HOWARD v. AMERICAN NATIONAL FIRE INS. CO.
<script src="http://www.google-analytics.com/urchin.js" type="text/javascript"> </script> <script type="text/javascript"> _uacct = "UA-1698443-1"; urchinTracker(); </script> <html ><br /> <head><br /> <title>HOWARD v</title><br /> </head><br /> <body><br /> <div><br /> <br/><b<br /> >HOWARD v.<br /> AMERICAN NATIONAL FIRE INS. CO.</b><br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/>Filed 8/11/10<br /> <br/><b<br /> > </b><br /> <br/><b<br /> > </b><br /> <br/><b<br /> > </b><br /> <br/><b<br /> > </b><br /> <br/><b<br /> > </b><br /> <br/><b<br /> >CERTIFIED FOR PUBLICATION</b><br /> <br/> <br /> <br/>IN<br /> THE COURT OF APPEAL OF THE STATE OF CALIFORNIA<br /> <br/> <br /> <br/>FIRST<br /> APPELLATE DISTRICT<br /> <br/> <br /> <br/>DIVISION<br /> FOUR<br /> <br/> <br /> <br/> <br /> <table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0<br /> ><br /> <tr ><br /> <td width=319 valign=top ><br /> <br/>JAMES<br /> HOWARD et al.,<br /> <br/> Plaintiffs and Appellants,<br /> <br/>v.<br /> <br/>AMERICAN NATIONAL FIRE INS. CO.<br /> et al.,<br /> <br/> Defendants and Appellants.<br /> </td><br /> <td width=319 valign=top ><br /> <br/> <br /> <br/> <br /> <br/> A121569 & A123187<br /> <br/> <br /> <br/> (San<br /> Francisco County<br /> <br/> Super. Ct. Nos. 307379 & 307383)<br /> <br/> <br /> </td><br /> </tr><br /> </table><br /> <br/> <br /> <br/> James<br /> Howard, a young man molested as a child by a Catholic priest, sued the Bishop<br /> who retained the priest in the diocese. <br /> A jury found the Bishop liable for negligent retention, and the court<br /> entered judgment in the amount of $5.5 million: <br /> $2.5 million in compensatory damages and $3 million in punitive damages. The Bishop settled with Howard while the case<br /> was on appeal, and agreed to join Howard in an action against the Bishop's<br /> insurers to recover on the judgment and for bad faith failure to defend,<br /> settle, and indemnify the molestation<br /> case. This action against one of the<br /> defendant insurers, American National Fire Insurance Company (American), was<br /> adjudicated in a bench trial. The court<br /> found American liable for breach of contract and bad faith failure to defend,<br /> settle, and indemnify. The court awarded<br /> almost $3 million in damages. American<br /> appeals the judgment, and plaintiffs appeal the denial of prejudgment interest. In a separate appeal, American challenges the<br /> legal costs awarded to plaintiffs in a postjudgment<br /> order. We consolidated the two<br /> appeals for purposes of oral argument and decision. As discussed below, we modify the judgment to<br /> award prejudgment interest but affirm the judgment in all other respects. We also affirm the postjudgment order awarding<br /> costs, with one modification.<br /> <br/>I. facts<br /> <br/><i >A. The underlying lawsuit and insurance<br /> coverage disputes</i><br /> <br/> A<br /> Catholic priest, Father Oliver O'Grady, sexually molested many young children<br /> over many years and was criminally convicted of child molestation in 1993. In 1994 and 1995, James Howard and his<br /> brother Joh Howard sued O'Grady and other defendants for damages suffered from<br /> the priest's molestation. The named<br /> defendants included the head of the diocese that employed O'Grady, the Roman<br /> Catholic Bishop of Stockton (Bishop), who is a corporation sole (a corporation<br /> of one person whose successor becomes the corporation on his death or<br /> resignation).<br /> <br/> In<br /> his complaint, James Howard alleged that the Bishop employed O'Grady from<br /> approximately 1977 through 1991. James,<br /> who was born in June 1975, alleged that he was an active parishioner in the<br /> church from the time of his birth and that O'Grady regularly and repeatedly<br /> molested him â€