Opinion
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County Super.Ct.No. RIC 349816. Gloria Trask, Judge.
Reed Smith, Margaret M. Grignon and Raymond A. Cardozo for Plaintiff, Cross-Defendants and Appellants.
Donald Bradley Cripe and David A. Kay for Defendant, Cross-Complainant and Respondent.
Amy Bach and Eugene Anderson for United Policyholders as Amicus Curiae on behalf of Defendant, Cross-Complainant and Respondent.
OPINION
Richli, J.
Don Buhrman bought a pleasure boat that he insured with Old United Insurance Company (Old United). After Buhrman replaced the engine, the boat sank in a storm while anchored at Lake Mead. Old United refused to pay Buhrman’s claim, which did not include the value of the new engine; cancelled and rescinded his insurance and refunded his premiums; and filed an action for rescission based on a material change in the boat. Buhrman filed a cross-complaint for tortious breach of contract, breach of contract, negligence, fraud, indemnity, contribution, and declaratory relief, claiming actual damages of $60,000 or more.
Based on a special verdict form prepared by Buhrman, the jury rendered a verdict of $17,091 for Buhrman’s covered loss; $316,230 for economic loss, including lost wages; $184,000 for noneconomic damages; and $1 million in punitive damages.
Old United and Western Marine Insurance Services, Inc. (West mar), the insurance agent, appeal from the judgment against them. We hold the punitive damages award should be stricken and the award for economic damages reduced to $60,245. Otherwise, we affirm the judgment with directions.
Old United is the principal appellant but we distinguish West mar when necessary.
I
FACTUAL AND PROCEDURAL BACKGROUND
Buhrman has worked in the merchant marine as a refrigeration engineer and on diesel engines. He purchased the subject boat in June 1998 and obtained insurance from Old United through West mar in the amount of $56,000. The boat was described in the application signed by Buhrman, the insurance quotation, and the policy declaration as having a 454-cubic-inch Mer cruiser engine, with 340 horsepower and a top speed of 50 miles per hour.
Employees for West mar and for Old United testified regarding the insurance policy. The standard insurance contract, the Aquapac 2001, had various provisions concerning coverage beginning with the “Agreement”: “We agree with you, in return for your premium payment and in reliance upon the information you give us or our agent, to insure your property specifically described.” Insured property included “[n]newly acquired property” meaning any property replacing insured property of similar or less length and/or horsepower as described in the policy, subject to 30-days’ notice. Coverage extended to “permanently attached equipment and unattached equipment and accessories generally required to be on board for the safe operation and maintenance.” The policy required the boat to be maintained in a “seaworthy condition at all times.” The policy further provided it would be void “[i]f there was any fraudulent statement, concealment, misrepresentation or failure to disclose material information” in negotiating the policy, including renewal. The policy did not define “material information.” Finally, the policy stated, “This policy, Declaration Page and the application submitted for insurance include all the agreements between you and us relating to this insurance. No change or waiver may be effected in this policy except by endorsement issued by us.” Old United conceded that nothing in the policy directly addressed the speed of the boat or expressly informed the insured to report changes to the boat.
The boat did not perform satisfactorily. It could not “plane, ” or achieve lift, and could only attain a speed of 35 miles per hour. Over the next two years, Buhrman and his son, Brent, installed a new engine and made other modifications.
In October 1998, Buhrman added a Bimini top, a custom cover, and a stereo to the boat and supplied West mar with receipts to document these additions, which increased the insured value of the boat to $60,245.
Although disputed by appellants, Buhrman testified he called West mar in July 1999 to tell the agent he was installing the new engine or “drive package.” West mar told him to submit his receipts when the installation was completed and the policy would be adjusted. The cost of the new engine was about $33,593. The installation and testing began in July 1999 and continued through September 2000 until the sinking. The new engine could not achieve speeds of more than 10 miles per hour. In August 2000, the boat could not move forward or reverse. The day before it sank at Lake Mead, the boat may have gone 20 or 30 miles per hour but it broke down after 10 minutes. Buhrman explained he did not ask the new engine to be added to the policy because the installation was not yet finished.
The morning of September 24, after a storm at Lake Mead, Buhrman was shocked to discover the boat sitting on the lake bottom. Because his father was so distressed, Brent Buhrman called West mar to report that the boat sank. Brent mentioned the original engine had been replaced. Because Westmar’s claims authority was limited to $2,500, West mar referred the claim to an Old United claims adjuster.
West mar and Old United employees testified about office procedures for receiving phone calls from clients and “history notes” used to document policy activity. According to the history notes, the first notice West mar received about the new engine was after the boat sank. Buhrman said West mar told him the claim would be covered but the policy would be cancelled.
Old United investigated and Buhrman disclosed he had installed a larger engine with greater horsepower that potentially could achieve speeds of 70 to 80 miles per hour. There was no evidence the boat was ever operated successfully at that speed. Buhrman explained to Old United he was not making a claim for the new engine. Old United then hired a marine surveyor, Russell Dennis, to inspect the damage to the boat and to identify the engine.
Old United contended it should have been informed about the new engine because it constituted a material change in the information about the boat. In September 2000, Old United sent Buhrman a reservation of rights letter expressly based on the provisions in the insurance policy for “insured property” and “newly acquired property.” In October 2000, Old United rescinded the insurance policy and refunded the premiums based on the provisions of the policy concerning “concealment, misrepresentation, or fraud” and “changes in policy.” Old United filed a complaint for rescission. It also inter pleaded the sum of $27,153.71 with the court.
Old United employees testified variously that neither the new engine nor the increased horsepower was the reason Old United cancelled and rescinded the policy but the increase in speed and the increased value were reasons. As stated expressly by Old United’s vice-president, Douglas Semler: “The reason for the rescission is we were told by the insured he was replacing the engine with an engine that had capability of attaining speeds of 70 and 80 miles an hour . . . . The information was not given to us that he was making that change.”
High-speed boats create more risk for insurers.
The cost to repair the boat, including the new engine, was about $35,000. The cost of repair without the engine was about $17,000. The parties stipulated that Buhrman did not claim coverage for the new engine.
Buhrman had earned $50,000 in 1999 working for a flooring company. He worked as a merchant seaman in 2001, earning between $6,000 and $18,000 a month. In 2002, his deposition prevented him from working for the typical four-month stint. He did not go to sea in 2003 and 2004 because of the lawsuit and the related mediation. He estimated he suffered lost income of $12,000 a month for 30 to 36 months or total lost earnings of $500,000. The lost earnings caused him to default on the boat loan. By the time of trial, the boat was rendered unsalvageable.
Buhrman claimed other damages for loss of use of the boat for 360 days, valued at $1,000 a day; for emotional distress for ruining his credit and damaging his relationships with Brent and a woman friend; and for having to sell his house and move into an apartment. When Old United cancelled and rescinded the policy, Buhrman was on the verge of accepting the refund of the insurance premiums until he was served with the lawsuit for rescission.
At the request of appellants, the court ruled on their rescission claim and found Buhrman had made a telephone call to West mar about the new engine, even though Westmar’s records did not document it. The court then ruled against Old United and in favor of Buhrman that the rescission of the insurance policy was invalid.
Buhrman’s expert testified that Old United acted unreasonably and in bad faith by failing to conduct an adequate investigation before rescinding. He contended the loss should have been covered because the loss was not related to the new engine. Old United’s expert disagreed.
The trial court denied appellants’ motions for a non suit and for a directed verdict based on their argument the evidence established a genuine dispute as to coverage. After the jury rendered its verdict for Buhrman, the court denied appellants’ post trial motions.
II
ANALYSIS
The gist of appellants’ argument is that if Buhrman had asked to adjust his insurance policy when he first began replacing the engine in 1999, Old United would have cancelled or rescinded the policy before the boat sank in 2000 and Old United would not be liable for insurance coverage.
The gist of Buhrman’s argument is that, because he did not know, nor was he informed, when and how he had to notify the insurer about the engine replacement, Old United should not have cancelled and rescinded the policy.
A. Special Verdict on Breach of Contract
Appellants commence their challenge by arguing the jury found no breach of contract by Old United, meaning appellants could not be liable on the cause of action for tortious breach of contract because the tort claim depends on the contract claim. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 36; Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1153.) This assertion is not strictly true because a distinction exists “between an insurer’s potential contract and tort liability to an insured.” (Dalrymple v. United Services Auto. Assn. (1995) 40 Cal.App.4th 497, 513.) Waller does not prohibit a tort cause of action where coverage is found to exist and the insured challenges the manner in which benefits are paid ultimately and the “bad faith cause of action has sufficient contractual underpinnings.” (Dalrymple, supra, at p. 515.)
Appellants also maintain the court must assess the special verdict findings as a matter of law without implying findings in favor of the prevailing party: “‘[A] special verdict’s correctness must be analyzed as a matter of law. [Citation.]’” (Wilson v. Ritto (2003) 105 Cal.App.4th 361, 366; Mendoza v. Club Car, Inc. (2000) 81 Cal.App.4th 287, 303; Trujillo v. North County Transit Dist. (1998) 63 Cal.App.4th 280, 285.) But appellants’ argument depends on their subjectively favorable characterization of the jury’s responses to the special verdict form. In our view, the jury did not find there was no breach of contract by Old United.
In the jury instructions, the court instructed the jury based on Judicial Council of California, Civil Jury Instruction (CACI) No. 303 that to recover damages from Old United for breach of contract, Buhrman had to prove all of the following: the existence of a contract; that Buhrman performed or was excused from performance; that “all conditions required for Old United’s performance had occurred”; that Old United had “failed to do something that the contract required it to do”; and that Buhrman was harmed.
The jury answered the questions as framed in the special verdict form. The form itself suffered some of the deficiencies identified in Myers Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 960: “‘The requirement that the jury must resolve every controverted issue is one of the recognized pitfalls of special verdicts. “[T]he possibility of a defective or incomplete special verdict, or possibly no verdict at all, is much greater than with a general verdict that is tested by special findings . . . .” [Citation.]’ (Falls v. Superior Court (1987) 194 Cal.App.3d 851, 854-855, . . .)”
In the first section of the special verdict form, labeled breach of contract, the jury found a contract existed between Buhrman and Old United and Buhrman had performed his obligations under the contract. The jury answered “no” to the question, “Did all of the conditions occur that were required for Old United’s performance?” The next question was “Did Old United fail to do something that the contract required it to do?” The jury never expressly answered the latter question because, instead, the verdict form instructed the jury to proceed to the second section, labeled “tortious breach of insurance contract (breach of implied convenant of good faith and fair dealing—bad faith).” In response to those questions, the jury found Old United had acted unreasonably in investigating, denying coverage, failing to pay insurance benefits, and delaying payment, thus causing harm to Buhrman. By doing so, the jury found, in effect, that Old United had not performed under the contract and then found an insured loss of $17,091.
There is an obvious typographical error in the final version of the special verdict form. Question 11 refers to “Old United’s unreasonable failure to properly investigate, ” exactly as it was phrased in the original draft form. Question 10 erroneously asks “Did Old United reasonably fail to properly investigate”? The latter construction makes no sense. .The jury must have understood both questions to be asking whether United acted “unreasonably, ” rather than “reasonably” and improperly simultaneously.
Although appellants assert the jury found Old United did not breach the contract, the record does not truly support this contention. The jury did not make an express finding that Old United did not breach the contract. The jury answered one question related to performance and did not answer the second question about performance. Instead, it answered affirmatively the subsequent questions related to tortious breach of contract and awarded damages for the insured loss. Although the special verdict form created some ambiguity, “[i]t is not difficult to track back through the special findings in order to appreciate what exactly the jury did.” (All-West Design, Inc. v. Boozer (1986) 183 Cal.App.3d 1212, 1221.) In view of the structure of the verdict form and the circumstances of this case, in which the trial court had already ruled against Old United on rescission, it is not a reasonable interpretation of the special verdict form that the jury expressly found Old United had not breached its contract. To the contrary, the jury found there was a breach of contract. We reject appellant’s arguments on this issue.
Furthermore, there is not necessarily an irreconcilable conflict between a jury finding that other conditions were required for Old United’s performance and a finding of tortious breach of contract. (Shaw v. Hughes Aircraft Co. (2000) 83 Cal.App.4th 1336, 1344-1346.) The existence of other required conditions may not have signified a breach of contract. For example, the jury might have reasoned that Old United could not have paid the claim until the amount of the insured loss was established, something that admittedly did not occur before Old United cancelled and rescinded the insurance policy. In that instance, Old United would have failed to do something it should have done without it meaning Old United had breached the contract. In his respondent’s brief, Buhrman describes other ambiguities and uncertainties in interpreting the special verdict. But, taken on its face and in context, the special verdict indicates the jury found Old United breached its contract with Buhrman.
B. Tortious Breach of Contract
As an alternative argument, Old United urges it cannot be liable for tortious breach of contract because it was entitled to pursue a declaratory relief action when a bona fide dispute existed about coverage. (Dalrymple v. United Services Auto. Assn., supra, 40 Cal.App.4th at pp. 519-522.) Old United enumerates several reasons why it did not act in bad faith, including that there was a genuine issue about coverage; that its conduct was not “unreasonable”; that it made a mistake; and that its actions could not be evaluated based on hindsight. (Chateau Chamberay Homeowners Assn. v. Associated Internet. Ins. Co. (2001) 90 Cal.App.4th 335, 346-347; Fraley v. Allstate Ins. Co. (2000) 81 Cal.App.4th 1282, 1288; Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1280-1281.)
Old United points to the mutual duty of the parties to an insurance contract to disclose all material facts. (Ins. Code, § 332.) Misrepresentation about material facts, whether intentional or not, may be a basis for rescission if the information could have caused higher premiums, rejection of the policy, or different policy terms. (Mitchell v. United National Ins. Co. (2005) 127 Cal.App.4th 457, 468-469, 474.) Furthermore, “misrepresentation need not relate to the loss ultimately claimed by the insured, ” one example being an insured who fails to disclose a heart condition but dies of cancer. (Id. at p. 474, citing Torbensen v. Family Life Ins. Co. (1958) 163 Cal.App.2d 401, 405.) Even simple nondisclosure, as opposed to misrepresentation, of a material risk can support rescission. (Cigna Prop. & Cas. Ins. Co. v. Polaris Pictures Corp. (9th Cir. 1998) 159 F.3d 412, 420, fn. 3.) Old United then asserts substantial evidence does not support a judgment for tortious breach of contract.
One fundamental problem with appellants’ contention is Old United did not file an action for declaratory relief regarding coverage. All of Old United’s arguments are based on the premise that it had a right to seek declaratory relief before cancelling or rescinding the insurance policy. Instead it rescinded the insurance policy while simultaneously filing an action to confirm the legitimacy of the rescission.
An action for declaratory relief, which seeks a judicial determination of the parties’ rights and obligations under an insurance policy, differs significantly from an action for rescission, which seeks to void the contract:
“The salutary purpose of the declaratory relief provisions is to permit a prompt adjudication of the respective rights and obligations of the parties in order to relieve them from uncertainty and insecurity with respect to rights, status and other legal relations. [Citation.] The general rule referred to above, which does not bar the right to subsequent coercive relief if it is not sought or litigated in the earlier action, promotes this purpose. It enables a party to get a prompt adjudication without a dispute over the damages suffered. In many cases further proceedings will be unnecessary because the right of the party who might claim damages is not established, or because if his right is established no damages ensue, or, if ensuing, damages may be established without further litigation.” (Lortz v. Connell (1969) 273 Cal.App.2d 286, 301.)
In contrast, an action for rescission, based on fraud, concealment, or misrepresentation, seeks to void the contract from its inception: “[A] rescission effectively renders the policy totally unenforceable from the outset so that there was never any coverage and no benefits are payable.” (Imperial Casualty & Indemnity Co. v. Sogomonian (1988) 198 Cal.App.3d 169, 182.) An action for rescission generally presents more complicated issues than a declaratory relief action, as was demonstrated in this case. Appellants cannot employ legal authority involving declaratory relief actions to justify Old United’s rescission of the policy.
Second, because we employ a standard of review that favors the judgment, we find substantial evidence supports the judgment. (Barratt American, Inc. v. Transcontinental Ins. Co. (2002) 102 Cal.App.4th 848, 861.) Old United relies on the following discussion from Dalrymple v. United Services Auto. Assn., supra, 40 Cal.App.4th at page 511:
“In general, where bad faith is alleged, a jury is empowered to resolve conflicting evidence regarding an insurer’s conduct and motives. (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 921.) Bad faith in this context is said to be conduct violating community standards of decency, fairness or reasonableness. (Id. at pp. 921-922, fn. 5.) An appellate court reviews a judgment on such a jury verdict under the substantial evidence standard. (Id. at p. 922.)
“Although an insurer’s bad faith is ordinarily a question of fact to be determined by a jury by considering the evidence of motive, intent and state of mind, ‘[t]he question becomes one of law . . . when, because there are no conflicting inferences, reasonable minds could not differ. [Citations.]’ (Walbrook Ins. Co. v. Liberty Mutual Ins. Co. (1992) 5 Cal.App.4th 1445, 1454-1455.) Thus, the issue of bad faith may, in specific instances, be treated as an issue of law. (Id. at p. 1457.) An appellate court reviews a judgment on an issue of law de novo. (Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888; Sanders v. Atchison, Topeka & Santa Fe Ry. Co. (1977) 65 Cal.App.3d 630, 648-649.)” Furthermore, where the issue involves whether an insured had probable cause to file a declaratory relief action as a means of disputing coverage, the issue can only be considered a matter of law “‘only when there is no substantial conflict in the evidence.’” (Dalrymple v. United Services Auto. Assn., supra, 40 Cal.App.4th at p. 511, italics in original.)
Old United maintains it could rescind because the evidence showed it had probable cause to believe Buhrman either intentionally or unintentionally concealed facts about the boat. Old United reaches this conclusion by portraying the evidence in a light entirely favorable to its position. According to Old United’s version of events, it reasonably believed that Buhrman had failed to inform Old United about the new engine because Buhrman did not call West mar or West mar did not record the telephone call. Old United then conducted an investigation based on information from West mar, Buhrman, Brent, and Dennis, the marine surveyor, before rescinding the contract and filing its action for rescission. But another fair assessment of the evidence is that Buhrman called West mar to report installing the new engine and he did not know exactly when he should report the new engine was operational or that a new engine could mean he would lose his insurance coverage.
Old United filed for rescission, not declaratory relief, before cancelling the policy, and there was substantial conflict in the evidence about what Buhrman knew, when he disclosed it, and why. Certainly, there is no plausible evidence in the record that Buhrman was trying to conceal the new engine in order to retain his insurance coverage with Old United. Under these circumstances, we conclude the proper appellate standard of review is whether the record demonstrates sufficient evidence to support the jury’s finding of bad faith. We deem the evidence is substantial and uphold the jury’s verdict on this point.
C. Punitive Damages
Old United challenges the award of punitive damages or, in the alternative, asks that it be reduced. The jury found that Old United and West mar acted with malice and oppression and awarded Buhrman $1 million in addition to compensatory tort damages of $500,230.
A finding of bad faith liability does not dictate an award of punitive damages. (American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017, 1051; Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 890; Tomaselli v. Transamerica Ins. Co., supra, 25 Cal.App.4th at p. 1286; Stewart v. Truck Ins. Exchange (1993) 17 Cal.App.4th 468, 483.) The evidence to support punitive damages must be “‘“‘so clear as to leave no substantial doubt’; ‘sufficiently strong to command the unhesitating assent of every reasonable mind.’”’” (Mathieu v. Norrell Corp. (2004) 115 Cal.App.4th 1174, 1190.) Old United disputes that its conduct could be characterized as base, vile, contemptible, or criminal. (College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 725; American Airlines, supra, at p. 1051.)
As justification for punitive damages, Buhrman accuses Old United of filing its rescission action only as a tactical maneuver to avoid a claim of bad faith. In spite of Buhrman’s cynical assessment, however, we agree it may be a common and prudent business decision to seek a judicial determination about coverage, especially when acting on legal advice. (Stewart v. Truck Ins. Exchange, supra, 17 Cal.App.4th at p. 484.) Sufficient evidence does not establish Old United was motivated to avoid arbitration or the regulations of the California Fair Claims Act or that Old United intended only to intimidate Buhrman, even if that was the effect of the rescission action.
Here there was no evidence of an ongoing pattern of misconduct by Old United, such as when “recidivism increases the wrongfulness of a defendant’s conduct and may justify greater punishment.” (Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191, 1203.) Old United did not act capriciously. It had some grounds for its actions. It paid the claim as soon as the rescission action was decided against it. Furthermore, “[t]he harm arose from a transaction in the economic realm, not from some physical assault or trauma; there were no physical injuries; . . . The compensatory damages for the injury suffered here, moreover, likely were based on a component which was duplicated in the punitive award.” (State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 426.)
Old United seems to have mishandled Buhrman’s claim by acting too precipitously based on fairly equivocal information. But its conduct does not warrant any award of punitive damages. As described below, Buhrman received adequate compensation without also obtaining a punitive damages award that was more than 58 times his insured loss of $17,091.
D. Lost Earnings, Loan Default, and Noneconomic Damages
As previously noted, the jury awarded Buhrman $316,230 for past economic loss, including lost earnings, losses due to default on the boat loan, and for lost use of the boat. The jury also awarded $184,000 for emotional distress, loss of creditworthiness, and “the like.” Old United identifies a plethora of error related to these damages awards.
Old United begins with the argument that lost earnings were not recoverable in an action for bad faith, as distinguished from claims for personal injury or wrongful termination. (American National Ins. Co. v. Fair Employment & Housing Com. (1982) 32 Cal.3d 603, 607; Rodriguez v. McDonnell Douglas Corp. (1978) 87 Cal.App.3d 626, 656.) Old United reasons the causal connection between lost job opportunities and a lawsuit concerning insurance coverage for a boat is too remote. (PPG Industries, Inc. v. Transamerica Ins. Co. (1999) 20 Cal.4th 310, 315-316.) Instead, Buhrman chose to forego $500,000 worth of purported employment opportunities over a three-year period while pursuing litigation over a boat worth about $60,000. The lost earnings also caused Buhrman to default on the boat loan. Old United protests that the impermissible awards for lost earnings and loan default infected the other damages awards with error, necessitating a general reversal. (Lundy v. Ford Motor Co. (2001) 87 Cal.App.4th 472, 480.) In the alternative, Old United maintains that the trial court prevented it from presenting various defenses.
Appellants objected to the lost earnings/default damages at trial. We conduct a de novo review of whether Burhman is entitled to such damages. (Toscano v. Greene Music (2004) 124 Cal.App.4th 685, 691, citing Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 315.)
We acknowledge there is no express authority permitting a litigant to recover lost earnings because a lawsuit interfered with his work schedule. Instead, the California court has commented that non lawyers, when acting in appropriate persona, should not “receive compensation for the valuable time they spend litigating a contract matter on their own behalf.” (Trope v. Katz (1995) 11 Cal.4th 274, 285.) Extending that reasoning here, we agree Buhrman could not be compensated for the work he missed because he felt he had to be available constantly for legal proceedings for several years. Even if he could not work four months at a time, there must have been work, either short term, temporary, or less lucrative, that he could have undertaken. Similarly, Buhrman was not entitled to recover damages for defaulting on the boat loan because he did not earn the income to pay it.
Although the jury was wrongly told it could base its award in part on lost earnings/default damages, the error was not necessarily prejudicial for the reasons discussed in Lundy v. Ford Motor Co., supra, 87 Cal.App.4th at page 480, finding reversible error where “there is no way to eliminate the likelihood that the jury chose the theory affected by the instructional error.” Here, while it cannot be determined what was the basis for the jury’s award of economic damages, it also cannot be said it was likely the jury used the wholly wrong measure of damages. The remaining items of economic damages were for lost use of the boat and storage costs. An award of more than $316,000 seems improbable, even if Burhman claimed $360,000 for lost use. (Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 800.) The most damages Buhrman could have reasonably obtained for lost use is $60,245, the total value of the boat without the new engine. (Guerin v. Kirst (1949) 33 Cal.2d 402, 415.) For that reason, we conclude it is proper to direct entry of a modified judgment reducing economic damages to $60,245, the total value of the boat.
As to the noneconomic damages, substantial evidence supports them, given the significant impact of the denial of coverage on Buhrman’s life and relationships. (Twaite v. Allstate Ins. Co. (1989) 216 Cal.App.3d 239, 257-258.) Buhrman’s emotional distress about the impact on his creditworthiness was distinct from the actual economic costs of the loan default and not prohibited as damages for lost earnings. Therefore, we find no error in the emotional distress damages.
The jury found West mar was also negligent (Greenfield v. Insurance Inc. (1971) 19 Cal.App.3d 803, 810-812; Third Eye Blind, Inc. v. Near North Entertainment Ins. Services, LLC (2005) 127 Cal.App.4th 1311, 1318, 1323), making it liable with Old United for the compensatory economic and noneconomic damages of $60,245 and $184,000, independent of any bad faith liability. The judgment against West mar should not be reversed.
As to the other arguments raised by appellants regarding prejudicial trial error, they are answered or otherwise resolved by this opinion.
III
DISPOSITION
In summary, we hold the punitive damages award should be stricken and Buhrman’s economic damages should be reduced to $60,245. The remaining award of $184,000 shall remain. We affirm the judgment with directions to modify accordingly.
Each party shall bear their own costs.
We concur: Hollenhorst, Acting P. J., Gaut, J.