On March 30, 2005, the Second District Court of Appeal in Los Angeles issued an opinion, 21 Century Insurance v. Superior Court, upholding a legislative revival (CCP, sec. 340.9) of a previously time-barred bad faith insurance punitive damage claim against an Ex Post Facto challenge filed by an insurance company.
In the opinion, Justice Croskey seems to reach the right result, but takes a long and unnecessary road to get there. There is a controling Cal. Supreme Court case, Peterson v. Superior Court (1982) 31 Cal.3d 147, which holds that a judicial decision allowing recovery of punitive damages against a drunk driver did not violate the ex post facto clause because punitive damages are civil in nature. The 21 century courts questions the viability of that decision in light of the U.S. Supreme Court's decision in Landgraf v. USI Film Producs (1994) 511 U.S. 244, 281, where the court stated that retroactive imposition of punitive damages for preenactment conduct could raise ex post facto issues. It thus proceeds as though Peterson is not controlling.
In my view, the 21 Century court misreads Landgraf. In Landgraf, the Supreme Court only said that a statute, which retroactively imposes punitive damages on acts that were not subject to those damages before its enactment, could raise ex post facto issues. But section 340.9 does not impose punitive damages on preenactment conduct. Instead, it only extends a procedural opportunity to seek those damages without changing the substantive requirements for recovery of punitive damages against an insurance company in a bad faith action. Such procedural changes do not raise constitutional retroactivity issues even if they work to a disadvantage of one of the parties. (Landgraf v. USI Film Producs, supra, 511 U.S. at p. 275, citing McBurney v. Carson, 99 U.S. 567, 569 (1879).) So, Landgraf does not really raise any doubts about continuing viability of Peterson, at least as it is applied in this case.
Professor Martin's web log provides an interesting take on this case. I think he is right when he says that this issue would make for a great law review article (if one cares to waste their time writing about such obscure subjects:)
I suspect that this case may go up all the way to the Supreme Court. There is a lot at stake and there is too much insurance money behind the petitioners not to litigate this thoroughly. But Supreme Court review here is not a given, particularly in light of the fact that they declined to review the 20th Century case.
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