text:
    Don Richard LEGO, Plaintiff, v. PEOPLE OF the STATE OF ILLINOIS, Defendant.
    No. 83 C 6878.
    United States District Court, N.D. Illinois, E.D.
    Dec. 19, 1984.

      Don Richard Lego, pro se.
    Neil F. Hartigan, Atty. Gen., State of Ill. by James E. Fitzgerald, Asst. Atty. Gen., Chicago, Ill., for defendant.
   ORDER

BUA, District Judge.

Facts

Don R. Lego filed this pro se civil rights suit against the “People of the State of Illinois” on September 30, 1983 while he was awaiting trial on murder charges in the state court. Lego requests declaratory and injunctive relief. The facts alleged in Lego’s original petition are as follows:

Lego was arrested in Will County, Illinois on September 3, 1983 and charged with murder. On September 6, 1983 Lego appeared before a circuit judge of the 12th Judicial Circuit. At that time, the judge set September 15, 1983 as a date for a preliminary hearing. The preliminary hearing was canceled, however, because on September 15, 1983, Lego was indicted by the Grand Jury.

Lego alleges that the provisions for preliminary hearings set forth in Ill.Rev.Stat., ch. 38, § 109-3, are unconstitutional in that a defendant indicted by a grand jury is denied the right to a preliminary hearing to determine whether there is probable cause justifying pretrial detention. Lego cites Gerstein v. Pugh, 420 U.S. 103, 95 S.Ct. 854, 43 L.Ed.2d 54 (1975), in support of his contention. In his Complaint, Lego requests this Court to grant the following relief: (1) declare Ill.Rev.Stat., ch. 38 § 109-3, unconstitutional; and (2) order the State Court to dismiss the murder indictment or, alternatively, to order the State Court to hold a preliminary hearing to determine probable cause.

On October 31, 1983, Lego filed a motion for further injunctive relief requesting this Court to enjoin the State from proceeding to trial in Lego’s case. On November 14, 1983, the Illinois Attorney General filed a motion to dismiss Lego’s Complaint for failure to state a claim. On June 4, 1984, Lego informed the Court, by letter, that he had been convicted in the State Court and sentenced to death. Lego’s conviction is presently before the Illinois Supreme Court on appeal. Also received by the Court is a motion to dismiss filed on behalf of John Shelly, the Sheriff of Will County. Shelly, however, has not been named a defendant in Lego’s Complaint filed with this Court.

Discussion

In Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1970), the Supreme Court held that a federal court is without jurisdiction to enjoin a pending state criminal prosecution except under extraordinary circumstances where the danger of irreparable harm is both great and immediate. In Samuels v. Mackell, 401 U.S. 66, 91 S.Ct. 764, 27 L.Ed.2d 688 (1970), the Court extended Younger and held that a federal court is without jurisdiction to issue a declaratory judgment when there is a state proceeding pending at the time the federal suit is filed.

In this case, Lego seeks solely injunctive and declaratory relief. Lego requests this Court to enjoin the State of Illinois from continuing its prosecution and to declare that Lego’s constitutional rights were violated because he was not afforded a preliminary hearing before trial. Since these issues are presently before the Illinois Supreme Court, this Court is without jurisdiction under Younger and Samuels to consider the merits of Lego’s Complaint. Lego has failed to allege any facts which would allow the Court to issue equitable relief under the exceptions to Younger rule.

Conclusion

The State’s motion to dismiss is granted. Lego’s Complaint is dismissed without prejudicing Lego’s right to contest the constitutionality of his conviction after he has exhausted all available state court remedies. Since Shelly is not a defendant in this case, his motion to dismiss is superfluous and need not be considered by this Court.

IT IS SO ORDERED.


source: Caselaw Access Project

author: VanARTSDALEN, District Judge.

license: Public Domain

text:
    E.J. STEWART, INC. v. AITKEN PRODUCTS, INC. and Electro-Therm, Inc. Marra DAVIS v. AITKEN PRODUCTS, INC. and Electro-Therm, Inc. VICTOR C. SMITH, INC. and Sporkin Associates, Inc. v. AITKEN PRODUCTS, INC. and Electro-Therm, Inc.
    Civ. A. Nos. 81-3292, 81-4328 and 81-4742.
    United States District Court, E.D.Pa.
    Jan. 22, 1985.

      A. Richard Bailey, Jeanne Wrobleski, Cozen, Begier & O’Connor, Philadelphia, Pa., for plaintiff in No. 81-3292.
    L. Carter Anderson, Kevin F. Berry, Rawle & Henderson, Philadelphia, Pa., for defendants in all cases.
    Peter Parashes, White & Williams, Philadelphia, Pa., for plaintiff in No. 81-4328.
    James F. Proud, Media, Pa., for plaintiff in No. 81-4742.
   OPINION AND ORDER

VanARTSDALEN, District Judge.

1. BACKGROUND

These consolidated civil actions had their genesis in a fire at E.J. Stewart, Inc.’s (E.J. Stewart) leased premises on January 31, 1980. The fire apparently started in an area near a suspended electric radiant heater in E.J. Stewart’s warehouse. E.J. Stewart, a video production company, brought suit in Civil Action 81-3292 against the manufacturers of the heating unit, Aitken Products, Inc. (Aitken) and the component heating element (or calrod), Electro-Therm, Inc. (Electro-Therm), to recover alleged property damage and business interruption losses caused by the fire. E.J. Stewart alleged that the radiant heating element, known as a Thermalink, arced or failed in a catastrophic manner, causing the fire.

The plaintiffs in Civil Actions 81-4328 and 81-4742, Marra Davis, Victor C. Smith, Inc. and Sporkin Associates, Inc., were the owner and two other tenants of the building, respectively. Pursuant to stipulation entered into by the parties, the plaintiffs in Civil Actions 81-4328 and 81-4742 agreed to be bound by a decision as to liability in Civil Action 81-3292. Therefore, Civil Action 81-3292, with E.J. Stewart as plaintiff, proceeded to trial alone.

Following a jury trial that commenced on February 28, 1984 and concluded on March 8, 1984, the jury returned answers to written interrogatories in favor of defendants as follows:

SPECIAL INTERROGATORIES TO THE JURY
1. Do you find that the electric heater was the cause of the fire? YES X NO
2. Do you find that the electric heater, at the time it was manufactured and sold by Aitken Products, Inc., was defective? YES X NO
(a) If 2 above is answered YES, was such defect a design defect? YES_NO _X
(1) If 2(a) is answered YES, was such a design defect a legal cause of the fire (i.e., a substantial factor in bringing about the fire)? YES_NO_
(b) If 2 is answered YES, was such defect a failure to provide adequate warnings? YES _X_ NO_
(1) If 2(b) is answered YES, was such failure to provide adequate warnings a legal cause of the fire (i.e., a substantial factor in bringing about the fire)? YES_NO _X
3. Do you find that the electric heating element (calrod) component part of the electric heater, at the time it was manufactured and sold by Electro Therm, Inc., was defective? YES X NO_
(a) If 3 is answered YES, Was such defect a design defect? YES_NO _X_
(1) If 3(a) is answered YES, was such a design defect a legal cause of the fire (i.e., a substantial factor in bringing about the fire)? YES_NO_
(b) If 3 is answered YES, was such a defect a failure to provide adequate warnings YES _X_ NO_
(1) If 3(b) is answered YES, was such failure to provide adequate warnings a legal cause of the fire (i.e., a substantial factor in bringing about the fire)? YES_NO X
4. Do you find that Aitken Products, Inc., was negligent, which negligence was a legal cause of the fire (i.e., a substantial factor in bringing about the fire)? YES _X_ NO_
5. Do you find that Electro Therm, Inc. was negligent, which negligence was a legal cause of the fire (i.e., a substantial factor in bringing about the fire)? YES _X_ NO
6. Do you find that E.J. Stewart, Inc., was contributorily negligent, which negligence contributed causally to bringing about the fire? YES X NO
7. What percentage of the total causal negligence of all parties found causally negligent do you find as to each party found causally negligent?
(a) Aitken Products, Inc. 20%
(Answer only if 4 is answered YES)
(b) Electro Therm, Inc. 5%
(Answer only if 5 is answered YES)
(c) E.J. Stewart, Inc. 75%
(Answer only if 6 is answered YES)
TOTAL 100%
NOTE: The total of 7(a), (b) and (c) must equal 100%.
8. Do you find that E.J. Stewart, Inc., with full knowledge of the risk involved, voluntarily assumed the risk of harm? YES_NO _X
9. If you have answered YES to 3(a)(1), 3(b)(1) and/or 5, do you find that there was some act or failure to act on the part of Aitken Products, Inc., that constituted an intervening, superseding cause, relieving Electro Therm, Inc. from liability? YES_NO _X

/s/_

Foreman/Forelady

Plaintiff timely filed an alternative motion for judgment notwithstanding the verdict or for a new trial on March 19, 1984. Plaintiff properly reserved the right to supplement its arguments upon receipt of the trial transcript. Due to the nature of certain of plaintiffs assignments of error, all parties concerned recognized the necessity of the trial transcript to disposition of plaintiffs motion. In order to avoid dupli-cative work, I informed defendants that their responses to plaintiffs motion need not be filed until after plaintiff supplemented its motion, following receipt of the trial transcript.

Shortly after plaintiff ordered the trial transcript, the court reporter who'had recorded the trial testimony was hospitalized with a serious ailment. Fortunately, the reporter recovered and recently completed transcribing the notes of testimony. Although I could have ruled on plaintiffs motion without the trial transcript, all parties and the court agreed to wait for the notes of testimony. Plaintiffs motion is now ripe for disposition.

2. MOTION FOR JUDGMENT N.O.V.

The standard for granting a motion for a judgment n.o.v. is the same as that for a directed verdict. Neville Chemical Company v. Union Carbide Corp., 422 F.2d 1205, 1210 n. 5 (3d Cir.1970), cert. denied, 400 U.S. 826, 91 S.Ct. 51, 27 L.Ed.2d 55 (1970). The jury’s verdict will be set aside only if manifest injustice will result if such verdict is allowed to stand. To grant such a motion the court must find as a matter of law that there can be but one reasonable conclusion as to the proper judgment. Woodward & Dickerson, Inc. v. Yoo Hoo Beverage Co., 502 F.Supp. 395, 397 (E.D.Pa.1980), aff'd mem., 661 F.2d 916 (3d Cir.1981). In ruling on plaintiffs motion I must view the evidence, and all inferences therefrom, in a light most favorable to defendants, the verdict winners. Thomas v. E.J. Korvette Inc., 476 F.2d 471 (3d Cir.1973).

Plaintiff has advanced several contentions in support of its motion for judgment n.o.v. I will deal with each in turn.

Plaintiffs first contention is that, based upon the jury’s answers to the special interrogatories, plaintiff is entitled to judgment in its favor. Plaintiff argues that: “To prevail on its. 402A claim, Stewart needed only to prove that the heater and calrod were defective and they caused the fire.” Plaintiff’s Memorandum at 9 (citations omitted). Plaintiff contends that because “[the jury] found that the heater was the cause of the fire and that the heater and the calrod were defective” that “judgment should have been entered in favor of Stewart.” Id. Plaintiffs statement as to what it needed to prove in order to prevail under section 402A is correct, as far as it goes. Plaintiff, however, does not go far enough.

The Pennsylvania Superior Court has opined that:

The progress of the law in extending liability without fault to product suppliers should not be in disregard of fundamentals pertaining to the tort law of causation. In negligence eases there has been the modern admixture of foreseeability and causation to determine the existence of liability. If in a negligence case foreseeability and cause are to be examined to determine the scope of liability, it would seem that the same should be true in a case of unintentional conduct involving liability without fault.

Oehler v. Davis, 223 Pa.Super. 333, 334, 298 A.2d 895 (1972) (footnotes omitted). Thus, analysis of Pennsylvania negligence law on causation is required to determine what plaintiff need prove to establish causation under both section 402A’s strict liability provisions and common law negligence.

The Pennsylvania Supreme Court has admitted difficulty in defining exactly what constitutes the nexus between wrongful acts or omissions (be they negligent or subject to strict liability) and the injuries sustained. Nevertheless, it is beyond dispute that under Pennsylvania law causation involves two separate and distinct concepts, cause in fact and legal (or proximate) cause. See Whitner v. Lojeski, 437 Pa. 448, 455-57, 263 A.2d 889 (1970). See also Conti v. Ford Motor Co., 743 F.2d 195, 197 (3d Cir.1984).

Cause in fact or “but for” causation provides that if the harmful result would not have come about but for the negligent conduct then there is a direct causal connection between the negligence and the injury. In other words, the conduct is the causa sine qua non of the injury. The Pennsylvania Supreme Court, however, has recognized that a causa sine qua non does not necessarily result in liability. Whitner, 437 Pa. at 457, 263 A.2d 889. Quoting from the Restatement, the Court has explained:

As comment a to § 431 of the Restatement says, ‘In order to be a legal cause of another’s harm, it is enough that the harm would not have occurred had the actor not been negligent. Except as stated in § 432(2), this is necessary, but it is not in itself sufficient. The negligence must also be a substantial factor in bringing about the plaintiffs harm.’

Id. at 457-58, 263 A.2d 889 (quoting Restatement (Second) of Torts § 431 comment a (1965)).

Legal or proximate causation involves a determination that the nexus between the wrongful acts (or omissions) and the injury sustained is of such a nature that it is socially and economically desirable to hold the wrongdoer liable. It is a determination that must be made in addition to a determination of cause in fact or “but for” causation. If certain conduct is not the cause in fact of someone’s injury it cannot be the legal or proximate cause. The converse, however, is not inevitably true. Something can be the cause in fact but not the legal or proximate cause of an injury. The articulated standard for determining legal or proximate cause is whether the alleged wrongful acts were a substantial factor in bringing about the plaintiff’s harm. Restatement (Second) of Torts § 431 (1965); Whitner, 437 Pa. at 458, 263 A.2d 889 (adopting Restatement approach).

Plaintiff’s contention that it needed “only to prove that the heater and calrod were defective and they caused the fire” is correct; provided the Pennsylvania standards of causation developed in negligence law are included. Plaintiff’s statement that, because “[the jury]” found that the heater was the cause of the fire and that the heater and the calrod were defective” judgment in its favor was required, is not correct. Causation involves both cause in fact and legal cause. Conti, 743 F.2d at 197. I therefore included two separate interrogatories pertaining to causation in the special interrogatories submitted to the jury. In light of the law of Pennsylvania on causation, it probably would have been error not to include separate questions on cause in fact and legal cause. The jury answered the cause in fact interrogatory in the affirmative and found that the heater started the fire. That alone does not establish a legal cause. Had the jury answered that first question in the negative, the case would have been over. Because the jury found cause in fact and a defect, it reached the interrogatories on legal cause (one on strict liability for each defendant). The jury answered those questions in the negative. Plaintiff’s contention, that it is entitled to judgment based on the answers to the special interrogatories, is incorrect. Causation would only have been established if the jury had answered both the cause in fact and legal cause interrogatories in the affirmative. The jury did not do so.

Plaintiff’s second contention is that the jury’s findings, as a matter of law, established that the defective condition of defendant’s products was a legal (or proximate) cause of the plaintiff’s damages. Based upon the Court of Appeals for the Third Circuit’s analysis in Conti v. Ford Motor Co., 743 F.2d 195 (3d Cir.1984), I disagree. While the facts of Conti and the case at bar are completely different, the legal issues and application of law to fact are remarkably similar.

In Conti the plaintiffs, Richard and Patricia Conti, brought suit against Ford Motor Company (Ford) for personal injuries sustained by Mrs. Conti while attempting to enter their Ford car. Mr. Conti turned on the ignition of their standard transmission car, without depressing the clutch, causing the car to lurch backward while Mrs. Conti was attempting to enter the passenger side of the vehicle. The lurch of the vehicle caused Mrs. Conti to lose her balance and fall, causing her personal injuries.

Plaintiffs complaint alleged that Ford was strictly liable for defective design and failure to warn. The case at bar was likewise submitted to the jury on the strict liability theories of design defect and failure to warn (in addition to negligence). Both in Conti and the case at bar the jury rejected the claim of defective design. In Conti, the jury found Ford liable on the failure-to-warn theory; in the present case the jury determined that the element and heater were defective by reason of the failure to warn, but found that such defect was not the legal cause of the plaintiffs harm. Further, the Conti jury found Mr. Conti 75% responsible for his wife’s injuries on Ford’s third-party negligence claim against him; in the present case the jury found E.J. Stewart 75% contributorily negligent on its negligence claim against defendants.

Ford appealed the jury’s verdict of $650,-000 to Mrs. Conti and $15,000 to Mr. Conti. One of the issues raised by Ford on appeal was “whether the lack of an adequate warning was the proximate cause of Mrs. Conti’s injuries.” Conti, 743 F.2d at 197. In its judgment n.o.v. motion plaintiff has alleged that:

Under the substantial factor test, to sustain the judgment, the Court would effectively have to hold that the evidence in this, case was sufficient to support a finding that the fire would have oe-curved even if defendant had provided adequate warnings or, more generally, even if the heater had not been defective.

Plaintiff’s Memorandum at 11 (emphasis in original). It is abundantly clear that plaintiff has raised the same issue addressed by the court of appeals in Conti: was the lack of adequate warnings the proximate or legal cause of plaintiff’s harm? In Conti, the court of appeals reversed the district court’s submission of the issue to the jury because there was not sufficient evidence, as a matter of law, “to support a reasonable inference that the. existence of additional warnings may have prevented the accident from occurring.” 743 F.2d at 198. In the present motion plaintiff seeks to have this court overturn the jury’s determination that the lack of adequate warnings was not a legal cause of plaintiff’s harm.

Plaintiff, in support of its position, contends that:

To find that the defect was not a substantial factor that caused the fire, the jury must have determined that the same fire would have occurred even with warnings or without any defect. It is incomprehensible and nonsensical to even suggest that this would have been the case. No one testified that if there had been warnings, they would not have followed them.

Plaintiff’s Memorandum at 11 (emphasis in original).

The sentence underlined by plaintiff seeks to shift the burden to defendants to show that plaintiff would not have heeded proper warnings. The Conti court, however, clearly stated that it was part of plaintiff’s case to establish the effect of any warning: “[Liability may result only when there is sufficient evidence that additional warnings or reminders may have made a difference.” Conti, 743 F.2d at 199 (citation omitted). It was part of plaintiff’s case to establish that the lack of warnings “may have made a difference.” Plaintiff simply did not so convince the jury.

While there was no testimony that any warnings would have been ignored, there was also no direct testimony that they would have made a difference. There was sufficient evidence to support the inference that an adequate warning may have prevented the plaintiffs harm. I therefore submitted the issue to the jury. As there was no direct testimony either way, it was for the jury to decide, based upon all the circumstances presented. The jury concluded that the lack of warnings was not a substantial factor in bringing about the fire. Plaintiffs contention, that the jury’s findings establish as a matter of law that defendants’ defective products were a legal cause of plaintiff’s harm, is incorrect. I will not, therefore, set aside the jury verdict.

Plaintiff’s third contention is that contributory negligence is not a defense to strict liability as a matter of law. I understand plaintiff’s contention to be that the only way the jury could have decided that the failure to warn was not the legal cause of the fire would have been for the jury to improperly have applied contributory negligence to the strict liability claim.

Anytime counsel decides to proceed at trial on multiple theories of liability there is a possibility that the jury may well become confused and apply aspects of one theory to the other theory or theories involved. That is especially true in tort law when a plaintiff proceeds at trial on the theories of strict liability, negligence and breach of warranty, or any multiple combination thereof. Provided there is no error in the jury charge or inconsistent answers to interrogatories, the verdict should stand. There is absolutely no basis to conclude that the jury did not fully understand the issues, or that it failed to properly apply the law to the facts.

A review of my charge to the jury in its entirety reveals that there was no error committed in charging the jury on contributory negligence. I instructed the jury that the negligence and strict liability claims were “entirely separate and independent.” Tr. of 3/8/84 at 28. Contributory negligence was included only in the charge on plaintiff’s claim of negligence. Id. at 34-36, 45-46. Because the plaintiff chose to proceed on a negligence theory and there was evidence of contributory negligence, I was required to give an instruction on that issue. It was given only in the context of the negligence claim.

Likewise, the jury’s answers to the written interrogatories were not inconsistent.. Plaintiff’s reasoning is as follows: because the jury found that the products were defective but such defects were not the legal cause of the fire, and the jury found plaintiff 75% contributorily negligent on the negligence claim, the jury must have improperly applied the 75% contributory negligence finding to the strict liability claims. There is no reason to so conclude. The jury’s answers might theoretically be inconsistent if the only asserted negligence of plaintiff was failure to warn. Neither plaintiff’s theory nor its evidence ever limited defendants’ alleged negligence to a failure to warn. My charge to the jury on negligence was not so limited. Id. at 31-32. Because there were other acts of the defendants that the jury could have decided were negligent,1 cannot assume the jury’s findings as to negligence were limited solely to a failure to warn. The jury’s answers to the written interrogatories were consistent.

Because there was no error in the charge as to contributory negligence and the jury’s answers to interrogatories were not inconsistent, at the most there could be no more than a “mere suspicion” that the jury confused the issues of contributory negligence, as it relates to negligence, and legal causation, as it relates to strict liability. Cf. Mudrak v. Paxson Machine Co., No. 80-3909 (E.D.Pa. December 23, 1983), aff'd, 751 F.2d 376 (3d Cir.1984). I can not inquire into the purely internal workings of the jury’s decision-making process on the mere possibility of confusion. See Domeracki v. Humble Oil & Refining Co., 443 F.2d 1245, 1247 (3d Cir.), cert. denied, 404 U.S. 883, 92 S.Ct. 212, 30 L.Ed.2d 165 (1971); Beron v. Kramer-Trenton, 402 F.Supp. 1268, 1271 n. 5 (E.D.Pa.1975), aff'd, 538 F.2d 318 (3d Cir.1976).

Finally, it is unclear exactly what effect contributory negligence can have on legal causation. Defendants requested an instruction on comparative causation because the Pennsylvania Comparative Negligence Act refers to “causal negligence.” I rejected such a charge. Nevertheless, it may have been proper for the jury to consider any contributory negligence of plaintiff in deciding the strict liability causation issue, if that is indeed what they did. See e.g. Schneider v. American Gage & Manufacturing, No. 80-4486 (E.D.Pa. August 9, 1984); McCown v. International Harvester Co., 463 Pa. 13, 342 A.2d 381, 384 (1975) (Pomeroy, J., concurring).

For the reasons stated above, plaintiff’s third contention in support of its motion for judgment n.o.v. will be rejected.

Plaintiff’s final contention in support of its motion is that as a matter of law plaintiff was not contributorily negligent. Viewing the evidence in a light most favorable to defendants, with all reasonable inferences therefrom, I cannot say that there is only one reasonable conclusion as to plaintiff's contributory negligence. There were numerous instances in the testimony where plaintiff’s employees’ conduct may have been construed by the jury to be below that of reasonable persons. See e.g., Tr. of 2/29/84 at 7-9; Tr. of 3/1/84 at 210-14; Tr. of 3/2/84 at 72-76; Tr. of 3/6/84 at 154-158.

Plaintiff appears to contend that because the jury determined that the heater was the cause in fact of the fire any conduct of the plaintiff, other than that relating to the failure-to-warn issue, is irrelevant. Evidence as to plaintiff’s installation, maintenance and observation of the heater was relevant to plaintiff’s possible contributory negligence, because the jury determined that the heater started the fire. There were several instances of the conduct of plaintiff’s employees regarding installation and maintenance of the heater that the jury could have determined were not that of reasonable persons. See e.g. Tr. of 3/1/84 at 56-58, 122, 232-34; Tr. of 3/2/84 at 26-30; Tr. of 3/6/84 at 70-72. The conduct of plaintiff’s employees was such that the jury could and did decide that it contributed causally to the fire.

For the reasons stated above, I cannot conclude that there is but one reasonable conclusion as to the proper judgment. While the jury’s verdict may have been surprising to plaintiff, it is not manifestly unjust, in light of the evidence, to allow it to stand.

3. MOTION FOR A NEW TRIAL

A new trial must be granted if there was substantial error in the admission or exclusion of evidence or in the court’s instructions, or the verdict was inadequate or excessive or against the weight of the evidence. Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 61 S.Ct. 189, 85 L.Ed. 147 (1940); Marder v. Conwed Corp., 75 F.R.D. 48 (E.D.Pa.1977); 11 C. Wright & A. Miller, Federal Practice and Procedure § 2805 (1973). In other words, a district court may grant a new trial if required to prevent injustice or to correct a verdict that was against the weight of the evidence. American Bearing Co. v. Litton Industries, Inc., 729 F.2d 943, 948 (3d Cir.1984), cert. denied, — U.S. -, 105 S.Ct. 178, 83 L.Ed.2d 112 (1984); Thomas v. E.J. Korvette, Inc., 476 F.2d 471, 474-75 (3d Cir.1973). The authority to grant a new trial resides in the sound discretion of the district court. Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 36, 101 S.Ct. 188, 191, 66 L.Ed.2d 193 (1980) (per curiam).

Plaintiff has advanced a number of contentions in support of its motion for new trial, some of which overlap its contentions regarding the motion for judgment n.o.v. I will deal with plaintiff’s contentions seri-atim.

Plaintiff’s first contention is that I erred in refusing to permit plaintiff to show the jury a videotape demonstrating the violent failure characteristics of the heater and the calrod manufactured by defendants. The circumstances surrounding the videotape and the reasons for its not being admitted at trial need to be set forth at length.

At a pretrial status conference in chambers on December 27, 1983, wherein all parties were represented by counsel, I questioned the parties about the possibility of settlement. The parties represented that such discussions had proved fruitless. After the defendants revealed that no formal demand had been made by the lead plaintiff, E.J. Stewart, I asked to speak to E.J. Stewart’s counsel in private. During that discussion, which along with the entire conference was off the record, plaintiff’s counsel revealed that they had a videotape of a catastrophic failure of a unit that was the same type as defendants’ products at issue. See Tr. of 5/5/84 at 75. I asked counsel if such tape had been turned over in discovery. Counsel for plaintiff informed me that such material had not, as far as they were concerned, been requested in discovery. Further, it was their intention to introduce it as a rebuttal testimony, thus obviating the necessity of identifying it as an exhibit under Local Rule 21(c)(5). I specifically informed counsel that by not turning over the videotape in discovery they were running a severe risk. See id. Counsel assured me that they would once again review the interrogatories to be sure that defendants had not requested the videotape during discovery.

The next time the videotape was discussed was by plaintiff’s counsel at a sidebar conference following the defendants’ cross-examination of Mr. Gwin, one of plaintiff’s fire investigation experts. Plaintiff stated that during redirect he intended to show a videotape of a test performed by Professor Kaczmarczik because certain testimony ellicited on cross-examination from Mr. Gwin by counsel for Aitken had “opened the door” on the issue. Defendants, who were first made aware of the test and videotape at that point, vigorously objected to its being used because it had not been identified during discovery. After hearing the parties on the issue, out of the jury’s presence, I ruled that plaintiff could not introduce it at that time. Id. at 76. I later refused to allow plaintiff to introduce the videotape as rebuttal evidence. Tr. of 3/7/84 at 10.

Plaintiff’s contentions both at trial and in its motion for a new trial are that (1) one of the defendants’ interrogatories requesting information about testing only refers to tests performed on items taken from the fire scene; (2) the plaintiff’s experts formed their opinions without relying on the videotape; (3) the test was done to refute the report of one of defendant’s experts; and (4) it was plaintiff’s intention to offer the videotape as rebuttal evidence.

Plaintiff’s first point is well taken. One of defendants’ interrogatories that inquired about testing did refer to items “found on the fire premises.” Because the videotape was a test performed on a heating unit not.“found on the fire premises,” there was no problem with plaintiff’s failure to identify it in answer to that specific interrogatory. Plaintiff’s other contentions, however, require further discussion.

Defendant Aitken’s First Set of Interrogatories contained the following requests:

1. State the name and address of every individual whom plaintiff expects to call as an expert witness at trial, and, for each witness so identified, state separately:
(c) The substance of the facts to which each such expert is expected to testify;
(d) The substance of the opinions to which each such expert is expected to testify;
(e) The grounds or summary of grounds for each such opinion;
(f) In detail, the factual information and materials supplied to each such expert, including all documents, reports or records furnished, all testimony, statements and reference material reviewed, all physical evidence, objects, test results, and special reports, photographs, plans or other tangible things provided to each expert for review or inspection.
5. Set forth the name and address of each expert who supplied you with the opinions on which you base the allegations contained in paragraphs 7, 10, 12, 15, 17, 19 and 22 of plaintiff’s Complaint and, with respect to each such expert, set forth the following:
(f) The factual information and materials on which such expert bases his opinion, including all documents, reports or records furnished, all testimony, statements and reference material reviewed, all physical evidence, objects, test results, and special reports, photographs, plans or other tangible things provided to each expert for review or inspection.

Defendants’ First Set of Interrogatories Directed to Plaintiff at 1, 2-3, 4 (emphasis added).

The preface to the interrogatories stated that the questions were “deemed continuing so as to require further answer from now until the time of trial, without further notice, if you learn information called for herein.” Id. at 1. Further, the Federal Rules themselves provide that “[a] party is under a duty seasonably to supplement his responses with respect to any question directly addressed tó ... the identity of each person expected to be called as an expert witness at trial, the subject matter on which he is expected to testify, and the substance of his testimony.” Fed.R.Civ.P. 26(e)(1)(B).

I have no reason to challenge plaintiff's assertion that its experts did not rely on the videotape and the test performed therein to reach their initial opinions. Plaintiff’s original answers to the first set of interrogatories were filed October 27, 1981. Both Prof. Kaczmarczik and Mr. Gwin were identified in answer to interrogatories 1 and 5. Plaintiff supplemented its answers on July 19, 1982 and again on June 14, 1983. In both instances Kaczmarczik and Gwin were again listed as expert witnesses expected to testify at trial. Plaintiff’s counsel represented at trial that the videotaped test in question was performed in July 1983. Tr. of 3/5/84 at 72. Therefore, the test was not performed until after the identified experts had formed some opinion as to the fire and its cause. That, however, is not dispositive. The Federal Rules and the interrogatories themselves required plaintiff to supplement its responses. Plaintiff did not do so.

When Prof. Kaczmarczik performed the test in July 1983 he already had an opinion that the heater caused the fire. He also had an opinion as to how it happened. Evidently, the test performed in July 1983, which was videotaped, confirmed his opinions. Although I did not view the tape, counsel represented that it depicted a similar unit to the one at issue failing in a violent manner with molten particles being expelled, striking a concrete floor, and radiating in an omnidirectional manner. It cannot be said that such a test would have no affect on Prof. Kaczmarczik’s pre-existing opinions. At the very least, it confirmed, buttressed or- strengthened his opinions, and was demonstrative evidence of them. I simply cannot believe that after the test had been performed, the subject matter and substance of the professor’s testimony was not affected in some way. Although it may not have changed his testimony, that is not the requirement for the duty to supplement. The duty arises as to any “information thereafter acquired.” See Fed.R. Civ.P. 26(e). Clearly, the test qualifies as after acquired information. Further, defendant Aitken’s interrogatory number 1 asked for “the factual information and materials supplied to each such expert, including ... physical evidence, objects, test results ... or other tangible things provided to each expert for review or inspection.” The professor’s obtaining and testing of the similar heating unit certainly falls within the scope of this interrogatory (as well as interrogatory number 5). It was “material” provided to him for review. Likewise, showing the videotape, with the test results therein, to Mr. Gwin clearly falls within the scope of the interrogatories. The interrogatories themselves were in no way limited only to things relied upon by the experts to form their initial opinions.

It is my view that plaintiff unquestionably had a duty to supplement its answers and provide defendants with a copy of the videotape even if they did not intend to use it at trial. This result is reinforced by the elementary proposition that the purpose of discovery is to prevent trial by surprise. If I were to accept plaintiff’s position, once an expert forms an opinion about a matter, any information thereafter acquired, by testing or otherwise, would not be discoverable because the expert did not rely on it to form his initial opinion. The party could sit back, waiting for the other side to raise the issue, and unleash the damaging evidence or testimony on his unsuspecting adversary during rebuttal. Such a situation would represent the epitome of trial by surprise that the modern rules of discovery were intended to eliminate. To accept plaintiff’s position would turn expert witness discovery on its head.

Plaintiff’s contentions, that the test was only performed to rebut one of the reports of defendants’ experts and that plaintiff only intended to offer the videotape as rebuttal evidence, are also not persuasive. The reason why plaintiff’s expert performed the test is irrelevant to the issue whether it should have been turned over in discovery. Either it was requested in the interrogatories and should have been turned over or it wasn’t. I have determined that it was requested. As explained above, plaintiff had a duty to supplement its answers and should have produced the tape in discovery.

Plaintiff’s contention that the tape was proper rebuttal evidence is also incorrect. At trial, plaintiff’s counsel admitted there were three purposes for showing the tape: (1) to show that the aluminum reflector on the heater would melt long before an external heat source would cause the cal-rod (or element) to fail; (2) to show that when elements do fail they can fail in a catastrophic manner; and (3) to show the probability that these catastrophic failures can cause fires. Tr. of 3/7/84 at 5. Arguably, the first purpose may have been a proper rebuttal argument because defendants contended that a fire caused by some other source could have caused the heater to fail. Nevertheless, because it was plaintiffs burden to prove that the heater caused the fire, such a purpose is also fully consistent with proving plaintiffs case-in-chief. Further, the second and third purposes offered by counsel were only relevant to proving the elements of plaintiffs cause of action and had nothing to do with rebuttal. Plaintiffs burden under strict liability was to prove the products were defective, and to prove the cause-in-fact and proximate cause of the harm. Conti, 743 F.2d at 197. Plaintiffs contention throughout was that the heater failed catastrophically, causing a fire. That is exactly, as I understand it, what the test in the videotape depicts. These are also the very reasons plaintiff sought to show the videotape. The videotape, therefore, should have been part of plaintiffs case-in-chief.

It was not error to exclude the proffered videotape from the evidence because it should have been produced during discovery and should have been listed as an exhibit in plaintiffs pretrial memorandum. See Emerick v. U.S. Suzuki Motor Corp., 750 F.2d 19 (3d Cir.1984). Plaintiffs contentions, that its experts formed their opinions without relying on the videotape and that the tape was only intended to be offered as rebuttal evidence, are not controlling. Because I warned counsel at a pretrial conference, plaintiff consciously chose to take the very risk that ensued. Plaintiff, rather than taking the prudent route, chose to roll the dice by interpreting defendants’ interrogatories as narrowly as possible. The discovery rules were not intended to make the exchange of pretrial information a game of chance.

Plaintiff’s second contention in support of the new trial motion is that I erred in entering judgment for defendants based upon inconsistent and irreconcilable answers to the written interrogatories. Plaintiff advanced this same argument in its motion for judgment n.o.v. For the reasons heretofore set forth this contention will be rejected here as well.

Plaintiff’s third and fourth assignments of error are related and can be addressed together. Plaintiff contends that I erred in submitting special interrogatories to the jury that were voluminous and confusing and that I erred in refusing to submit the interrogatories requested by plaintiff. The reason that these contentions can be considered together is that the proposed interrogatories eventually submitted by plaintiff were more voluminous than those actually submitted! Compare Docket Entry No. 143 with Docket Entry No. 149 (it appears as though questions 3 and 4 of plaintiff’s interrogatories were redundant and without those plaintiff’s would be slightly shorter).

The written special verdict interrogatories submitted to the jury contained nine numbered questions with several questions containing subparts. Depending upon how it answered the interrogatories, the jury could have answered anywhere from a single question to a maximum of sixteen “yes” or “no” questions, with an additional question apportioning causal negligence among the three parties.

The decision whether to submit a general verdict or a special verdict to the jury rests with the sound discretion of the trial court. Moyer v. Aetna Life Insurance Co., 39 F.Supp. 725 (M.D.Pa.1941), aff'd, 126 F.2d 141 (3d Cir.1942). One court of appeals has gone so far as to say that the district court is entitled to “uncontrolled discretion.” Skidmore v. Baltimore & Ohio R.R. Co., 167 F.2d 54, 66-67 (2nd Cir.), cert. denied, 335 U.S. 816, 69 S.Ct. 34, 93 L.Ed. 371 (1948).

I decided to submit special interrogatories to the jury because, given plaintiff’s alternative theories, the causation issues and the multiple defendants’ cross claims, I recognized the serious problems that would arise in sustaining a general verdict. I notified counsel of my intentions well in advance so that they could submit proposed interrogatories of their own. Counsel did so. I limited the interrogatories to the essential issues to be decided and those necessary to sustain- a verdict. Part of the reason the interrogatories were fairly lengthy was because plaintiff, as was its right, chose to proceed on alternative theories of liability. The interrogatories, therefore, had to reflect those possibilities as well as certain claims by the defendants. The interrogatories were worded as plainly and simply as possible, while still serving their function. The interrogatories were neither so voluminous nor so confusing that a new trial is warranted.

It was not error to fail to give plaintiff’s requested special interrogatories because those interrogatories are substantially the same as the ones submitted to the jury, except that plaintiff eliminated the questions as to contributory negligence and intervening superceding cause (it also appears that interrogatories 3 and 4 are dupli-cative). See docket entry No. 149. I have previously explained why the issue of contributory negligence was for the jury and will not repeat that explanation here. Su-perceding cause was relevant to the possible liability of Electro-Therm, Inc. The failure to submit plaintiff’s suggested special interrogatories does not warrant granting a new trial.

Plaintiff’s fifth contention is that the court erred in limiting the interrogatories to a design defect and lack of adequate warnings. There are several reasons why plaintiff’s point is not persuasive.

First, as I explained to plaintiff following my charge to the jury, there was no testimony of record that a specific defect in the manufacturing process caused the heater to arc. Tr. of 3/8/84 at 47-48. There was testimony that all elements eventually fail, either quiescently or catastrophically. Because the elements must fail eventually, and some do so violently, plaintiff argued that the heaters should have been designed with a mechanism to prevent violent failures, i.e., a ground fault interrupter. There was no testimony that a manufacturing defect caused the element in question to fail violently rather than quietly. If there had been testimony that elements could have been designed so that they did not ever fail (quietly or violently), that the element in question failed violently would have raised an inference that it was due to a manufacturing defect. The testimony, however, was that all elements eventually fail. Thus, plaintiff was required to offer evidence as to some defect in manufacture that caused the element at issue to fail violently rather than quietly. The mere fact of a failure did not raise an inference that the element or heater was manufactured improperly.

Second, it was not error to fail to submit an interrogatory regarding a manufacturing defect because plaintiff never suggested I do so. See Plaintiffs Special Verdict (Docket Entry No. 149). Plaintiff did timely object to my failure to charge the jury on the issue of a possible manufacturing defect so that the issue as to the charge was preserved. Tr. of 3/8/84 at 47. Although I refused to specifically charge on that issue, I had already charged the jury generally that:

[I]f you find that the product at the time it left the possession and control of either of the respective defendants, you find that it lacked any element necessary to make it safe for its intended use or contained any condition that made it unsafe for its intended use, then the product in the law would be defective, and such defendant or defendants would be liable for all harm that was caused by such defect.

Tr. of 3/8/84 at 24. Following the jury’s verdict on the special interrogatories, upon hearing argument from plaintiff, I instructed the jury that “it is conceivable that you may have found some other — based on your decision on a defect — on some other possible defect, and if you did, we want to be sure as to whether you have determined that that was — that such defect was or was not — a substantial factor in bringing about the fire.” Id. at 79. The jury retired, returned and again answered in the negative as to any other defect.

Combining the general charge on “defect” with the supplemental oral charge reveals that any alleged error in failing to charge specifically about a manufacturing defect was harmless error, if any.

Plaintiffs sixth contention in support of its motion is that the court erroneously told the jury that the interrogatories were not confusing prior to sending them back to consider whether any defect was a substantial factor in bringing about the harm. Plaintiff also alleges that requesting the jury to determine proximate causation as to any defect, without recharging on certain other issues, was error. These points are not persuasive because by not raising them at trial plaintiff has waived them. The “necessity, extent and character of additional instructions is a matter within trial court’s discretion.” Roberts v. Williams-McWilliams Co., 648 F.2d 255, 265 (5th Cir.1981). There was no need to re-charge on those issues because they were adequately explained in the original charge. Further, I could not find any reference in the transcript where I told the jury that the interrogatories were not confusing. When resubmitting the question of any defect to the jury, I did state that I thought the jury had already answered the question. Clearly, such a comment did not prejudice plaintiff.

Plaintiff’s seventh contention is that the court erred in charging the jury on contributory negligence. Plaintiff made this same allegation in its motion for judgment n.o.v. For the reasons heretofore stated the contention regarding contributory negligence will be rejected here as well.

Plaintiff’s eighth assignment of error is that the court improperly allowed William Hurlock to testify as to hearsay evidence. The testimony in question was given by one of plaintiff’s employees, who had noticed a possible deformity in the element prior to the fire. The testimony involved Mr. Hurlock’s knowledge of a “similar-type element” that had “failed” in an electric range. Tr. of 3/2/84 at 72. Part of the testimony involved statements of the witness’s mother-in-law, who actually witnessed the element fail. Plaintiff objected to such statements as hearsay. I overruled plaintiff’s objections and allowed the testimony.

“ ‘Hearsay’ is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” Fed.R.Evid. 801(c). The statements made by the witness’s mother-in-law were not hearsay because they were not offered in evidence to prove the truth of the matter asserted. Simply put, the statements were not offered to prove that the element in Hurlock’s mother-in-law’s oven failed violently. The statements were offered to prove that Hurlock had some knowledge or information about heating elements similar to the one at issue. Whether the statements by his mother-in-law were true is not the issue. The issue is what was the extent of Hurlock’s state of knowledge about heating elements. The statements were properly admitted for the limited purpose of showing Hurlock’s state of mind and understanding on which he subsequently acted regarding the alleged deformity in the heater. See Boston & Maine R.R. v. Aetna Casualty and Surety Co., 329 F.2d 602, 604 (1st Cir.1964).

Plaintiff’s ninth contention is that the court erred in ruling that defendants could cross-examine witnesses on the issue of plaintiff’s insurance. There was no error in such a ruling because the evidence was relevant to show possible bias. See Fed.R.Evid. 411. I ruled that defendants could ask a witness for the plaintiff who investigated the fire, to identify his employer, an insurance company. Defendants’ counsel never raised the issue on cross examination. The only testimony involving insurance occurred when plaintiff’s counsel asked one of plaintiff’s witnesses who hired him to perform his investigation. Tr. of 3/2/84 at 231. Further, I specifically told plaintiff’s counsel that he could introduce evidence that it would be to the insurance company’s advantage to prove that the fire was arson. Id. at 260. There was no error committed that requires a new trial. The jury heard a single reference to “INA” during seven days of testimony. The reference was simply that INA had hired one of plaintiff’s witnesses and it was brought out on direct examination, presumably because I had ruled that defendants could show this on cross-examination.

Plaintiff’s final contention in support of its motion for a new trial is that the special verdict and judgment entered thereon is against the weight of the evidence and is contrary to law. It is plain from the discussion herein that the special verdict and judgment were proper in light of the evidence presented at trial.

Plaintiff’s alternative motions for judgment n.o.v. or a new trial will be denied.

      . The Federal Rules require that motions for judgment n.o.v. and for a new trial must be served within ten days after the entry of judgment. Fed.R.Civ.P. 50(b) and 59(b). The court is without power to hear motions filed out of time. 9 C. Wright & A. Miller, Federal Practice and Procedure § 2357 (1971) (Rule 50(b)); 11 C. Wright & A. Miller, Federal Practice and Procedure § 2812 (1973) (Rule 59(b)). The moving party, therefore, must timely serve and file its motion. There is, however, no Federal Rule that governs the time for a response. Likewise, there is no Local Rule directly governing time for a responsive post-trial brief. There is a Local Rule governing "Motion Practice” in general. E.D.Pa.R.Civ.P. 20. I assume that Local Rule 20(c) controls the timing of responsive post-trial briefs. Therefore, a response is due within ten days if the party was served by hand, an extra three days is provided if served by mail.
      In cases such as this when there is no question that the trial transcript is necessary to resolve questions raised by the moving party’s motion, it is my usual practice to allow the responding party to file its brief after the moving party has had opportunity to supplement its motion with the trial transcript. When the moving party requests leave to supplement, it is a waste of time to require the non-moving party to file two responses; once within the period prescribed in Local Rule 20(c) and again after the moving party has supplemented its motion. The better practice, when the moving party requests leave to supplement, is to require the non-moving party to file a single responsive brief following the moving party’s filing of a supplemental brief.

        . The Court has stated that:
      One could wish that the pronouncement of this Court on the subject over the years had been somewhat more lucid, more consistent, more forthright; had distinguished between cause in a factual or "philosophic” sense and proximate or legal cause; had acknowledged that the concept, like that of negligence itself, was designed not only to permit recovery for a wrong, but to place such limits upon liability as are deemed socially or economically desirable from time to time.

        Whitner v. Lojeski, 437 Pa. 448, 455, 263 A.2d 889 (1970) (footnote omitted).

      . Certain early Pennsylvania cases used the cause in fact or "but for” test to establish liability. See e.g., Burrell Township v. Uncapher, 117 Pa. 353, 363, 11 A. 619 (1887). That early view has been discredited.

      . Plaintiff's claim, that the failure to submit the issue of a manufacturing defect to the jury is grounds for a new trial, is addressed at pages 897-898 infra.

      . I brought the inherent difficulties involved in charging a jury on multiple theories to counsel for plaintiff’s attention several times, both on and off the record. See e.g. Tr. of 3/1/84 at 143. Plaintiffs counsel eventually agreed to withdraw the breach of warranty claim, Tr. of 3/5/84 at 194, but decided to go forward on its strict liability and negligence claims. Because plaintiff chose to go forward on its negligence claim, and there was evidence of contributory negligence, I was required to instruct the jury on that issue. Plaintiff is certainly entitled to go forward on any and all theories on which it presents sufficient evidence. When plaintiff chooses to do so it must accept the risks with the benefits. Absent error by the trial judge or inconsistent findings by the jury, a court cannot assume the jury was confused.

      . Had the plaintiffs claim of negligence been limited to failure to warn the jury’s findings might be inconsistent. The finding that the product was defective by reason of a failure to warn but that such failure was not a legal cause of the fire, would be inconsistent with the finding that the defendants were negligent because of a failure to warn and such negligence was a legal cause of the fire.

      . For example, the jury may well have decided that Aitken was negligent by reason of the testimony regarding the alleged phone call or phone calls to Aitken by an EJ. Stewart employee. Indeed, the plaintiff, in one of its pretrial briefs, asserted this as the primary negligence of Ait-ken. The jury may also have decided such conduct by Aitken was not so extraordinary as to be unforeseeable by Electro-Therm. The jury may also have decided that the conduct of plaintiff's employees on the whole was such that, despite the alleged phone call, plaintiff was 75% responsible for the fire.

      . Plaintiff is absolutely correct that evidence of conduct by plaintiff that would lead to an inference of some other cause in fact of the fire is irrelevant, e.g. testimony about smoking in the studio.

      . Plaintiff's contention at trial that defendants “opened the door” rings somewhat hollow. Defendants had no idea whatever that Professor Kaczmarczik had done any tests other than those disclosed in discovery. Thus, when Ait-ken's counsel asked Mr. Gwin a hypothetical question, to which Gwin replied that the opposite was true based upon tests he had seen performed by Professor Kaczmarczik, defendants had no idea they were opening any door. Rather, defendants blindly fell through the trap door plaintiff set for them. See also n. 11 infra.

      . Plaintiff’s videotape, arguably, would have shown that the aluminum reflector would have melted before the external heat source would have caused the element to arc.

      . Plaintiff did offer the videotape prior to the redirect examination of Mr. Gwin, contending defendants had “opened the door.” See p. 893 and n. 9 supra. I refused to allow the tape to be shown at that time. Because plaintiff technically offered the tape during his case-in-chief, the ground for refusing to admit it was not that it was improper rebuttal, rather, it was the failure to produce the videotape during discovery. The above discussion shows that plaintiff's insistence that the videotape was rebuttal evidence, and therefore did not have to be listed as a trial exhibit, is incorrect.

      .The very fact that plaintiff did offer the videotape during its case-in-chief cuts against its contention that it only intended to offer the tape as rebuttal. Although plaintiff contended that defendants had “opened the door,” I can not possibly see any merit to this contention. How could defendants have opened any door about the videotape when they didn’t know it existed? As far as they knew all the materials Mr. Gwin had reviewed were listed in the interrogatory answers. Defendants had no reason to expect that he would refer to any materials other than those listed.

      . Plaintiff proceeded to trial on the theories of strict liability and negligence. In addition, plaintiff asserted alternative possibilities under both of its theories (e.g. design defect and failure to warn under strict liability). In order to insure that the special verdict rendered could be sustained, I submitted the issues separately as to each defendant, thus doubling those questions pertaining to the defendants.

      . After giving the general charge on defect I instructed that "in part" the plaintiff claimed there was a design defect and defect by reason of lack of adequate warnings. I never limited the jury to those theories alone.


author: RAFEEDIE, District Judge.

text:
    Theodore KANNE, and Beatriz Kanne, Plaintiffs, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a Connecticut corporation; the Lincoln National Life Insurance Company, an Indiana corporation; Metropolitan Life Insurance Company, a New York corporation; Harlow Carpets, Inc., a California corporation; Hart, Shaffner & Marx, a General Partnership; Does 1 through 50, Inclusive, Defendants.
    No. CV 83-2261-ER.
    United States District Court, C.D. California.
    Jan. 23, 1985.

      Carol Hay, Ernest Franceschi, Jr., Lakewood, Cal., for plaintiffs.
    Suzanne Clover, James S. Cline, Adams, Duque & Hazeltine, Los Angeles, Cal., Owen Strange, Booth, Mitchell, Strange & Smith, Los Angeles, Cal., for defendants.
   RAFEEDIE, District Judge.

This matter came on regularly for trial on March 6, 1984, before the Honorable Edward Rafeedie, United States District Judge. Plaintiffs Theodore Kanne and Beatriz Kanne appeared with their attorneys of record, Carol A. Hay and Ernest Francheschi, Jr. Defendant Connecticut General Life Insurance Company appeared through its attorneys of record, Adams, Duque & Hazeltine, by James Cline and Suzette Clover. The Court, having heard the testimony of witnesses, having received oral and documentary evidence in the matter and having considered the pleadings and all of the records and files herein, renders its decision as follows:

I. BACKGROUND

1. Procedural

On December 17, 1982 plaintiffs Theodore Kanne (“Theodore”) and Beatriz Kanne (“Beatriz”) filed this civil action in the Superior Court of the State of California for the County of Los Angeles. The defendants at that time were Connecticut General Life Insurance Company (“Connecticut General”), Lincoln National Life, Metropolitan Life Insurance Company (“Metropolitan”), Harlow Carpets, Inc. (“Harlow Carpets”) and Hart, Shaffner & Marx. The complaint sought compensatory and punitive damages under state law for (1) breach of contract by failing to pay claims for medical benefits within a reasonable period of time, (2) breach of the implied covenant of good faith and fair dealing, (3) breach of fiduciary duties, (4) common law fraud, and (5) breach of statutory duties under California Insurance Code § 790.03.

Connecticut General and Metropolitan answered the complaint on March 18, 1983. In their answer, they denied plaintiffs’ allegations and raised-affirmative defenses, including failure to state a claim for relief as to all causes of action, full payment of benefits due, privilege to assert one’s rights in good faith, the bars of California Insurance Code § 10111 and Civil Code § 3302, failure to mitigate damages, preemption by the Employee Retirement Income ' Security Act of 1974, 29 U.S.C. §§ 1001-1381, (“ERISA”), and failure to exhaust administrative remedies under ER-ISA, and the unconstitutionality of allowing punitive damages against the defendant for breach of the covenant of good faith and fair dealing.

On February 4, 1983, plaintiffs filed a Motion to Remand. The Court granted the motion on March 24, 1983. After the parties stipulated to the dismissal of Lincoln National Life Insurance Company and Harlow Carpets on March 3, 1983, the action again was removed to federal court on April 8, 1983 on the basis of diversity jurisdiction. On April 19, 1983, Hart, Shaffner & Marx filed a Motion to Dismiss Extra-Contractual Claims, which the Court granted on May 23, 1983. On April 13, 1983, Metropolitan filed a Motion for Summary Judgment, which the Court granted on June 17, 1983. Although plaintiffs appealed these determinations, they subsequently dismissed their appeals. Finally, upon reaching a settlement with Hart, Shaffner & Marx on November 1, 1983, plaintiffs requested that Hart, Shaffner & Marx be dismissed with prejudice. The Court granted this request.

2. Factual

On May 23, 1981, Theodore was an employee of Harlow Carpets. Since Connecticut General had issued a group medical insurance policy (the “policy”) to the ABC Trust, of which Harlow Carpets was a member, Theodore was covered as an eligible employee under the policy. The ABC Trust is administered by the Associated Builders and Contractors in Washington, D.C. Similarly, on the same date, Beatriz was covered as an eligible employee under a self-funded ERISA plan at her place of employment, Hart, Shaffner & Marx. This plan was administered by Metropolitan Life Insurance Company.

Jonathan Kanne (“Jonathan”) was born on May 23, 1981 to Theodore and Beatriz while they were vacationing in Holland. Although the policy provided primary coverage for Jonathan only from the date of application by his parents, ABC Trust later authorized coverage retroactive to May 23, 1981. The Hart, Shaffner & Marx policy provided Jonathan with secondary coverage from May 23, 1981 through January 31, 1982.

Jonathan was born two months early with congestive heart failure. Within two weeks he was diagnosed as being cyanotic (a “blue baby”) as a result of the heart failure. Shortly thereafter, Theodore provided this information to Connecticut General.

Doctors in Holland subsequently recommended that Jonathan be treated at Moffitt Hospital in San Francisco. Theodore advised Metropolitan of this recommendation and requested an advance payment for air transportation fees on KLM, Royal Dutch Airlines, in the sum of $3,000.00. This amount was to cover first class airfare for Beatriz and Jonathan, oxygen for Jonathan while in first class, and modification of the plane’s electrical system necessitated by Jonathan’s need for oxygen.

Because Connecticut General and Metropolitan refused to advance any portion of the requested sums, Theodore drove to Mexico to borrow the necessary money from his father. Jonathan thereafter was transported from Amsterdam to Los Ange-les by KLM Airlines and from Los Angeles to San Francisco by Schaffer Air Ambulance.

After Jonathan arrived in San Francisco, Theodore obtained reimbursement in the sum of $698.40 from Metropolitan. Theodore then sought to recover the balance from Connecticut General under a coordination of benefits arrangement between the two insurance companies.

The Kannes dealt with Rosa Monostroi (“Rosa”), the Connecticut General Senior Benefits Analyst with primary responsibility for handling claims of the ABC Trust involving employees and dependents of Harlow Carpets. Rosa initially rejected the KLM claim on the ground that San Francisco was not the nearest hospital to Amsterdam. Thereafter, she changed her reasoning, determining instead that the treatment Jonathan was to receive in San Francisco was neither essential nor medically necessary. She based these decisions on the wording of the policy which covers: “Charges for professional ambulance services to or from the nearest hospital where necessary care and treatment can be given.” Rosa, however, determined that the Schaffer Air Ambulance bill was covered by the policy and, therefore, paid this claim promptly.

On October 22, 1982, Los Angeles Children’s Hospital mailed to Connecticut General medical bills incurred by Jonathan for emergency surgery on September 15, 1981. Similarly, other medical providers involved in this hospital stay presented their medical bills to Connecticut General within a reasonable time after they were incurred. Notwithstanding provisions in the policy booklet calling for immediate payment upon receipt of proof of loss, Connecticut General delayed payment of a majority of these medical bills for three to eleven months after presentation. Similarly, Connecticut General delayed payment for over eight months of the claims sustained by Jonathan’s hospitalization at Los Angeles Children’s Hospital beginning on October 16, 1981. Theodore repeatedly telephoned Rosa who explained to him that the reason the bills had not been paid was that they had not been received. The claims file documents kept by Connecticut General, however, show that an itemized bill from Children’s Hospital in the total amount of $89,840.16 was received by Connecticut •General on December 29, 1981. Connecticut General paid $9,999.00 of that claim in February 1982, and $9,999.00 on March 1982. The latter part of October it paid $69,141.44 after it had received a collection agency claim in September 1982. It made a last payment of $776.00 in late October 1982, after plaintiffs had retained counsel.

Connecticut General provided no explanation or justification for the delay in the payment of the $69,141.44 incurred by Children’s Hospital from October 16, 1981 to November 13, 1981. Although Rosa testified that she did not receive an itemized bill for the $69,141.44, Connecticut General, as stated above, admits receiving the Children’s Hospital bill in the sum of $89,840.16 on December 29, 1981. The balance forward on that bill was $69,141.44. Rosa explained that she thought this figure read $9,144.00, and that it already had been paid.

II. DISCUSSION

A. Federal Preemption

Connecticut General argues that the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1381, (“ERISA”), preempts all of plaintiffs’ claims for relief. While under the facts of the case at hand plaintiffs initially could have sued in federal court under ERISA for benefits due and breach of fiduciary duty, they chose instead to rely solely upon state law. As explained below, plaintiffs as masters of their complaint, were free to make this choice since their state law claims are not preempted by ERISA.

The fact that ERISA may apply to a particular dispute because, the plan under scrutiny is an ERISA plan — as is the case here — does not by itself answer the difficult question of ERISA’s effect on state law claims against an insurance company. Rather, in order to resolve this issue, it is necessary to distinguish between state laws which regulate an employee benefit plan and those which regulate an insurance company from which a plan purchases insurance. Any law directly regulating an employee benefit plan is preempted, 29 U.S.C. 1144(a), but laws regulating an insurance company or policy from an insurance company are saved from preemption. Eversole v. Metropolitan Life Insurance Co., Inc., 500 F.Supp. 1162 (C.D. CA 1980); Accord McLaughlin v. Connecticut General Life Insurance Co., 565 F.Supp. 434 (N.D. CA 1983).

Section 1144(b)(2)(A) saves from preemption state laws which “regulate insurance.” The phrase “regulating the business of insurance” has been defined as “statutes aimed at protecting or regulating this relationship, directly or indirectly.” See Eversole, 500 F.Supp. at 1168, relying on SEC v. National Securities, Inc., 393 U.S. 453, 460, 89 S.Ct. 564, 569, 21 L.Ed.2d 668 (1969); McLaughlin, 565 F.Supp. at 443. Under the facts of the case at hand, the purpose of the state laws underlying plaintiffs’ claims is to secure the insured’s rights as policyholders. As a consequence, these claims should be treated as insurance regulations which are saved from preemption as was the case in Eversole and McLaughlin. This conclusion is further strengthened by § 1144(b)(2)(B), the “deem-er clause.” That subsection prohibits a state from deeming an employee benefit plan to be an insurance company for the purpose of any state law regulating insurance. The effect of this clause is to prohibit a state from regulating a self-insured employee benefit plan as if it were an insurance company. Eversole, 500 F.Supp. at 1169; McLaughlin, 565 F.Supp. at 443.

Russell v. Massachusetts Mutual Life Insurance Co., 722 F.2d 482 (9th Cir.1983) does not compel a different result. In Russell the plans in question were self-funded employee benefit plans. Neither involved insurance policies. As a consequence, the savings clause of ERISA did not serve to protect the plaintiff’s state law claims which were directed to the plans. In contrast, here, as in Eversole and McLaughlin, Connecticut General issued a group insurance policy to a plan. Since plaintiffs’ claims are directed to this policy, the savings clause is triggered. Russell, therefore, does not alter the rule that any law directly regulating an employee benefit plan is preempted, but laws regulating an insurance company or policy purchased from an insurance company are saved from preemption. See Eversole, 500 F.Supp. at 1170.

B. Substantive Claims

1. Coverage Under the Policy

(a) KLM Airline Ticket

Rules governing the interpretation of insurance contracts in California are well settled. First, ambiguities are construed against the insurance company. Therefore, coverage clauses are interpreted broadly in favor of coverage, while exclusions are interpreted narrowly. McLaughlin, 565 F.Supp. 434, 440 (N.D.Cal.1983); see also State Farm Mutual Automobile Ins. Co. v. Partridge, 10 Cal.3d 94, 101-02, 109 Cal.Rptr. 811, 816, 514 P.2d 123 (1973). Second, if two or more interpretations are reasonable, the court must adopt the interpretation which favors coverage. “If semantically permissible, an insurance contract will be given such interpretation as will fairly achieve its object of securing indemnity to the insured for the losses to which the insurance relates.” State Farm Mutual Automobile Ins. Co. v. Jacober, 10 Cal.3d 193, 203, 110 Cal.Rptr. 1, 7, 514 P.2d 953, 960 (1973). In other words the insurer must establish that its interpretation supporting denial is the only reasonable construction of the contract. McLaughlin, 565 F.Supp. at 441. Third, the insurance contract must be considered in light of the insured’s reasonable expectation of coverage. If coverage reasonably may be expected but is not to be provided, notice of noncoverage must be conspicuous, plain, and clear. Id.

Even if the ABC Trust, on behalf of its employer members, bargained for this contract, the California rules outlined above apply to the facts of this case. See McLaughlin, 565 F.Supp. 434; Jones v. Crown Life Ins. Co., 86 Cal.App.3d 630, 150 Cal.Rptr. 375 (1978). Therefore, in order to prevail on the issue of the KLM bill, Connecticut General must show either that the clause unambiguously excludes coverage or that the clause cannot be interpreted reasonably to provide coverage. As stated above, the clause in question covers “charges for professional ambulance service to or from the nearest hospital where necessary care and treatment can be given.” At various times Connecticut General contended that the claim for the KLM flight was not subject to coverage because: (1) it was a pleasure flight; (2) the services were not performed at the nearest hospital where treatment could have been provided; and (3) the treatment was not essential and medically necessary.

The clause, however, does not specifically exclude from coverage the use of a passenger airline, does not state criteria to determine what is the nearest hospital where treatment could be received, and does not provide any guidance as to when and under what circumstances care and treatment is necessary. Furthermore, it is reasonable to interpret the clause as providing coverage for transportation upon a passenger airline to a hospital recommended by doctors for treatment which the doctors believe is essential and medically necessary. Although the doctors in San Francisco determined that Jonathan was too small and had to grow before the operation could be performed, the doctors in Holland thought that an immediate operation was necessary.

Even if the clause cannot be interpreted reasonably to provide coverage, Connecticut General is liable for the KLM bill because it breached its contractual duty to make an adequate investigation of plaintiffs’ claims. The duty to investigate possible bases for an insured’s claim includes the duty to investigate grounds for denying the claim. Prior to rejecting the claim for the KLM bill, Connecticut General neither investigated whether Moffitt Hospital was the nearest hospital nor whether the treatment Jonathan was to receive there was medically necessary. For example, Connecticut General never discussed with the physicians at Moffitt Hospital or with the referring physicians in Holland the necessity of Jonathan’s receiving treatment at Moffitt Hospital as opposed to a hospital in Europe. Failure to substantiate the grounds for rejection through proper investigation renders Connecticut General liable for the claim.

For either reason set forth above, Connecticut General is liable for the KLM bill. Because Hart, Shaffner & Marx has paid $698.40, its share of the KLM bill under the coordination of'benefits agreement, Connecticut General is liable for 80% of the remaining sum of $2,793.60 or $2,234.88.

(b) Failure to Pay Other Claims Immediately

Page 34 of the plan booklet states: “All benefits other than disability income benefits will be paid by Connecticut General immediately upon receipt of due proof.” Connecticut General breached its contract with plaintiffs by failing to comply with this term.

The evidence at trial revealed that payment on many of the other claims was delayed for over nine months. For example, the $69,141.44 issued to Children’s Hospital was not paid until Connecticut General received a collection agency claim, nine months after its receipt of the $89,-840.16 bill with a balance forward of $69,-141.44. Similarly, the last installment of the $89,840.16 bill in the sum of $776.00 was not paid until ten months after receipt of the bill.

Connecticut General neither has justified the delay in these payments nor has provided any rationalization for its failure to investigate in a timely fashion the status of the $69,141.40 sum. Connecticut General knew or should have known that the sum had not been paid at least as early as December 29, 1981, when it received the balance forward indication on the $89,-840.16 bill. Connecticut General, therefore, breached its contract with the Kannes by failing to pay the claims “immediately upon receipt of due proof.”

2. Breach of the Covenant of Good Faith and Fair Dealing

In addition to the duties imposed by the express terms of an agreement, the law in California implies in every contract a covenant of good faith and fair dealing. Egan v. Mutual of Omaha Ins. Co., 24 Cal.3d 809, 169 Cal.Rptr. 691, 620 P.2d 141 (1979), cert. denied, 445 U.S. 912, 100 S.Ct. 1271, 63 L.Ed.2d 597 (1980). This implied promise requires each contracting party to refrain from acting in any way that would impede the right of the other to receive the benefits of the agreement. Egan, 24 Cal.3d at 818, 169 Cal.Rptr. at 695.

Denial of a claim for insurance benefits where benefits were in fact due under an insurance contract is not, in and of itself, a breach of the implied covenant; an insurer is not required to pay every claim presented to it. Austero v. National Cas. Co., 84 Cal.App.3d 1, 30, 148 Cal.Rptr. 653, 672.

Instead, in order to be liable' for breach of the implied covenant of good faith and fair dealing, Connecticut General must have acted unreasonably and in bad faith. Silberg v. California Life Ins. Co., 11 Cal.3d 452, 461, 113 Cal.Rptr. 711, 521 P.2d 1103 (1974); Austero, 84 Cal.App.3d at 27, 148 Cal.Rptr. at 670. Bad faith, in this context, is an imprecise label for what essentially is some kind of unreasonable insurer conduct. Austero, 84 Cal.App.3d at 27 n. 22, 148 Cal.Rptr. at 670 n. 22. Thus, generally, the substance or gravamen of the wrong in first party insurance cases (as distinguished from third party insurance cases where the insurance company is being sued for refusing to accept the third party’s offer to settle his claim) is an unreasonable refusal to pay benefits due under the terms of the policy. The benefit contracted for by an insured under the terms of a policy is the availability of money promptly upon the occurrence of a particular event. When an insurer refuses unreasonably to make a payment of the benefit due, or when the insurer does not pay promptly, it deprives the insured of the essence of the bargain. The insured bargained for prompt payment, not a right of action against the insurer. Austero, 84 Cal.App.3d at 30, 148 Cal.Rptr. at 670.

The facts of this case go beyond the typical first party insurance case in that all but one of the claims presented (the KLM airline ticket) have been paid. Nonetheless, the test of liability in this case is the same—whether Connecticut General’s failure to investigate possible bases that may have supported plaintiffs’ claims as well as its failure to pay these claims promptly was unreasonable.

From the evidence presented at trial, this Court has concluded that Connecticut General acted unreasonably in these respects. As stated previously, payment on several of the claims was delayed for over nine months. In addition, Connecticut General failed to investigate several of the claims, specifically, the KLM airline ticket, as well as the status of the $69,141.40 bill. Because Connecticut General acted in an unreasonable manner in handling plaintiffs’ claims, Connecticut General breached the implied covenant of good faith and fair dealing.

This lawsuit could have been avoided nad there been better communication between the parties. While both sides share responsibility for this breakdown in communication, most of the blame rests with Connecticut General, a sophisticated insurance company whose obligation is to process claims in a timely, efficient, and cordial manner. People insure themselves for peace of mind and security. To protect these interests, it is essential that an insurer fully inquire into the possible bases that might support the insured’s claim and act promptly. In this case, Connecticut General became overly pedantic and insensitive to plaintiffs during their time of great stress.

The Court does not find that the plaintiffs have been negligent in the submission of their claims. While they may have done so in stricter conformity with the defendants’ requirements, their failure to do so was reasonable under all of the circumstances. Early on, defendants were placed on notice that plaintiff’s child was seriously ill, and would require extensive hospitalization and treatment. Repeated requests for payment of the bills were made to the claims representative, and copies of the bills were in defendants’ possession. Under these circumstances, it is not proper for the insurer to sit back and delay payment of the claims, under the pretextual theory that the plaintiffs have not dotted all the “I’s” and crossed all the “T’s”. On the contrary, the insurer has the duty to take the initiative to see to it that the promised protection is delivered when needed. It must act to facilitate the claims instead of searching for reasons not to do so.

• 3. Breach of Fiduciary Duty

Plaintiffs argue that Connecticut General breached its fiduciary duties in its dealings with them. California law, however, does not recognize an action for breach of fiduciary duty between an insurer and an insured.

An insurance policy is a contract. As such, there is implied within every insurance policy a duty of good faith and fair dealing. While this duty is fiduciary in nature, it does not create a fiduciary relationship. See, Spindle v. Chubb/Pacific Indemnity Group, 89 Cal.App.3d 706, 712, 152 Cal.Rptr. 776, 780 (1979).

In the insurance context, the implied covenant of good faith and fair dealing requires no more than “that each party is prevented from interfering with the other’s right to benefit from the contract.” Miller v. Elite Ins. Co., 100 Cal.App.3d 739, 756, 161 Cal.Rptr. 322, 331 (1980). It does not further require that the insurer place the insured’s interests above its own as would be the case were the insured a fiduciary. The Miller court also noted that, “where a conflict of interest emerges, the carrier has the obligation of protecting the interests of the insured [only] equally with his own.” Miller, 100 Cal.App.3d at 756; 161 Cal.Rptr. at 331; see also Egan v. Mutual of Omaha Ins. Co., 24 Cal.3d at 818; 169 Cal.Rptr. at 695 (1979); Silberg, 11 Cal.3d at 460, 113 Cal.Rptr. at 717.

An insurance company, moreover, is privileged, in pursuing its own economic interests, to assert its legal rights. Fletcher v. Western National Life Insurance Co., 10 Cal.App.3d 376; 89 Cal.Rptr. 78 (1970).

[A]n insurer is not required to pay every claim presented to it. Besides the duty to deal fairly with the insured, the insurer also has a duty to its other policyholders and to the stockholders (if it is such a company) not to dissipate its reserves through payment of meritless claims. Such a practice inevitably would prejudice the insurance seeking public because of the necessity to increase rates, and would finally drive the insurer out of business. Austero, 84 Cal.App.3d at 30, 148 Cal.Rptr. at 672.
Finally, as stated in McLaughlin:
it strains credulity to suggest, as defendant does here, that when an insurance company is the fiduciary [under ERISA] making claims decisions under a group policy, that it is due the same deference accorded to trustees who have no financial interest in their decisions. There is an inherent conflict of interest between an insurance company’s duties to plan participants and to its policyholders. To remedy this conflict, California insurance law holds insurers to fiduciary standards by inter alia applying strict rules of construction against the insurer. McLaughlin, 565 F.Supp. at 447 n. 9.

In this case this Court has applied strict rules of construction against Connecticut General in order to remedy the inherent conflict of interest between its duties to its plan participants and its duties to its policyholders. Even were Connecticut General a fiduciary under ERISA, it would not be a fiduciary under California law. Under that law, while Connecticut General is obliged to act in good faith and deal fairly, this is not a fiduciary duty.

4. Fraud

Plaintiffs’ complaint alleges a cause of action for fraud based upon Connecticut General’s alleged promises to them which plaintiffs claim were made without intent to perform. Specifically, plaintiffs contend that the policy contained promises that any expenses incurred by reason of Jonathan’s medical problems, including his air fare from Holland to Los Angeles, would be covered in full by coordination of benefits between the various insurance companies insuring plaintiffs. Plaintiffs further contend that they were induced by these promises to purchase a policy, and also relied upon the representation to refrain from procuring other insurance.

In order to prevail on their fraud claim, plaintiffs needed to show misrepresentation, knowledge of falsity, intent to defraud—that is, intent to induce reliance— justifiable reliance, and resulting damage. 4 Witkin, Summary of California Law Torts § 466 at 2711 (8th ed. 1974). The evidence at trial fails to support each of these elements. Connecticut General did not make any false representations that any medical expenses resulting from illness to Jonathan would be covered by the policy and paid promptly. The liability in this case stems from Connecticut General’s failure to comply with their own internal regulations rather than from Connecticut General’s intent to defraud.

5. Breach of the Statutory Duties Imposed By Insurance Code Section 790.03(h)

Plaintiffs assert that Connecticut General violated §§ 790.03(h)(2) and 790.-03(h)(3) of the California Insurance Code. These sections prohibit respectively, the failure “to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies [,] ” and the failure “to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.”

Connecticut General violated § 790.-03(h)(2) by failing to acknowledge and act reasonably promptly upon the Kanne’s claims, notwithstanding Theodore’s repeated efforts to obtain payment. Theodore’s many telephone calls to Connecticut General were unproductive. Eventually, he became so frustrated that following Jonathan’s release from the hospital in February 1982, Theodore went to see Rosa. Although he presented to her, on that occasion, a number of the unpaid bills, which did not include the Children’s Hospital bill in the sum of $69,141.40, several of these bills remained unpaid for many months thereafter.

Connecticut General, however, did not violate § 790.03(h)(3). Mr. Hanna, the Complex Manager at Connecticut General testified that Connecticut General has adopted and implemented standards for the prompt, accurate, and courteous investigation and processing of claims of policyholders. These standards are reasonable. Thus, although Rosa did not comply with these standards in handling the Kanne’s claims, Connecticut General did not violate § 790.03(h)(3).

C. Exemplary And Other Damages

Were plaintiffs to have prevailed on their breach of contract claim alone, they would be entitled only to the award of compensatory damages set forth above for the KLM ticket. Civil Code § 3294 provides:

In an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, express or implied, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.

Punitive damages thus are not available in an action based solely upon breach of a contractual obligation, even where the breach' is intentional, willful, or in bad faith. However, where an action also sounds in tort, exemplary damages may be recovered upon proper showing of malice, fraud or oppression, even though the tort incidentally involves a breach of contract. Miller v. National American Life Insurance Co. of California, 54 Cal.App.3d 331, 336, 126 Cal.Rptr. 731, 733 (1976).

Plaintiffs, therefore, may be entitled to punitive damages on the tort theory on which they have prevailed, breach of the implied covenant of good faith and fair dealing.- The mere fact that an insurer has breached its duty of good faith and fair dealing by acting unreasonably in handling a claim, however, does not mean that the insurance company automatically is liable for exemplary damages. Austero, 84 Cal.App.3d at 36, 148 Cal.Rptr. at 676; Silberg, 11 Cal.3d at 462, 113 Cal.Rptr. at 718. Exemplary damages may be awarded only where there is oppression, fraud, malice to vex, annoy or injure, or where there is a conscious disregard of a plaintiff’s rights. Miller v. Elite Insurance Co., 100 Cal.App.3d 739, 759, 161 Cal.Rptr. 322 (1980). Thus, to be liable for punitive damages on a breach of good faith and fair dealing claim an insurer must have acted with actual malice which may be inferred from the circumstances of the case. Miller, 100 Cal.App.3d at 758, 161 Cal.Rptr. at 333, (citing Richardson v. Employer’s Liability Assurance Corp., 25 Cal.App.3d 232, 245; 102 Cal.Rptr. 547, 556 (1972)); See also BAJI 6.94 and 14.71.

The evidence presented at trial established that Connecticut General acted with actual malice towards the Kannes. Connecticut General consciously disregarded the Kannes’ rights by failing to process their claims in a prompt manner, by failing to investigate their claims, and by interpreting some of their claims in an unreasonable manner.

Connecticut General’s breach of the implied covenant of good faith and fair dealing, and violation of Insurance Code § 790.-03(h)(2) were the proximate and direct cause of all loss, damage, emotional distress, embarrassment and fear of denial of medical treatment suffered by plaintiffs. Plaintiffs have suffered emotional distress, humiliation and embarrassment to their damage in the sum of $250,000.00. In addition, plaintiffs are entitled to exemplary damages in the sum of $500,000.00, an amount which the Court believes is sufficient to deter Connecticut General and other such insurance companies from treating their policyholders and insureds in the manner in which the Kanne’s have been treated.

D. Attorney’s Fees

In the prayer of the complaint, plaintiffs seek to recover attorney’s fees as an element of damages. In California, in the absence of an attorney’s fee clause in the applicable insurance policy, attorney’s fees are not recoverable in a bad faith action against an insurance company. Moore v. American United Life Insurance Co., 150 Cal.App.3d 610, 644; 197 Cal.Rptr. 878, 900 (1984). The question, therefore, becomes whether or not there is an attorney’s fee provision in the insurance contract between the Kannes and Connecticut General. The policy provides in pertinent part:

SUMMARY PLAN DESCRIPTION (Continued)
Under ERISA there are steps you can take to enforce the above rights. For instance, if you request materials from the plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $100 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Administrator.
If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that plan fiduciaries misuse the plan’s money or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
If you have any questions about your plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area office of the U.S. Labor — Management Services Administration, Department of Labor.

This summary plan description is meant to provide policyholders with an understanding of their rights under ERISA such as those set forth in 29 U.S.C. § 1132(g). That section states that: “In any action under this subchapter by a participant, beneficiary, or fiduciary, the court on its discretion may allow a reasonable attorney’s fee and costs of action to either party.”

Thus, although the summary plan description does not expressly restrict the Court’s discretion to award attorney’s fees to actions brought under ERISA, the description should be interpreted in this fashion. As a consequence, since the Kannes chose to proceed only under state law, the Court has no power to award them attorney’s fees in this action. They are, however, entitled to their costs.

LET JUDGMENT BE ENTERED ACCORDINGLY.

      . Although Beatriz was not covered as an eligible employee under the policy, Beatriz as Theodore's spouse is a party to the insurance contract and, therefore, has standing to sue for the claims asserted. The policy booklet states at page 4 that "you and your family members are eligible to participate in this plan ...” and further defines family members as one’s spouse. Under the policy, therefore, Beatriz is able to recover expenses incurred on behalf of a dependent to the same extent as Theodore. Moreover, it is reasonably foreseeable that Beatriz, in addition to Theodore, could suffer emotional distress from Connecticut General’s improper handling of the Kanne family’s claims.

      . In addition, she, at one time, told Theodore that the flight was not covered because it was a "pleasure trip.”

        Cf. McLaughlin v. Connecticut General, 565 F.Supp. 434, 453 (N.D. CA 1983) holding that both Mr. and Mrs. McLaughlin were parties to the insurance contract, he as the "employee” and she as his "dependent” and thus both had standing to seek damages for emotional distress and other injuries for breach of the implied covenant.