In state court, ProBuilders defended a Contractor in a construction defect lawsuit under a reservation of rights. Plaintiffs obtained almost $2 million in damages, and ProBuilders sued Contractor in federal court for declaratory relief and rescission of the policy. Contractor and Plaintiffs joined together and counterclaimed for breach of contract and bad faith. The jury found no breach of contract and the district court entered partial judgement for ProBuilders. Contractor and Plaintiffs appealed, raising various claims of instructional error.
The Ninth Circuit affirmed in an unpublished opinion, finding the district court properly instructed the jury on various exclusions and did not err in refusing to provide instructions on bad faith and substantial prejudice because such instructions would have been inconsistent with California law. Additionally, any error in declining to instruct the jury in this case on certain issues was harmless error.
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