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is shown, other cases are not as clear as to why further reductions of punitive damages are constitutionally necessary. In Amerigraphics, Inc. v. Mercury Casualty Co., 182 Cal.App.4th 1538, defendant Mercury challenged a punitive finding of 10:1 in the context of a bad-faith insur- ance dispute involving claims for flood damage between Mercury and a small print shop. A jury had awarded $130,000 in compensatory damages, and $3 million in punitive damages. The trial court reduced the amount of the punitive dam- ages to $1.7 million, or a 10:1 ratio. Upholding the findings of punitive dam- ages in general, the appellate court noted as follows with regard to the financial vul- nerability element of “reprehensibility”: ….the relationship between an insurer and its insured is unique, in that an insured like Amerigraphics purchases insurance pre- cisely to buy peace of mind and security. (See Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 819 [169 Cal.Rptr. 691].) “A fundamental dispar- ity exists between the insured, which performs its basic duty of paying the policy premium at the outset, and the insurer, which, depending on a num- ber of factors, may or may not have to perform its basic duties of defense and indemnification under the policy. (See Foley v. Interactive Data Corp. (1988)] 47 Cal.3d 654, 693 [254


Cal.Rptr. 211] [noting the ‘insurer’s and insured’s interest are financially at odds’].) An insured is thus not on equal footing with its insurer – the rela- tionship between insured and insurer is inherently unequal, the inequality rest- ing on contractual asymmetry. An insurer’s tort liability for breach of the covenant is thus predicated upon spe- cial policy factors inapplicable to the insured. [Citation.]” (Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390, 404-405 [97 Cal.Rptr.2d 151].)(Amerigraphics at 328; see also Behr v. Redmond 193 Cal.App.4th 517, 2011 Cal.App. LEXIS 277 (status changed from unpublished to published on March 14, 2011), modified on other grounds in Behr v. Redmond, 2011 Cal.App. LEXIS 355 (Cal.App.4th Dist., March 25, 2011) (original ratio of 1:75 to 1 was approved although defendant waived the right to object to the proportionali- ty after the reduction of compensatory damages.)


Unfortunately, the Ameritech appel-


late panel felt that the 10:1 ratio was still overly generous. The only “reprehensibil- ity” factor that weighed in plaintiff Amerigraphics failure was its “financial vulnerability.” However, the court also noted that “Amerigraphics, which thought it had insured itself against


Punitive — continued from Previous Page


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