the decedent and his relationship with his
parents. The death of an only child, especially where the parents are beyond child-bearing
age, represents a particularly acute loss.
       Research into settlements and jury verdicts in comparable cases is also crucial to
understand how the community values such cases. Using only Jury Verdicts Weekly and
O‟Brien‟s Evaluator, which were circulated to USAA staff, Martin surveyed California jury
verdicts in child wrongful death cases between 1989 and 1992. After taking into account
certain criteria explained to the jury, he opined that the average verdict was $1,162,559 and
the average settlement was $815,647.
       Martin opined that USAA exhibited bad faith in numerous respects. First, USAA‟s
$10,000 offer, which was not changed for 15 months, was “certainly not fair, neither fair
nor equitable,” Martin testified. It was “an outright insult to anyone who had any
knowledge . . . of litigation results in the community.” Martin called the $10,000 offer
compared to the ultimate $175,000 settlement “the most outrageous case of what we call
low-balling in the cases that I have ever seen.”
       Second, USAA employees did practically no investigation at all. Their failure to
watch the video showed that “their minds were closed to the possibility” that the case
would settle for more than their $10,000 valuation.
       Third, they hired a skilled, expert outside adjustor, deVries & Company, and then
ignored its opinion that Clayton‟s UIM claim could be worth more than $350,000.
       Fourth, they failed to investigate the “amazingly comparable” Plishner case, which
should have been a “red flag” to USAA that its valuation of Clayton‟s claim was wrong.
       Fifth, USAA‟s process of responding to the precedential complaint was “shocking
and outrageous,” because the same people who had been involved in the problem were
assigned to prepare the response.

       Finally, it was bad faith and a “reprehensible thing to do” to use Clayton‟s and
Felch‟s concern about the two-policy issue as a basis for refusing to make a fair offer under
Clayton‟s policy. According to Martin, USAA should have clearly and simply explained to
its insureds why only one policy applied and then made a fair offer under that policy so the
issue “would not have hung as a cloud, as it did, for months after that.”
       Jerry Ramsey, an insurance defense lawyer for 30 years who has also served as an
arbitrator in hundreds of cases, testified that the value of Clayton‟s claim in 1990 was
between $500,000 and $1 million; therefore, USAA immediately should have offered to
pay the policy limit. “This case was worth much, much more than the money available
under the policy. There‟s no question about that.” Ramsey called USAA‟s $10,000 offer
“an intentional low-ball offer, trying to buy a case cheap under catastrophic circumstances.”
       Ramsey testified that he reads jury verdict services “religiously” and supplies
appropriate verdicts to his insurance company clients.
       Agreeing with Clayton‟s experts, nearly every USAA witness testified that
comparable jury verdicts or settlements are a factor used to one degree or another in
valuing claims, particularly in child death cases. Seven USAA employees, from claims
examiner Billhimer to home office attorney Mary Ibarra, described their use of verdicts or
settlements for this purpose. Dennis Moriarty, USAA‟s lawyer on the Clayton claim and an
expert witness at trial, stated that he uses jury verdicts as “part of the process” in
determining a claim‟s value. Indeed, Moriarty‟s survey of child death verdicts was cited by
Billhimer to justify his request for $175,000 settlement authority. Craig Needham, a
plaintiffs‟ personal injury lawyer who testified as a defense expert, said that jury verdict
reports were “a factor that you can consider” in valuing cases.
       After the admission of extensive testimony regarding jury verdicts, the issue of the
permissible use of those verdicts arose again in connection with settling jury instructions.
Over USAA‟s objection, the court instructed the jury that it could consider evidence of jury
verdicts and settlements in other cases for two purposes: to determine whether USAA‟s
settlement offer was reasonable and to show what materials USAA‟s employees “may or

may not have relied on” in reaching their evaluation. USAA argued that only the second
purpose was proper.
       After two days of deliberations, the jury unanimously found that USAA had
breached the covenant of good faith and fair dealing and that its breach was the cause of
injury to plaintiff. The jury awarded $29,310 in economic damages, representing Clayton‟s
share of the attorney‟s fees incurred in the arbitration proceeding, and $400,000 in
noneconomic damages. The jury also found by clear and convincing evidence that USAA
committed oppression and malice, but not fraud, by its bad faith conduct.
       The punitive damage trial proceeded immediately. The only evidence was a
stipulation that USAA‟s net worth was $3.6 billion and its net income for 1994 was
$593,924,372. The jury awarded $3.9 million in punitive damages.
       Judgment was entered on June 15, 1995. The court denied USAA‟s motions for
judgment notwithstanding the verdict and for a new trial.
                                         III. DISCUSSION
A. Insurance Code Section 11580.26 Does Not Preclude USAA's Bad Faith Action.
       USAA contends that Insurance Code section 11580.26 precludes appellant's bad
faith claim. That section provides in pertinent part: “No cause of action shall exist against
either an insured or insurer from exercising the right to request arbitration of a claim under
this section or Section 11580.2.” (Ins. Code, § 11580.26, subd. (b).) We disagree.
       USAA‟s interpretation of the statute has been rejected (and we believe persuasively)
by Division Three of the Second District in Hightower v. Farmers Ins. Exchange (1995) 38
Cal.App.4th 853, 861-863. USAA attempts to distinguish this decision on the ground that
the valuation of a wrongful death claim is a difficult and subjective process. In contrast,
readily verifiable medical expenses exceeded the policy limits in the Hightower case.
USAA‟s argument fails because it cannot be stated as a matter of law that USAA acted
reasonably in connection with the Clayton claim. In fact, three experts testified that the
policy limits of David Clayton‟s policy were clearly owed and a jury obviously credited this

testimony. Under such circumstances, the trial court did not err by denying USAA‟s
request for judgment notwithstanding the verdict.
B. The Trial Court Did Not Abuse its Discretion in Admitting the Videotape.
       USAA next contends that the trial court erred in admitting into evidence a videotape
containing representative excerpts of a school memorial service in Zach‟s honor. The
unedited videotape had been submitted to USAA by Clayton. In admitting the tape, the
court reasoned that it was “evidence that was available to the defendant to evaluate the
       The trial court correctly ruled that the videotape was relevant and admissible. As
one court explained under similar circumstances: “All of the challenged documentary
evidence came from [the insurer‟s] file. In deciding the basic issue of the case -- whether
[the insurer] acted in good faith in refusing to settle the . . . claim, without arbitration, for
[the policy limits] -- the jury was entitled to be advised as to exactly what information was
in defendant‟s file . . . . How else could they have properly determined whether [the
insurer] acted fairly and in good faith in its handling of the claim?” Richardson v.
Employers Liab. Assur. Corp. (1972) 25 Cal.App.3d 232, 242, overruled on other grounds
in Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 580, fn. 10.) In order to value
respondent‟s claim, USAA needed to learn about Zach‟s disposition and character. (BAJI
No. 14.52; Krouse v. Graham (1977) 19 Cal.3d 59, 68.) The videotape provided
information regarding how those who knew him well would likely describe him in a
wrongful death trial. Such information was relevant to the settlement value of Clayton‟s
claim. The fact that USAA did not review the tape does not vitiate its relevance.
       After reviewing the videotape and the record, we also reject USAA‟s claim that the
trial court should have excluded the videotape on the ground that it was more prejudicial
than probative. (See Evid. Code, § 352.) The trial court fully evaluated this issue and its
ruling was well within its discretion.
C. The Trial Court Did Not Err in Instructing the Jury that It Could Consider Jury
   Verdict and Settlement Evidence in Determining Whether USAA’s Initial Settlement

   Offer Was Reasonable.
       USAA presents a three-pronged attack on the trial court‟s decision to instruct the
jury as follows: “In this case you heard evidence of jury verdicts and settlements in other
cases. This evidence would ordinarily not be admissible in a wrongful death case, because
an arbitrator or jury, in awarding damages in a wrongful death case, is not allowed to
consider other jury verdicts or settlements in other cases. However, in a bad faith case, a
jury is entitled to consider such evidence if they wish in order to determine whether the
settlement offer made by the defendant to the plaintiff was or was not reasonable. [¶] Also,
this evidence, if the jury wishes to consider it, can be used to show what materials the
defendant's employees may or may not have relied on in coming to their evaluation.”
USAA requested a similar instruction, except it stated that such evidence could not be
considered in determining whether its offer was a reasonable one.
       Although somewhat hard to follow, USAA‟s first argument appears to be that the
evidence was not relevant to whether the settlement offer was reasonable. USAA is simply
incorrect. Every witness at trial testified that jury verdicts and, to a lesser extent, settlement
offers should be considered in valuing a claim like Clayton‟s claim. While it is true that the
ultimate value of any given claim must be decided on its own facts, the ballpark of
reasonableness is set by the perception of what is likely to occur if a given case is tried or
arbitrated. The relevance of the evidence was not limited to notice, but rather, as the trial
court concluded, tended to prove the reasonableness of the offer.
       USAA next contends that the evidence was inadmissible lay opinion. We disagree.
Evidence Code section 800 on its face does not apply to this evidence, which was
introduced via expert testimony.
       Finally, USAA contends that the evidence was inadmissible hearsay. We again
disagree. The evidence was not admitted for the truth of the verdicts or settlement offers
found in the services. As the trial court explained: “It‟s a tool of the trade that‟s used, not
for the eternal truth but for this is what‟s going on. This is what is happening.” In other
words, even if a particular jury verdict reported in a given publication was incorrect, it

could still influence the perception of the relevant community of adjustors and lawyers of
the value of similar claims.
       Finally, assuming for the sake of argument that a limiting instruction of some type
should have been given, we would find no prejudice from its absence. (E.g., Mock v.
Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 335-336 [setting forth
standard of review for prejudice resulting from erroneous jury instruction].) There is no
reasonable likelihood that the instruction misled the jury into simply comparing the
settlement offer to the average verdicts as USAA contends. The testimony at trial and the
closing arguments regarding the limitations of the reporting services and the use of the
information contained therein was sufficient to obviate any such prejudice.
       USAA‟s second claim of prejudice fairs no better. USAA contends that the jury
must have misused the jury verdict information to determine the amount of Clayton‟s
emotional distress damages. Even if the jury did so (which we do not assume), the misuse
was not attributable to the instruction about which USAA complains nor would its proposed
limiting instruction have obviated this alleged misuse.
       We therefore conclude that instructing the jury with the challenged instruction was
not reversible error.
D. Substantial Evidence of Causation Is Found in the Record.
       USAA next contends that the judgment must be reversed because Clayton failed to
prove his damages were caused by USAA. Substantial evidence, however, is present in the
record to support the judgment. Clayton testified: “[I]f we were offered $175,000 and
given a good reason why only one policy covered, in my mind I believe we would have
settled right then.” Since $175,000 represented the policy limits of Clayton‟s policy and
since USAA owed Clayton a duty to make a reasonable offer under his policy
notwithstanding any dispute over the application of a separate policy, the jury could draw
the reasonable inference that, if it had been offered either with an explanation or without

loss of the parents‟ rights to pursue their claim against the second policy in another forum,
Clayton would have accepted the policy limits on his policy.
E. No Genuine Issue of Liability Exists in this Case.
       USAA next contends that it cannot be liable in tort because as a matter of law a
“genuine issue as to damages under the policy” existed. USAA relies upon authority that
holds that an insurer is not liable in tort for refusing to defend or to pay benefits where a
genuine legal question regarding the insurer‟s liability exists. (See Waller v. Truck Ins.
Exchange, Inc. (1995) 11 Cal.4th 1; Opsal v. United Services Auto. Assn. (1991) 2
Cal.App.4th 1197, 1205-1206; Safeco Ins. Co. of America v. Guyton (9th Cir. 1982) 692
F.2d 551, 557.) USAA fails to comprehend that that point is not at issue here. The Clayton
claim was one of admitted liability. The question presented to the jury was a factual one
that was not amenable to resolution as a matter of law: whether the settlement offer was a
reasonable one. Substantial evidence supports the jury‟s conclusion that it was not.
F. Clayton Suffered Compensable Economic Loss.
       USAA next argues that Clayton did not suffer any legally compensable economic
loss. USAA reasons that, since the parties to an underinsured motorist arbitration are
statutorily required to bear their own fees and costs (Ins. Code, § 11580.2), Clayton‟s costs
and fees incurred in connection with the scheduled arbitration of his claim cannot be
economic loss for purposes of this bad faith action. We disagree.
       Our Supreme Court has held: “When an insurer‟s tortious conduct reasonably
compels the insured to retain an attorney to obtain the benefits due under a policy, it follows
that the insurer should be liable in a tort action for that expense. The attorney‟s fees are an
economic loss-- damages-- proximately caused by the tort.” (Brandt v. Superior Court
(1985) 37 Cal.3d 813, 817, accord Waters v. United Services Auto Assn. (1996) 41
Cal.App.4th 1063, 1069, 1078, 1081, & fn. 15.) We see nothing in the statute that evinces
a legislative intent to modify this well-established rule. If the arbitration is undertaken in
good faith, the statutory rule applies; if it is not, then the insured should be entitled to

recover damages caused by the insurer‟s bad faith conduct, including fees and costs
incurred in an unwarranted arbitration proceeding.
G. Substantial Evidence Supports the Award of Emotional Distress Damages.
       USAA contends that the $400,000 award for non-economic loss was not supported
by substantial evidence. While the evidence of emotional distress is not overwhelming, our
review of the record reveals substantial evidence to support the jury‟s award.
       Clayton was devastated by the death of his only child and USAA knew that he was
distraught. Clayton testified that the process of arguing over the value of Zach‟s life was
“heart-wrenching” and “gnawed” at him. He felt “betrayed” and “deeply offended” by
USAA‟s valuation of his claim. The deposition, in which he was forced to relive his
memories of Zach‟s death, was a “difficult emotional experience” for him. Clayton felt
“mistreated as a result of the way the whole settlement process has gone . . . .” From such
evidence, the jury could reasonably conclude that Clayton was distraught and in much
emotional pain and that USAA‟s conduct heightened and prolonged his emotional turmoil.
The evidence and inferences therefrom are sufficient to support the jury‟s award.
H. The Award of Emotional Distress Damages Was Not Excessive.
       USAA further contends that the emotional distress award in the amount of $400,000
was excessive and can only be explained as an attempt to compensate Clayton for the loss
of his son. Testimony and jury instructions repeatedly told the jury that Zach‟s loss and
Clayton‟s grief resulting therefrom were not compensable in a wrongful death action and
the jury in this case was properly instruction on damages for the bad faith action. As one
respected treatise explains: “The amount fixed by the jury as damages for mental anguish
or emotional distress will be disturbed on appeal „only when the sum awarded is so large
that the verdict shocks the moral sense and raises a presumption that it must have resulted
from passion or prejudice.‟ (Fletcher v. Western Nat'l Life Ins. (1970) 10 Cal.App.3d 376,
409.)” (Croskey, et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 1995)

¶ 13:111, pp. 13-23.) Although the award is a substantial one, we cannot conclude that it
was excessive.
I. The Law Does Not Require Emotional Distress to Flow from Economic Loss
   or Be Severe.
        USAA next argues that reversal is required due to the trial court‟s failure to instruct
the jury that it was permitted to award emotional distress damages only if Clayton‟s
distress flowed from a “substantial economic loss” caused by USAA‟s conduct.2 We
conclude that the trial court properly rejected these special instructions because they
misstate the law.
        After reviewing the pertinent authorities, we conclude that respondent‟s explanation
of the governing rules is correct: “[P]laintiff in a bad faith case must prove some economic
loss as a means of validating the seriousness of his or her emotional distress. Once
economic loss is shown, however, the plaintiff is entitled to recover for all emotional
distress proximately caused by the insurer‟s bad faith without proving any causal link
between the emotional distress and the financial loss.” (See Waters v. United Services
Auto. Assn., supra, 41 Cal.App.4th 1063 [analyzing pertinent Supreme Court authority].)
        We acknowledge that support for USAA‟s contention can be found in Blake v.
Aetna Life Ins. Co. (1979) 99 Cal.App.3d 901 (Blake). We are not convinced, however,
that Blake correctly reflects the law of this state. In that case, plaintiff‟s husband died from
an overdose of a dangerous barbiturate. The plaintiff made a claim under a life and
accidental death policy, but presented no proof (as required by the policy) that her

2       USAA‟s proposed instructions read as follows:

         “You may award damages for emotional distress only to the extent that you find David Clayton suffered
emotional distress as the result of substantial economic loss legally caused by the wrongful conduct of USAA, as
required by these instructions.”

         “Emotional distress alone, even if caused by USAA‟s conduct is not sufficient for an award of damages.
Rather any emotional distress David Clayton suffered must have arisen from a substantial economic loss that resulted
from USAA‟s conduct in the handling of David Clayton‟s wrongful death claim.”

husband‟s death was an accident rather than a suicide. The insurer immediately paid the
life insurance claim, but continued to investigate the accident claim. Plaintiff eventually
filed a bad faith action that resulted in an award of $10,000 for emotional distress. The
insurer appealed.
       The Court of Appeal reversed the judgment, finding as a matter of law that the
insurer had acted reasonably in withholding payment of the accidental death claim. As a
second ground supporting reversal, the court found that plaintiff's emotional distress was
not caused by financial hardship resulting from the nonpayment of the claim. This alternate
holding was premised upon fact patterns “customarily” found in bad faith cases where
emotional distress awards were upheld. (Blake, supra, 99 Cal.App.3d at p. 925.) As an
example of such a case, the Blake court cited Silberg v. California Life Ins. Co. (1974) 11
Cal.3d 452. The emotional distress suffered by the plaintiff in Silberg did arise from the
insurer‟s failure to promptly pay plaintiff‟s claim. Nothing in the language employed by our
Supreme Court, however, indicates that in order to be compensable the emotional distress
must arise from “financial deprivation traceable directly to nonpayment of claim.” (Blake,
supra, 99 Cal.App.3d at p. 925.) Rather, the court wrote: “[v]iolations of the duty [of
good faith] of the insurer sounds in tort . . . and an insured may recover for all detriment
resulting from such violation, including mental distress.” (Silberg v. California Life Ins.
Co., supra, 11 Cal.3d at pp. 460-461.) We are convinced that no requirement that
emotional distress flow from financial hardship attributable to non-payment can be found in
the cases cited by the Blake court in support of its rather startling (and unnecessary)
departure from established law. Therefore, even though Clayton did not suffer financial
hardship from nonpayment of his claim, his economic damages of nearly $30,000 validated

the seriousness of his claim and he was entitled to recover for the emotional distress caused
by USAA‟s conduct.3
          With respect to USAA‟s argument that the jury should have been instructed that, in
order to be compensable the emotional distress suffered must have been “severe, substantial
or enduring,” we note that USAA never requested such an instruction. Furthermore, our
Supreme Court has rejected any such a requirement. (Gruenberg v. Aetna Ins. Co., supra,
9 Cal.3d at pp. 579-580.)4
          Accordingly, the trial court did not err in rejecting the proffered instructions and
instructing the injury as it did on this subject.
J. The Award of Punitive Damages Is Supported By Substantial Evidence
   and Is Not Excessive.
          Finally, USAA attacks the award of $3.9 million in punitive damages on the grounds
that the award is not supported by the evidence and is excessive. We disagree on both
          We turn first to the evidence supporting the award. While the jury must determine
that an award of punitive damages is supported by clear and convincing evidence, we
review a jury‟s punitive award under the general substantial evidence standard of review.
(Patrick v. Maryland Casualty Co. (1990) 217 Cal.App.3d 1566, 1567 (Patrick).)
Viewed under this standard, we have no trouble concluding that the record in this case is
sufficient to support the jury‟s substantial award of punitive damages.

3        In the unpublished portions of this opinion, we reject USAA‟s related claims that (a) Clayton did not suffer
compensable economic loss, (b) the emotional distress damages were not supported by substantial evidence, and (c)
the emotional distress damages were excessive.

4         In advancing this argument, USAA appears to be relying on the fact the nature of the emotional distress
suffered is an issue in a case that our Supreme Court recently accepted for review. (Torres v. Automobile Club of So.
California (S0438329), reprinted for tracking pending review at 50 Cal.App.4th 487.) After the present appeal was
fully briefed, the Supreme Court issued an order in that case limiting the issues to be argued to “whether under Civil
Code section 3295(d) a defendant is entitled to a new trial on liability and compensation damages following the
reversal of an award of punitive damages and remand to the trial court for a new trial on punitive damages.”

       As USAA contends, evidence that an insurer has violated its duty of good faith and
fair dealing does not necessarily establish that the insurer acted with the relevant malice,
oppression or fraud to support an award of punitive damages. (E.g., Patrick, supra, 217
Cal.App.3d at p. 1575.) In this case, the jury returned findings that USAA acted with both
malice and oppression. The Civil Code defines malice as “conduct which is intended by the
defendant to cause injury to the plaintiff or despicable conduct which is carried on by the
defendant with a willful and conscious disregard of the rights or safety of others.” (Civ.
Code, § 3294, subd. (c)(1).) Oppression is defined as “despicable conduct that subjects a
person to cruel and unjust hardship in conscious disregard of that person‟s rights.” (Civ.
Code, § 3294, subd. (c)(2).) Despicable conduct is, in turn, defined in BAJI No. 14.72.1
(1989 rev.) as “conduct which is so vile, base, contemptible, miserable, wretched or
loathsome that it would be looked down upon and despised by ordinary decent people.”
“Conscious disregard” as used in the definition of malice has been construed as awareness
of probable dangerous or harmful consequences of the conduct coupled with willful and
deliberate failure to avoid those consequences. (E.g., Mock v. Michigan Millers Mutual
Ins. Co., supra, 4 Cal.App.4th at p. 329 & fn. 25.)
       Throughout this appeal, USAA has failed to comprehend the facts and reasonable
inferences that the jury could have drawn from the evidence presented to it. A review of
the record demonstrates that there was ample evidence from which the jury could conclude
that USAA deliberately tried to “low-ball” Clayton, a long-time policyholder, at a
particularly emotionally vulnerable time.
       Clayton presented three expert witnesses at trial. Each was convinced that USAA
had attempted to take advantage of Clayton‟s grief by convincing him to accept a “low-
ball” offer. Indeed, these experts were all convinced that it was essentially a “no-brainer”
that Clayton‟s policy limits should have been offered promptly. As Clayton‟s attorney
argued, it was only because another parent who had suffered a similar loss provided

Clayton with information that Clayton learned that the offer was unreasonably low and
rejected it.
        The inference of deliberate “low-balling” is further supported by USAA‟s tactic of
refusing to raise its claimsperson‟s settlement authority until Clayton and Zach‟s mother
conceded that only Clayton‟s policy applied. One expert termed this conduct
“reprehensible.” Another explained that any dispute about whether a second policy also
applied did not change USAA‟s duty to make a reasonable offer under Clayton‟s policy.
        The jury could also have reasonably concluded that USAA‟s gross failure to
investigate the claim was attributable to a decision to “low-ball” Clayton. The lack of
investigation is palpable. Indeed, the jury again could reasonably have concluded that
USAA did not know that Zach was Clayton‟s only child until after Clayton and his ex-
wife‟s depositions were taken shortly before the arbitration. This fact would increase the
value of the case according to almost everyone who testified. Many (if not all) of the
people on the claims committee who approved the $15,000 settlement authority limit did
not know this fact or, indeed, any other salient facts about the case. It was also generally
admitted that USAA should and could have obtained prior to the commencement of
discovery for the arbitration all of the information that was later used to justify paying the
policy limits.
        Moreover, the jury was entitled to draw the inference that USAA chose to simply
ignore red flags that it had grossly undervalued the claim and to hide its head in the
proverbial sand. CSAA paid its policy limits of $100,000, despite the fact that its insured
was merely speeding and that the other car had crossed the center line. Clayton brought to
USAA‟s attention an incredibly similar case that Safeco had settled for $500,000. The
independent adjustor hired to investigate the accident opined (albeit somewhat
ambiguously) that the claim might exceed the policy limits. Jury verdicts for wrongful
death of children claims in California, some provided by Clayton and others available in
USAA‟s own library, were averaging over $1 million and settlements were averaging in
excess of $800,000. Indeed, at least two USAA managers involved in the Clayton case

were aware of one or more California wrongful death of a child verdicts against USAA in
excess of $1 million.
       Furthermore, the jury had before it testimony regarding how Clayton‟s complaint
letter to USAA‟s president was handled. We agree with the trial court that this evidence
was “shocking.” Consistent with company practice, no independent investigation of
Clayton‟s claim that the valuation was unfair was undertaken. No one even took the time to
watch the video that was enclosed. One of Clayton‟s experts testified that this failure
demonstrated that “their [USAA‟s] minds were closed to the possibility that the case would
be unusual and extraordinary, settle for more than their $10,000 valuation. I think they had
a mindset to keep the case where it was and suppress the claim as long as possible.”
Again, an inference of deliberate low-balling is further supported.
       Finally, USAA knew that, if Clayton chose to arbitrate, he would be forced to incur
substantial attorneys fees and the additional distress associated with litigation, distress that
he and Zach‟s mother had assiduously sought to avoid. The inference that USAA was
counting on such factors to deter Clayton from pursuing his claim is again a reasonable one.
       Thus, the evidence supports inferences far more reprehensible than mere “inept” or
“witless” claims-handling procedures as urged by USAA. (Cf. Patrick, supra, 217
Cal.App.3d at p. 1576.) The record here more than adequately supports the jury‟s findings
of malicious and oppressive conduct.
       USAA nevertheless argues that the punitive damages award cannot be sustained in
the absence of a showing of harmful company-wide policies or practices. While such
evidence is undoubtedly useful support for an award of punitive damages (see, e.g., Mock
v. Michigan Millers Mutual Ins. Co., supra, 4 Cal.App.4th at p. 329; Patrick, supra, 217
Cal.App.3d at p. 1576), it is not a prerequisite for an award of punitive damages against an
insurance company. (Cates Construction, Inc. v. Talbot Partners (March 28, 1997,
B085960) ___ Cal.App.4th ___, ___ [97 Daily Journal D.A.R. 4201, 4212]; Mock v.
Michigan Millers Mutual Ins. Co., supra, 4 Cal.App.4th at p. 338, fn. 36.)

       USAA also argues that the award of punitive damages was excessive. “We may
reverse the award as excessive only if the entire record, viewed most favorably to the
judgment, indicates the award was the result of passion and prejudice.” (E.g., Stevens v.
Owens-Corning Fiberglas Corp. (1996) 49 Cal.App.4th 1645, 1658.) The trial court‟s
approval of the punitive damages award, while not binding, is entitled to significant weight.
(Ibid.) After the reviewing the record herein, we are not convinced that the punitive
damage award was the product of passion and prejudice as opposed to an amount
reasonably calculated to punish wrongdoing and deter future misconduct. (Ibid.)
       Finally, USAA for the first time in its reply brief supplements its argument on the
excessiveness of the punitive damages award by raising a constitutional due process
challenge. Generally, arguments not raised in an appellant‟s opening brief are deemed
waived. (Stoll v. Shuff (1994) 22 Cal.App.4th 22, 25; In re Ricky H. (1992) 10
Cal.App.4th 552, 562.) However, because USAA‟s argument is premised upon a United
States Supreme Court decision that was filed after its opening brief was filed, we briefly
address this portion of its claim. (BMW of North America, Inc. v. Gore (1996) ___ U.S.
___ [116 S.Ct. 1589] (BMW).)
       We begin by observing that USAA does not even attempt to perform a rigorous
constitutional analysis in support of its claim. USAA merely seizes upon isolated language
from the BMW decision (without even providing adequate pinpoint citations) and then fails
to address differences between that case and the present case, differences that fatally
undermine its claim.
       First, USAA argues that its conduct fails to meet the “reprehensibility test” set forth
in BMW. In so doing, USAA again ignores the appropriate standard of review and the
reasonable inferences that the jury could have drawn from the evidence presented to it. As
demonstrated above, the jury could have reasonably concluded that USAA‟s conduct in this
case amounted to predatory low-balling of a long-time insured at an incredibly emotionally

vulnerable time. Such conduct was without doubt despicable and reprehensible and thus
justifies the imposition of substantial punitive damages.
       Second, USAA claims that BMW establishes a “repeated conduct” test. USAA is
wrong. BMW merely points out that the repetitive nature of the conduct can be taken into
account in determining the reprehensibility of the conduct. (BMW, supra, ___ U.S. at pp.
____ [116 S.Ct. at pp. 1500-1600].) Repeated conduct is not a prerequisite for the
imposition of substantial punitive damages where a single action is sufficiently
reprehensible standing on its own.
       Finally, USAA argues that the punitive damages bear no reasonable relationship to
the compensatory damages. In so doing, USAA attempts to limit the analysis to the
financial aspect of the harm suffered by Clayton. The compensatory damages in this case,
unlike the BMW case, include a substantial award for emotional distress. When the total
compensatory damages are factored into the analysis, the jury‟s award of punitive damages
is well within the range of constitutionally allowable awards. (see, e.g., TXO Production
Corp. v. Alliance Resources Corp. (1993) 509 U.S. 443; Neal v. Farmers Ins. Exchange
(1978) 21 Cal.3d 910, 928-929; cf. BMW, supra, ___ U.S. at p. ___; [116 S.Ct. at p. 1602
[500:1 ratio excessive under circumstances of the case].)
       Accordingly, we affirm the award of punitive damages.
                                        IV. DISPOSITION
       The judgment is affirmed. Costs on appeal are awarded to Clayton.

                                                   Haerle, J.

We concur:


Kline, P.J.

Lambden, J.

Trial Court: Superior Court of Alameda County

Trial Judge: Hon. Jacqueline Taber

Attorneys for Appellant
USAA                                            Michael J. Brady
                                                Laura L. Reidenbach
                                                Ropers, Majeski, Kohn & Bentley

                                                Jacquelyn K.Wilson
                                                Gassett, Perry & Frank

                                                Robert J. Moss
                                                Howard, Moss, Loveder, Strickroth
                                                      & Walker

Attorneys for Respondent
David Clayton                                   Richard A. Seltzer
                                                Seltzer & Cody

                                                Ellen Lake
                                                Law Offices of Ellen Lake

A071513       Clayton v. USAA