Gruenberg v. Aetna Insurance Co.
Supreme Court of California
510 P.2d 1032 (1973)
After a fire at his restaurant, Gruenberg (plaintiff) was investigated by Aetna's (defendant) claims adjuster, Brown, who suspected Gruenberg of arson and excessive insurance; Gruenberg was then criminally charged with arson and insurance fraud. While those charges were pending, Aetna demanded Gruenberg sit for an examination about his insurance claim; Gruenberg refused until the criminal case was resolved, and Aetna denied his claim outright based on that refusal. After the criminal charges were dismissed, Gruenberg sued Aetna and Brown for breaching their duty of good faith, alleging severe economic and emotional harm. The trial court dismissed the complaint, and Gruenberg appealed.
Whether an insurer has an implied obligation to consider the insured's claim in good faith within the limits of the policy, independent of the insured's own conduct.