Murphy v. Allstate Insurance Company

17 Cal. 3d 937 (1976)

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Nature of the Case

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Facts

P sued Pollard for the wrongful death of her nine-year-old son. Pollard was insured by D. D rejected settlement demands of $23,500 and $25,000, the latter being the maximum coverage provided by Pollard's policy. P received a verdict of $85,000, but on a motion for a new trial, accepted a reduction in judgment to $42,000. Subsequent to the entry of judgment, D advised it would pay the policy limit of $25,000 and, if that were rejected, would appeal. The offer was rejected, and D appealed contending the award was excessive. P obtained a writ of execution ordering immediate payment by Pollard of the judgment plus interest. D denied obligation owing to either Pollard or to P. P brought the present action against D alleging breach of the duty of good faith to its insured by having refused to settle within policy limits. Pollard had not assigned any cause of action to P. P sought recovery under Insurance Code section 11580, subdivision (b)(2), authorizing direct action against the insurance company by a judgment creditor. P also alleges direct action is permitted by Code of Civil Procedure section 720 by creditors' suit. D moved for judgment on the pleadings, first on the ground that there is no allegation Pollard assigned to P his cause of action for failure to settle and, secondly that D is not indebted to Pollard within the meaning of section 720. The motion was granted and P appealed.