Madrigal v. Allstate Insurance Co. (215 F. Supp. 3d 870, 2016)

ORDER DENYING DEFENDANT ALLSTATE INDEMNITY COMPANY’S MOTION FOR JUDGMENT AS A MATTER OF LAW (Dkt. No. 281) AND MOTION FOR NEW TRIAL (Dkt. No. 282)

SUZANNE H. SEGAL, UNITED STATES MAGISTRATE JUDGE

I.

INTRODUCTION

On April 21, 2014, Plaintiffs Carlos Madrigal (“Madrigal”), Richard Tang and Anna Tang (the “Tangs”) (collectively, “Plaintiffs”) filed suit in state court against Defendant Allstate Indemnity Company (“Allstate”) alleging claims arising from Allstate’s failure to accept a settlement demand. Allstate removed the action to federal court on June 2, 2014 on the basis of diversity jurisdiction. On September 30, 2015, the Court granted Allstate’s Motion for Summary Judgment in part, dismissing all of Plaintiffs’ claims except: (1) Madrigal and the Tangs’ respective claims for breach of the implied covenant of good faith and fair dealing; (2) the Tangs’ claims for intentional and negligent misrepresentation; and (3) the Tangs’ prayer for punitive damages. (Dkt. No. 145 at 59-60).

The Court held several pretrial hearings. The Court denied all of Plaintiffs motions in limine, but granted three of Allstate’s motions in limine. (Dkt. 167, 176). Regarding jury instructions, the Court rejected several of Plaintiffs proposed instructions, but adopted the majority of Allstate’s proposed jury instructions, including the more recent versions of the CACI instructions proposed by Allstate. However, the Court also modified or declined to include certain instructions over Allstate’s objection, as discussed more fully below. (Dkt. Nos. 171, 184, 205, 207, 208). A jury trial commenced on November 12, 2015.

On November 20, 2015, at the close of Plaintiffs’ evidence, Allstate orally moved for Judgment as a Matter of Law under Rule 50(a) on Plaintiffs’ respective bad faith claims, the Tangs’ promissory fraud and negligent misrepresentation claims, and the Tangs’ prayer for punitive damages.

The Court granted Allstate’s Rule 50(a) motion as to the negligent misrepresentation claim. (Dkt. 207). The Court took the remainder of the Rule 50(a) motion under submission. (Dkt. No. 209). On November 23, 2015, before the Parties began closing arguments, the Court denied the remainder of Allstate’s Rule 50(a) motion.

On November 24, 2015, the jury found Allstate liable on Madrigal and the Tangs’ respective bad faith claims. (Dkt. No. 262 at 2). The jury awarded Madrigal the amount of the underlying excess judgment (a number stipulated to by the Parties), plus interest and costs “to be determined by the Court.” (Id.). The jury awarded Anna Tang and Richard Tang $50,000.00 each for the emotional distress caused by Allstate’s breach of the implied covenant. (Id.). However, the jury also found that Allstate was not liable on the Tangs’ promissory fraud claim and that the Tangs were not entitled to punitive damages. (Id. at 3-4).

On December 21, 2015, Allstate filed a Motion for Judgment as a Matter of Law under Rule 50(b) on Plaintiffs’ bad faith claims, (“JMOL Motion,” Dkt. No. 281), including the declaration of Peter H. Klee. (“Klee JMOL Deck,” Dkt. No. 281-1). Plaintiffs filed an Opposition on January 12, 2016, (“JMOL Opp.,” Dkt. No. 285), including the declaration of Arash Hom-ampour. (“Homampour Deck,” Dkt. No. 285-1). On January 26, 2016, Allstate filed a Reply, (“JMOL Reply,” Dkt. No. 288), including a second declaration of Peter H. Klee. (“Klee JMOL Deck II,” Dkt. No. 288-1).

Also on December 21, 2015, Allstate filed a Motion for a New Trial, (“New Tr. Motion,” Dkt. No. 282), including the declaration of Peter H. Klee. (“Klee New Tr. Deck,” Dkt. No. 282-1). On January 12, 2016, Plaintiffs filed an Opposition, (“New Tr. Opp.,” Dkt. No. 286), including the declaration of Arash Homampour. (“Hom-ampour Deck,” Dkt. No. 285-1). On January 26, 2016, Allstate filed a Reply. (“New Tr. Reply,” Dkt. No. 287).

On February 8 and on May 6, 2016 the Court held hearings on Allstate’s Motions. For the reasons stated below, Allstate’s Motion for Judgment as a Matter of Law is DENIED. Allstate’s Motion for New Trial is also DENIED.

II.

SUMMARY OF EVIDENCE

On July 18, 2009, Richard Tang had a motor vehicle accident with Carlos Madrigal, which rendered Madrigal paraplegic. (Trial Transcript (“Tr.”) 11/12/15 PM at 28 (Stipulated Fact No. 2)). At the time of the accident, Mr. Tang and his wife Anna Tang were insured by Allstate with a bodily injury coverage limit of $100,000 per claimant. (Id. (Stipulated Fact No. 1); Tang, Tr. 11/20/15 PM at 40:5-12). Madrigal was uninsured. (Varela, Tr. 11/16/15 at 140:ll-3). Madrigal pursued a claim against Mr. Tang for his injuries. (Tr. 11/12/15 PM at 28 (Stipulated Fact No. 5)).

Allstate first learned of Madrigal’s claim in July 2009, through Mr. Tang’s attorneys, Dobbin Lo and Associates (“Dobbin Lo”). (Varela, Tr. 11/16/15 at 98:5-9). On July 27, 2009, Madrigal’s attorney Kyle Madison wrote to Allstate to state that he was representing Madrigal, and to learn the policy limits. (Madison, Tr. 11/17/15 PM at 56:2-8; see also Tr. Exh. 210). Allstate assigned adjuster Teresa Varela to Madrigal’s claim on July 30, 2009. (Tr. 11/12/15 PM at 28 (Stipulated Fact No. 3); Varela, Tr. 11/16/15 at 97:20-21).

On August 4, 2009, Varela wrote to Madison asking him to provide Allstate with information about Madrigal’s claim and to have Madrigal sign the enclosed medical and wage authorization forms. (Id. at 99:14-17 & 100:7-11). Varela’s August 4, 2009 letter identified “RICHARD TANG” as Allstate’s insured, (Tr. Exh. 214), as did follow up letters from Allstate dated August 21, 2009 and September 24, 2009. (Tr. Exhs. 217 & 121). Madison never provided the requested medical and wage authorizations. (Varela, Tr. 11/16/15 at 101:5-15; Madison, Tr. 11/17/15 PM at 59:3-5 & 11/18/15 AM at 106:6-9).

Varela testified that her initial contacts with the Tangs were through Dobbin Lo. (Varela, Tr. 11/16/15 at 107:22-108:5). On August 21, 2009, Varela wrote to Dobbin Lo asking for authorization to obtain a recorded statement from Mr. Tang, which was granted. (Id. at 109:4-110:3; see also Tr. Exh. 217). The statement was made through an interpreter in the presence of Dobbin Lo on August 26, 2009. (Varela, Tr. 11/13/15 PM at 67:21-23 & 11/16/15 at 110:4-10). According to Varela, Mr. Tang stated that he made a right turn from the lane next to the curb and was not at fault. (Id. at 110:14-111:2). Mr. Tang told Varela that at the time of the accident, he was on his way to his wife’s restaurant, where he worked, to pick up a list of food items to purchase for the restaurant. (Id. at 111:7— 12).

Varela testified that after hearing Mr. Tang’s version of the accident, she was concerned that Mrs. Tang could potentially be held liable because she was the registered owner of the vehicle that Mr. Tang was driving and because at the time of the accident, Mr. Tang was possibly acting within the “course and scope” of his employment. (Id. at 111:9-112:11). On August 28, 2009, Varela asked Dobbin Lo if the Tangs would allow her to disclose their policy limits to Madrigal’s attorney, which they authorized on September 2, 2009. (Id. at 137:5-9; see also Tr. Exh. 220). At the end of September 2009, Varela obtained permission from Dobbin Lo to speak with the Tangs directly. (Varela, Tr. 11/17/15 PM at 31:19-28).

Varela and Madison first spoke on September 2, 2009. (Varela, Tr. 11/16/15 at 139:21-140:4). During the telephone call, Madison told Varela that he would gather Madrigal’s medical bills and records and send them to her instead of providing a medical documents authorization. (Id. at 140:5-10). Madison told her that Madrigal was uninsured, which Varela memorialized in a notation in the case file stating “PER KYLE [MADISON] AT ATTY OFFICE (09/02/09 FILE NOTE BY ADJ-RTV), NO INSURANCE ... PROP 213.” (Id. at 140:11-3 & 141:14-17; see also Tr. Exh. 11 (ellipses in original)).

On September 24, 2009, Allstate received a copy of a medical bill from Madison reflecting medical expenses related to the treatment of his paraplegic condition of $34,398. (Varela, Tr. 11/16/15 at 151:16-22, 152:3-8 & 155:3-6; see also Tr. Exh. 234). On the same date, Varela wrote to Madison asking for the names of two witnesses who Madison claimed had seen the accident. (Varela, Tr. 11/16/15 at 150:8-14; see also Tr. Exh. 121). Varela states that Madison did not disclose those names in response to the letter. (Varela, Tr. 11/16/15 at 151:12-15). On September 28, 2009, Varela wrote to Madison again asking for additional medical records. (Id. at 153:7-15; see also Tr. Exh. 236). On September 29, 2009, Madison sent Varela thirty-five pages of medical records that covered the first few weeks of Madrigal’s initial hospital stay after the accident. (Varela, Tr. 11/16/15 at 155:12-24 & 157:3-10; see also Tr. Exh. 34). Varela testified that without a medical authorization from Madrigal, beyond the single bill and the thirty-five pages of medical records that Madison had voluntarily provided, there was no other medical information that Allstate could obtain. (Varela, Tr. 11/16/15 at 163:7-17).

In November 2009, Varela wrote to Madison asking him again to send the witness information that she had previously requested and any other information that he might have to help her further investigate liability. (Varela, Tr. 11/16/15 at 164:22-165:8; see also Tr. Exh. 148). Vare-la sent Madison another letter requesting the same information on December 11, 2009. (Varela, Tr. 11/16/15 at 165:21-166:8; see also Tr. Exh. 149). By the end of 2009, Varela claims that Madison had still not provided her with the witness information or any additional medical records. (Varela, Tr. 11/16/15 at 166:5-23). On January 15, 2010, Varela wrote Madison another letter requesting that information. (Id. at 167:13-168:13; see also Tr. Exh. 247).

Although Varela testified that Madison did not provide her with the names of any witnesses before January 15, 2010, (Varela, Tr. 11/16/15 at 166:5-23), Madison testified that he has a “memory” that “sometime” “after October of 2009” and before January 15, 2010, he provided Varela with the names of two witnesses to the accident. (Madison, Tr. 11/17/15 PM at 69:11-20). Madison lacks a contemporaneous record of providing that information, however. (Id.).

According to Varela, sometime between 4:30 and 4:45 p.m. on Friday, January 15, 2010, Allstate received via fax a demand letter from Madison, which she reviewed in the “early evening.” (Varela, Tr. 11/16/15 at 169:20-170:1; see also Tr. Exh. 251). Although the demand letter indicated that medical records were enclosed, Varela testified that none were included with the fax or the hard copy of the letter she received a few days later. (Varela, Tr. 11/16/15 at 170:2-18). Madrigal’s settlement demand letter stated in relevant part:

This letter will confirm that Plaintiffs [sic] have made' a policy limits demand to Defendant RICHARD TANG and his insurance carrier, Allstate Insurance Company, by way of a C.C.P. § 998 offer for $100,000.00....

Before this letter’s conditional policy limits settlement offer can be accepted by you on behalf of your insured, you must comply completely, not just substantially, with the following conditions precedent, and those conditions precedent must be completely performed by you within and only within 30 days from the date of this letter.

1. You must timely deliver to my office legible photocopies of all available liability insurance policies maintained by your insured;

2. You must timely deliver to my office the appropriate release of all claims forms;

3. You must timely deliver to my office a declaration under penalty of perjury, signed by your insured, specifically stating that no other liability insurance policies exist for the subject accident, (including an umbrella policy) [,] that he was not in the course and scope of employment, and an asset sheet of all assets or lack thereof;

4. You must deliver to my office a settlement draft, equal to the total amount of all available liability insurance policy limits along with a certified copy of the policy revealing limits;

5. ... [I]f you do not understand any portion of this letter or if you believe that any portion of this letter cannot be complied with for any reason, then this instant conditional policy limits settlement offers [sic] requires you, as another condition precedent to be performed by you, at or within thirty (30) days from the date of this letter, to communicate in writing to my office, whatever, [sic] “problems” you deem to exist. If your written problems establish good cause, then my office will grant you an extension of time within which you may accept my client’s conditional policy limits settlement offer;

Time is of the essence. Therefore, failure on your part to completely perform all of the above conditions precedent at or within thirty (30) days from the date of this letter will be deemed to be a rejection of this letter’s conditional policy limits settlement offer. In other words, performance on your part of some, but not all, of the above condition [sic] precedent will be deemed by this instant letter to be a counter offer. You are hereby put on notice that any counter offers by you will hereby be rejected by this office....

(Tr. Exh. 251) (emphasis added). The settlement demand letter included contact information for four witnesses whose testimony the letter claimed established that Allstate’s “insured [was] 100% liable for this accident.” (Id.).

According to Madison, the use of the phrase “appropriate release” in the settlement demand was “standard” language designed to encompass any insureds of whom the claimant might be unaware. (Madison, 11/18/15 PM at 30:12-17; see also Walker, Tr. 11/19/15 AM at 53:20-54:7). Furthermore, Madison testified that the “condition” in the letter inviting Allstate to inform him, in writing, of any “problem” in complying with the demand, was “sort of a catch-all so that if there is an issue that [he did not] know about, that they can raise it with [him]” and receive more time to resolve the perceived problem. (Madison, 11/18/15 PM at 109:20-22; Walker, Tr. 11/19/15 AM at 58:12-59:9). Madison stated that Allstate did not alert him to any such problem before rejecting Madrigal’s offer. (Madison, Tr. 11/17/15 PM at 98:6-8 & 109:15-18). Madison further testified that certain reasons put forward by Varela during trial to explain why Allstate allegedly could not accept the offer, such as the purported requirement that a check be tendered before the release, the need for the release to include Mrs. Tang, and the submission of an asset sheet from Mrs. Tang, were in fact not “problems” preventing settlement of Madrigal’s claim against the'Tangs. (Id. at 109:23-110: 15).

Varela contacted the Tangs that night (January 15, 2010) between 7:30 and 7:45 p.m. to discuss the letter. (Varela, Tr. 11/16/15 at 171:7-10). Both Mr. and Mrs. Tang participated in the call. (Id. at 171:18-20). Mrs. Tang testified that based on her memory, this was her first conversation with Allstate. (Tang, Tr. 11/20/15 PM at 42:12-15). Mrs. Tang translated for Mr. Tang during the call. (Varela, Tr. 11/16/15 at 171:23-172:5). Varela testified that she went through the demand letter’s terms one by one and explained that the potential value of the case could exceed the policy limits. (Id. at 172:6-16). Varela also testified that she explained to the Tangs that the demand letter required declarations or documents regarding three issues: whether Mr. Tang was acting in the scope of his employment; the availability of other insurance; and an accounting of assets. (Id. at 172:17-173:1).

Even though the demand letter mentioned only Mr. Tang by name, Varela believed that compliance with the demand letter would require Mrs. Tang to reveal her assets along with Mr. Tang’s because Mr. and Mrs. Tang were married and likely had community property. (Id. at 17 6:16-177:3). Also, because of Mrs. Tang’s potential liability as Mr. Tang’s employer and owner of the vehicle Mr. Tang was driving, Varela concluded that Allstate could not agree to a settlement unless it also, specifically released Mrs. Tang. (Id. at 173:24-174:3). Varela testified that she told the Tangs that any settlement release had to include both Mr. and Mrs. Tang. (Id. at 173:24-174:3). However, there is no evidence that Varela specifically asked for Anna Tang’s permission to reveal her identity to Madison.

According to Mrs. Tang, during the call Varela simply stated that Allstate was going to pay the policy limits demand so that both of the Tangs would be protected, and did not identify or explain any problems with the demand. (Tang, Tr. 11/20/15 PM at 47:7-15, 80:11-20 & 81:14-19). Mrs. Tang specifically claimed that Varela did not go through the letter and all of its conditions point by point, either orally during the call, or later in writing. (Id. at 45:16-23). Mrs. Tang further testified that Varela never told her that to settle the case, Allstate needed the release to include both her and her husband, or that the requirement that Mr. Tang provide an asset sheet, which Mrs. Tang admitted Vare-la mentioned, encompassed Mrs. Tang’s assets as well. (Id. at 61:9-11, 89:4-7 & 114:3-6). Mrs. Tang denied that she ever refused to disclose asset information, either during the January 15, 2010 call or afterwards. (Id. at 48:9-19).

Contrary to Mrs. Tangs’ testimony, Varela stated that upon learning of the asset disclosure requirement, the Tangs immediately said that they did not want to provide an asset sheet. (Varela, Tr. 11/16/15 at 173:5-8). Varela told them to discuss the asset disclosure requirement with their attorney, and asked them to follow up with their commercial carrier to see if there was any additional commercial coverage. (Id. at 173:8-18; id. at 173:4-20). Varela claimed that Mrs. Tang agreed to “try and contact someone to discuss whether they should disclose [asset] information after all.” (Id. at 177:10-18).

Varela explained why she did not insist that the Tangs disclose their assets:

Q: Now, when the Tangs told you that they didn’t want to disclose their assets, why didn’t you just tell them they have to disclose them or insist that they disclose them?

A: Well, I am not a financial advisor, and I would be remiss — it would not be right for me to tell the Tangs what to disclose with respect to their personal assets. If Richard and Anna Tang decided to provide asset information and I demanded that they do that, there was always that potential possibility that Mr. Madison could say that he wasn’t willing to. accept the hundred thousand and go after Anna and Richard Tang for whatever assets they were listing and giving to him. So I couldn’t take that risk. I wouldn’t do that to the Tangs. That would be their decision that they’d have to make on their own.

(Id. at 175:12-176:1).

Varela spoke with the Tangs again on January 19, 2010. During the call, she once again explained why there might be additional coverage through a commercial policy and asked Mrs. Tang to follow up. (Id. at 179:2-14). Varela also claimed to have advised the Tangs once more that they had a right to consult with an attorney regarding their personal assets and that it was “up to them to decide whether they wanted to provide that asset sheet to Mr. Madison.” (Id. at 179:19-180:2). According to Varela, Mrs. Tang again indicated that she would possibly consult with an attorney concerning the asset sheet. (Id. at 180:3-13). By this point, however, Varela felt that Madrigal’s offer “could never be accepted” on the terms in the demand letter because she “knew that the Tangs didn’t want to disclose their asset information,” and because she “could not give [Madison] a check without securing a signed release for both Richard and Anna Tang.” (Id. at 184:7-22).

Varela wrote a letter to the Tangs confirming the contents of their January 19, 2010 conversation. (Id. at 178:20-22). Varela’s letter stated in part, “although we do not believe Richard Tang was the proximate cause of the accident, given the gravity of the injuries, the exposure may exceed your policy limits of $100,000. Therefore, we must advise you have the right to consult an attorney, at your own expense, to safeguard and protect your personal assets.” (Tr. Exh. 248). Mrs. Tang interpreted Varela’s letter simply to mean that “Allstate will take care of the problem.” (Tang, Tr. 11/20/15 PM at 49:2-3).

Following receipt of Madison’s January 15, 2010 demand letter, Varela hired an investigator to conduct witness interviews. (Varela, Tr. 11/16/15 at 187:18-21). The investigator interviewed three of the four witnesses Madison had identified (Allstate was unable to locate the fourth), who Varela stated “basically said they did not witness the accident” and therefore could not provide evidence showing that Mr. Tang was responsible for Madrigal’s injuries. (Id. at 188:10-18). On January 22, 2010, Varela spoke with Madison to explain that the witnesses they had reached did not provide evidence of Mr. Tang’s liability, and to obtain additional medical documents. (Id. at 189:3-14). Madison told her that Allstate had all of the information it needed and all of the medical records he had. (Id at 189:17-19; see also Madison, 11/18/15 AM at 50:21-23). Madison also told her that Madrigal “was still in a wheelchair, but was getting better.” (Vare-la, Tr. 11/16/15 at 189:24-25; Walker, Tr. 11/19/15 AM at 68).

Allstate’s investigator eventually located an eyewitness named Fidel Avendano, who was not among the witnesses Madison identified, who contradicted Mr. Tang’s version of the accident and placed responsibility for the accident on Mr. Tang. (Varela, Tr. 11/16/15 at 192:3-21, 193:15-19 & 194:7-23). Varela received the investigator’s report of Avendano’s interview on Saturday, January 23, 2010, and called the Tangs that same day. (Id. at 192:17-21 & 195:2-7; see also Tr. Exh. 47). Mr. Tang, either through an interpreter or through Mrs. Tang, purportedly did not change his version of the accident. (Varela, Tr. 11/16/15 at 196:7-18).

On Monday, January 25, 2010, Varela arranged for a meeting with Karen Cohn, who was temporarily serving as her manager, and Allstate evaluation consultant John Gellatly. (Id. at 197:10-19; see also Gellatly, Tr. 11/12/15 PM at 103). According to Varela, as of January 25, 2010, she had approximately $34,000 in medical bills and no evidence of Madrigal’s prospective medical expenses or lost wages. (Varela, Tr. 11/16/15 at 206:2-15). Varela told Cohn and Gellatly about the $34,000- bill. They discussed the potential value of the case, but did not discuss whether Madrigal was insured. (Id. at 199:20-24). Varela testified that she erroneously assumed during her conversation with Cohn and Gellatly that Madrigal was insured because Varela had overlooked references in the file that Madrigal was uninsured. (Id. at 200:4-9). Varela asked for authorization to offer the full $100,000 policy limits, despite the terms in the demand that she considered problematic, because she assumed that Madrigal, as an insured driver, would be eligible for pain and suffering damages. (Id. at 199:4-8, 200:19-23 & 204:7-13). According to Varela, although “there was no discussion about accepting the demand” on its own terms because “[tjhere were too many problems with it,” they decided that Varela should extend an offer for policy limits on “whatever terms we could.” (Id. at 199:4-12 & 201:6-7).

Varela testified that she spoke with the Tangs on January 28, 2010 and informed them that Allstate would make a policy limits offer of $100,000. (Id. at 211:4-15). Varela claimed that she did not tell the Tangs that Allstate would accept Madrigal’s demand, as that would require the Tangs to provide an asset sheet, among other terms that Allstate could not meet. (Id. at 211:21-212:9). Varela testified that she once again advised the Tangs that they had the right to consult with an attorney about whether to disclose their assets. (Id. at 211:15-18). Varela’s notes of the discussion stated:

Insured [Mrs. Tang] asked must they respond to the asset list. She says she owns a house but it’s on an upside-down payment. And although Anna Tang owns a store, it’s not doing well with the current economy. I explained I’m not an attorney and I can only provide updated information. This is probably the fifth or sixth time I’ve explained their right to hire an attorney at their own expense to protect their rights and their assets.

(Varela, Tr. 221:18-25; see also Tr. Exh. 51). According to Varela, during each of the “five or six conversations” she had with the Tangs explaining to them that “the asset sheet was something that Mr. Madison was requiring as one of his terms,” the Tangs “told [her] they did not want to disclose their assets or that information.” (Varela, Tr. 11/16/15 at 222:4-8). Nonetheless, Varela stated that the Tangs asked her to fax the January 15, 2010 demand letter to Dobbin Lo so they could discuss the asset sheet issue. (Id. at 214:24-215:4 & 214:12-18). Varela sent the fax to Dobbin Lo that same day (i.e., January 28, 2010). (Id. at 214:24-215:4 & 220:10-12).

Contrary to Varela’s version of the conversation, Mrs. Tang stated that during the January 28, 2010 call, Varela told her that Allstate was “going to settle the policy limited [sic] demand,” and that she (Mrs. Tang) believed the settlement would be paid “as of that day.” (Tang, Tr. 11/20/15 PM at 49:8-17). Mrs. Tang claimed never to have heard of Dobbin Lo, stating that she did not “even know who Dobbin Lo is to start with,” and denied that she ever asked Dobbin Lo to represent her husband, or that she told Varela that she was going to consult with Dobbin Lo about whether or not she and her husband should provide an asset sheet. (Id. at 41:19-25, 42:3 — 4 & 50:11-15). Mrs. Tang also categorically denied that she ever refused to give her asset information or that she did not wish to provide an asset sheet. (Id. at 48:16-19 & 51:10-13).

On January 29, 2010, Varela sent Madison a letter offering to pay policy limits. The terms of the Allstate letter required a release (without identifying in the letter itself that Anna Tang was an insured) before the check could be delivered, but did not require the Tangs to provide an asset sheet. (Varela, Tr. 11/17/15 AM at 16:12-24 & 17:20-18:2; Tr. Exh. 3). The letter also notified Madison that although Allstate had provided its “insured” with a copy of the January 15, 2010 demand letter, “[we] must allow our insured to make the decision regarding providing confidential information with respect to their assets.” (Vare-la, Tr. 11/17/15 at 18:3-4 & 21:4-7). Varela copied Anna and Richard Tang on the letter. (Tr. Exh. 3). Varela did not indicate that there were defects in Madrigal’s original demand, i.e., that Madrigal’s demand was defective for not specifically identifying Anna Tang.

Varela explained that she did not tell Madison in the January 29, 2010 letter that the Tangs had refused to disclose their assets because “just the day before— it was the 28th — [the Tangs] informed [her] that they were going to go ahead and consult their lawyers with regards to their decision on what to do with the asset list,” and had requested that she fax a copy of the January 15, 2010 demand letter to Dobbin Lo, which she did. (Varela, Tr. 11/17/15 AM at 21:15-24). Varela also testified that after sending the January 29, 2010 letter, she followed up with the Tangs “a couple of times” about asset disclosure issues, and that in the end, “both Mr. and Mrs. Tang said that their final decision was not to disclose their assets.” (Id. at 22:21-25).

Madison testified that Varela did not contact him before sending the January 29, 2010 letter to “explain what she was doing.” (Madison, Tr. 11/17/15 PM at 123:14—16). Furthermore, Madison claimed that Allstate never informed him that there were any potential problems with the January 15, 2010 demand letter:

Q Did you in any way prohibit Allstate from picking up the phone and, before they made any formal counteroffer, identifying issues or problems to resolving the case?

A No. In fact, we had conversations.

Q Did Allstate ever ask you for more time?

A No.

Q Did Allstate ever say we have to resolve this issue of course and scope, so we need more time?

A No.

Q Did Allstate say we have to resolve this issue of a release, so we need more time?

A No.

Q Did Allstate say we have to resolve this issue of an asset sheet. Do you need one from Anna Tang? Don’t you need one from Anna Tang? Anything, and ask for more time?

A None of this occurred, Mr. Hom-ampour.

(Madison, Tr. 11/18/15 PM at 86:4-20).

Varela spoke with the Tangs at least twice on February 1, 2010. (Varela, Tr. 11/17/15 AM at 25:4-12). That same day, the Tangs faxed their declarations stating that they had no additional insurance coverage and that Mr. Tang was not acting in the course and scope of business at the time of the accident. (Varela, Tr. 11/16/15 at 225:14-226:4 & 226:13-15; id. 11/17/16 AM at 24:16-24; see also Tr. Exh. 60). According to Varela, Mrs. Tang confirmed during these conversations that their final decision was not to provide an asset sheet. However, Mrs. Tang testified that Varela’s testimony was “false” and that she did not say anything about a “final decision” regarding an asset sheet. (Tang, Tr. 11/20/15 PM at 59:19-60:3). Nonetheless, it was undisputed that the Tangs never told Varela what assets they owned, either separately or jointly. (Varela, Tr. 11/16/15 at 223:17-224:4; Tang, Tr. 11/20/15 PM at 75:5-11).

According to Varela, she realized after she sent the January 29, 2010 offer that she had overlooked the fact that Madrigal was uninsured, which meant that general damages for pain and suffering were not available. (Varela, Tr. 11/17/15 AM at 30:12-31:1). On February 4, 2010, Varela spoke with Madison to clarify Madrigal’s uninsured status. (Id. at 31:25-32:5). It was the first time that Varela claims to have spoken with Madison since September 2, 2009, when Madison had told Varela that he would not provide her with the authorizations requested by Allstate but would send the relevant records. (Id. at 31:17-24). Varela told Madison that she had made the January 29, 2010 policy limits offer on the erroneous assumption that Madrigal was insured, but that she was willing to honor the offer if Madison was willing to accept it. (Id at 32:5-13). According to Varela, Madison stated that he was not “accepting or denying” the offer, and told her that she had all of Madrigal’s medical records. (Id. at 32:13-24). Varela told Madison that she would follow up with her managers. (Id. at 32:25-33:3).

After her phone call with Madison, Varela spoke to Cohn and Allstate “claims process expert” Richard Vellanoweth. (Id. at 33:4-7; see also Vellanoweth, Tr. 11/19/15 PM at 25). Varela told them that, contrary to her prior assumptions, Madrigal was uninsured, Madrigal’s counsel had only $34,000 in medical bills and he had also failed to submit any evidence of Madrigal’s future medical expenses or current medical condition. (Varela, Tr. 11/17/15 AM at 33:8-14). It was decided that Varela could “revise” the offer to pay only for the out-of-pocket medical expenses that Madrigal had documented. (Id. at 33:17-19).

On February 4, 2010, only days after the January 29, 2010 policy limits offer, Varela sent a new offer via fax to Madison. Varela dropped the amount of the offer to $34,398, with an invitation to Madison to provide further medical bills for Allstate’s consideration. (Id at 34:22-24 & 36:7-12). It is undisputed that Varela did not copy the Tangs or Dobbin Lo on the letter. (Tr. Exh. 57). Mrs. Tang testified that Allstate never told her that it was going to offer only $34,000. (Tang, Tr. 11/20/15 PM at 49:18-20). Mrs. Tang also stated that she never received a copy of Varela’s February 4, 2010 letter to Madison. (Id. at 49:23-25).

According to Mrs. Tang, at some point “later in February” she had a conversation with Varela about an asset sheet. (Id. at 50:24-51:2). Mrs. Tang claimed to have told Varela that she did not need an attorney to discuss the possible consequences of an asset disclosure because her “house was upside down,” and asked Varela if she had “to sign for it” (i.e„ an asset sheet). (Id. at 51:1-9 & 74:22-75:4). Mrs. Tang testified that Varela said “no, you don’t have to sign for it” and that the decision was up to Mrs. Tang if she wished to provide one. (Id. at 52:1-10). Throughout this conversation, Mrs. Tang believed that Allstate was going to pay the policy limits demand and settle the case. (Id. at 54:10-15). Mrs. Tang stated that on February 8, 2010, Varela sent the Tangs a letter confirming their conversation, and that the letter accurately reflected the contents of their conversation. (Id. at 90:4-91:4; see also Tr. Exh. 5). However, Mrs. Tang further stated that Varela never explained to her what an asset sheet was, never provided a sample of an asset sheet, and never explained what the consequences might be of failing to provide an asset sheet. (Tang, Tr. 11/20/15 PM at 53:4-7 & 53:21-23).

On February 8, 2010, Madison called to confirm that Allstate had withdrawn its $100,000 offer and was .standing by its revised $34,398 offer. (Varela, Tr. 11/17/15 AM at 37:15-18 & 38:9-15). According to Varela, when she confirmed, Madison seemed “very eager” and insisted that Varela re-send the fax, which she did. (Id. at 37:18-24). On February 11, 2010, Madison sent Varela a letter “memorializing” their February 8, 2010 conversation, which he erroneously identified as having taken place on February 10. (Id. at 39:1-41:23; Madison, Tr. 11/17/15 AM at 133:1-10; see also Tr. Exh. 61). According to Varela, the February 11, 2010 letter informed her for the first time that Madrigal was working as a courier at the time of the accident, and stated that Madrigal would be fifing suit against Mr. Tang. (Varela, Tr. 11/17/15 AM at 39:1-41:23; Madison, Tr. 11/17/15 AM at 133:19-22). According to Madison, Varela never called him to say she was confused by his February 11, 2010 letter. (Id. at 135:17-20).

Following the conversation with Madison, Varela spoke with Vellanoweth. (Vare-la,' Tr. 11/17/15 AM at 44:4-6). They agreed that in fight of the information about Madrigal’s employment (i.e., that he might have lost income as damages), it would be in the best interest of the Tangs to put the $100,000 offer “back on the table.” (Id. at 44:12-23). On February 19, 2010, Varela sent Madison a letter extending the $100,000 offer contingent upon the execution of the release that Varela had previously sent, which included releases for both Mr. and Mrs. Tang. (Id. at 45:11-15 & 46:12-17). Varela’s letter stated “[i]n response to your February 11, 2010 letter, please be advised that we do agree to pay our $100,000 policy limit in settlement of your client’s claims.” (Tr. Exh. 7) (emphasis added). Madison responded by a letter the same day, stating “In response to your fax today, there has been no ‘confusion.’ Allstate has clearly rejected the policy limit demand of $100,000 in writing on February 4, 2010 and verbally to me on February 10, 2010 [sic] as confirmed by my fax of February 11, 2010. We are moving forward against your insured as if the policy were open as our 30 day policy limit demand letter of January 14, 2010 [sic]. Please put your insured on notice.” (Vare-la, Tr. 11/17/15 AM at 47:1-20; see also Tr. Exh. 8). Mrs. Tang testified that she never received a copy of Madison’s February 19, 2010 letter. (Tang, Tr. 11/20/15 PM at 60:20-61:1). Varela testified that she made at least twelve additional policy limit settlement offers during the subsequent months, none of which was accepted. (Varela, Tr. 11/17/15 AM at 49:24-50:4 & 53:13-16 (marking Varela’s subsequent policy limit offer letters as Tr. Exhs. 274, 276, 277, 278, 279, 280, 282, 283, 284, 285, 287, 289, 290, 291, 293, 294, 295 & 296).

Madrigal filed suit against Mr. Tang on September 17, 2010. (Dkt. No. 297 at 28 (Stipulated Fact No. 5)). Mrs. Tang was added as a defendant after the suit began, but was dismissed before trial, and the case proceeded only against Mr. Tang. (Varela, Tr. 11/17/15 PM at 25:21-26:6; Madison, Tr. 11/17/15 PM at 102:18-22 & 106:5-8). On October 4, 2012, the jury rendered a verdict finding that Richard Tang was 100% at fault for the accident and awarded Madrigal damages that, with costs, exceeded $10 million. (Tang, Tr. 11/20/15 PM at 57:6-12). Following the judgment, Místate paid Madrigal the policy limit of $100,000 in partial satisfaction of the judgment. (Varela, Tr. 11/17/15 AM at 56:7-10). In addition, Madrigal and the Tangs entered into an Assignment of Rights agreement in which Madrigal agreed not to execute the ultimate judgment in exchange for all assignable rights that the Tangs possessed against Allstate. (Tang, Tr. 11/20/15 PM at 100:21-101:5).

III.

ELEMENTS OF A BAD FAITH FAILURE TO SETTLE CLAIM

The implied covenant requires an insurer to accept a reasonable third party offer to settle within policy limits against its insured. Graciano v. Mercury General Corp., 231 Cal.App.4th 414, 425, 179 Cal.Rptr.3d 717 (2014); see also DeWitt v. Monterey Ins. Co., 204 Cal.App.4th 233, 236, 138 Cal.Rptr.3d 705 (2012) (same). “[T]he breach of the insurer’s obligation occurs at the time when it indulges in the unwarranted rejection of a reasonable compromise offer within the policy limits.” Critz v. Farmers Ins. Group, 230 Cal.App.2d 788, 797, 41 Cal.Rptr. 401 (1964), disapproved on other grounds by Crisci v. Security Ins. Co. of New Haven, Conn., 66 Cal.2d 425, 429-30, 58 Cal.Rptr. 13, 426 P.2d 173 (1967)). “An insurer’s ‘good faith’ is essentially a matter of fact.” Allen v. Allstate Ins. Co., 656 F.2d 487, 489 (9th Cir. 1981) (as amended) (citing Kinder v. Western Pioneer Ins. Co., 231 Cal.App.2d 894, 900, 42 Cal.Rptr. 394 (1965)); see also Critz, 230 Cal.App.2d at 796, 41 Cal.Rptr. 401 (“Good or bad faith is a question of fact in each case.”).

To prevail on a claim for breach of the implied covenant of good faith and fair dealing, an insured must show: (1) the claimant brought a claim against the insured that was covered by the insurer’s policy; (2) the insurer failed to accept a reasonable settlement demand for an amount within policy limits; (3) the insurer’s failure to accept the settlement demand was unreasonable, which means without proper cause; and (4) a monetary judgment was entered against the insured for a sum greater than the policy limits. (CACI 2334, as revised 12/2015). The crux of a bad faith claim is an “unwarranted rejection of a reasonable settlement offer.” Crisci, 66 Cal.2d at 430, 58 Cal.Rptr. 13, 426 P.2d 173. Factors that a jury may consider in determining whether the offer to settle was reasonable include whether:

(1) [the offer’s] terms are clear enough to have created an enforceable contract resolving all claims had it been accepted by the insurer, (2) all of the third party claimants have joined in the demand, (3) it provides for a complete release of all insureds, and (4) the time provided for acceptance did not deprive the insurer of an adequate opportunity to investigate and evaluate its insured’s exposure.

Graciano, 231 Cal.App.4th at 425, 179 Cal.Rptr.3d 717 (internal citations omitted).

“‘[The] implied covenant obligates the insurance company ... to make reasonable efforts to settle a third party’s lawsuit against the insured.’” Id. (quoting PPG Industries, Inc. v. Transamerica Ins. Co., 20 Cal.4th 310, 312, 84 Cal.Rptr.2d 455, 975 P.2d 652 (1999) (emphasis added)). However, “mere errors by an insurer in discharging its obligations to its insured ‘does [sic] not necessarily make the insurer liable in tort for violating the covenant of good faith and fair dealing ... ’” Graciano, 231 Cal.App.4th at 425, 179 Cal.Rptr.3d 717. (citations omitted). Liability does not attach where the refusal to settle is the result of an “honest, innocent mistake.” Id. (quoting Tomaselli v. Transamerica Ins. Co., 25 Cal.App.4th 1269, 1280-81, 31 Cal.Rptr.2d 433 (1994)). Rather, “ ‘the insurer’s conduct must ... have been unreasonable.’” Graciano, 231 Cal.App.4th at 425, 179 Cal.Rptr.3d 717 (quoting Brandt v. Superior Court, 37 Cal.3d 813, 819, 210 Cal.Rptr. 211, 693 P.2d 796 (1985) (emphasis in original)). “Bad faith” implies unfair dealing rather than mistaken judgment or poor prognostication. Critz, 230 Cal.App.2d at 796, 41 Cal.Rptr. 401. However, the insured is not required to show “actual dishonesty, fraud, or concealment” on the insurer’s part. Crisci, 66 Cal.2d at 430, 58 Cal.Rptr. 13, 426 P.2d 173.

Throughout the settlement process, the claimant and the insurance company deal at arm’s length. Critz, 230 Cal.App.2d at 797, 41 Cal.Rptr. 401. While a reasonable offer must include enough time for the insurer to conduct an adequate investigation, it is well settled that “ ‘the third party is entitled to set a reasonable time limit within which the insurer must accept the settlement proposal ....’” Graciano, 231 Cal.App.4th at 434, 179 Cal.Rptr.3d 717 (quoting Martin v. Hartford Acc. & Indem. Co., 228 Cal.App.2d 178, 185, 39 Cal.Rptr. 342 (1964)). At the same time, if additional time is needed to investigate and assess an offer in good faith, the insurer should inform the claimant of the need for additional time, which may not be unreasonably withheld. McDaniel v. GEICO General Ins. Co., 55 F.Supp.3d 1244, 1262 (E.D. Cal. 2014), appeal docketed, No. 14-17203 (9th Cir. Nov. 5, 2014) (citing Critz, 230 Cal.App.2d at 798, 41 Cal.Rptr. 401). Depending on the circumstances, whether an insurer has “refused” an “offer,” including whether the insurer could have acted in a different manner in light of an offer’s deadline, may be a question for the jury. McDaniel, 55 F.Supp.3d at 1259 (citing Coe, 66 Cal. App.3d at 994, 136 Cal.Rptr. 331). However, “[wjhere the potential value of the claim is large in relation to the policy limit, [and] where the claimant’s case is comparatively strong and the potential defendant’s weak, rejection of an initial offer to settle at or near the policy limit may then and there constitute a breach of the implied covenant of good faith.” Critz, 230 Cal.App.2d at 798, 41 Cal.Rptr. 401.

The claimant “is under no duty to keep negotiations open after rejection of an early settlement offer.” Id. at 797, 41 Cal.Rptr. 401. Rather, the claimant “may take an initial rejection at face value and choose thereafter to submit his claim to the uncertainties of litigation.” Id. Accordingly, “ ‘[e]ven if the insurer attempts to resume negotiation by a belated offer of the policy limit, that action does not necessarily relieve it of the onus of an earlier bad faith rejection.’” Schlauch v. Hartford Accident & Indem. Co., 146 Cal.App.3d 926, 936, 194 Cal.Rptr. 658 (1983) (quoting Critz, 230 Cal.App.2d at 789, 41 Cal.Rptr. 401); see also McDaniel, 55 F.Supp.3d at 1262 (“If an offer’s time limit is reasonable, and the settlement offer itself is otherwise reasonable, but the insurer does not accept the offer within the time limit, then the insurer has breached the covenant of good faith and fair dealing and cannot escape liability by attempting to accept an expired or withdrawn offer.”).

IV.

ALLSTATE’S MOTION FOR JUDGMENT AS A MATTER OF LAW

A. The Parties’ Contentions

Allstate argues that it is entitled to judgment as a matter of law on Plaintiffs’ bad faith claims for two independent reasons. First, Allstate contends that Madrigal’s January 15, 2010 demand was unreasonable as a matter of law because it did not specifically offer to release Mrs. Tang. (JMOL Motion at 1, 6-18; JMOL Reply at 3-9). According to Allstate, the interpretation of a settlement demand is an issue of law for the court to decide, and this Court’s prior decision to submit the determination of the reasonableness of Madrigal’s demand to the jury was erroneous as a matter of law. (JMOL Motion at 6-7). Allstate further argues that the professed ignorance of Madrigal’s counsel of the existence of Mrs. Tang did not make his demand reasonable and is irrelevant as a matter of “basic contract law” because “an offeror’s undisclosed, subjective belief of the reasonableness of his offer” does not control. (Id. at 12). For the same reason, Allstate contends that counsel’s undisclosed willingness to include Mrs. Tang in the settlement is irrelevant. (Id. at 14-15).

In further support of its “failure to release” argument, Allstate asserts that Plaintiffs’ argument that Allstate had a duty to seek clarification of the terms of Madrigal’s offer is unsupported by law and ultimately irrelevant because after Allstate put Madrigal on notice of Mrs. Tang’s existence in its January 29, 2010 letter, Madrigal’s counsel neither agreed to modify his existing demand nor made a new demand including Mrs. Tang. (Id. at 16-17). Furthermore, Allstate notes that the Court rejected Plaintiffs’ request for an instruction on the duty to clarify on the grounds that the evidence did not show that Allstate misunderstood the terms of Madrigal’s offer. (JMOL Reply at 9 (citing Order Re Certain Jury Instructions, Dkt. No. 171)). Finally, Allstate contends that it was prohibited by law from disclosing that Mrs. Tang was an insured without her consent. (JMOL Reply at 5). Because Mrs. Tang was not included in the demand, Allstate insists that not only was the demand “unreasonable,” but also that its failure to accept the demand was reasonable. (JMOL Motion at 17-18; JMOL Reply at 5).

Second, Allstate contends that Allstate’s failure to accept Madrigal’s January 15, 2010 demand was reasonable because “the undisputed evidence at trial” showed that Allstate could not comply with the settlement demand’s condition requiring Mr. Tang to provide an “asset sheet of all assets or lack thereof.” (JMOL Motion at 1, 19-22). According to Allstate, Varela discussed the asset sheet condition with the Tangs; the Tangs were aware of the condition; Allstate appropriately recommended that the Tangs consult an attorney or a financial adviser, which the Tangs chose not to do; and the Tangs never provided an asset sheet or otherwise disclosed to Allstate what assets Mr. Tang owned. (Id. at 20). Allstate also rejects any alleged contentions that industry custom or practice required it to give Mr. Tang “legal advice” regarding the asset disclosure condition, or that it was derelict in failing to provide Mr. Tang with an asset disclosure form. (JMOL Reply at 10-12). As such, Allstate contends that it was incapable of accepting the demand for reasons beyond its control. (JMOL Motion at 21).

With respect to the failure of the demand to include an explicit release of Mrs. Tang, Plaintiffs argue preliminarily that the reasonableness of Madrigal’s demand was not a pure question of law because there was a “factual dispute as to the terms of Madrigal’s offer, the interpretation of those terms, the breach of the implied covenant of good faith and fair dealing, breach of that covenant, and what could/should have been done before rejection of the policy limits offer.” (JMOL Opp. at 9). Plaintiffs note that the California Supreme Court has recognized that ‘the reasonableness of a rejected settlement offer is often an issue of fact to be determined by the jury.’ ” (Id. at 10) (quoting Samson v. Transamerica Ins. Co., 30 Cal.3d 220, 243, 178 Cal.Rptr. 343, 636 P.2d 32 (1981)).

Furthermore, Plaintiffs emphasize that all of Allstate’s correspondence prior to Madrigal’s January 15, 2010 demand affirmatively identified only Richard Tang as the insured. (Id. at 10). According to Plaintiffs, exempting an insurer from liability because a settlement demand did not specifically refer to an insured whose existence the insurer did not disclose “would encourage insurance companies to hide the identity of potentially culpable insureds so that [they] could never have to pay a policy limits demand.” (Id.). Plaintiffs further contend that in the cases upon which Allstate relies, the claimant knew of the existence of all relevant insureds, but deliberately offered to release only selected insureds. (Id. at 11) (citing Graciano). Finally, Plaintiffs argue that to the extent that Allstate was concerned about whether the release of Mrs. Tang was encompassed by the settlement demand’s reference to an “appropriate release,” Allstate had a duty to clarify any ambiguities before rejecting the demand. (Id. at 13-14) (citing, inter alia, Betts v. Allstate Ins. Co., 154 Cal.App.3d 688, 708 n.7, 201 Cal.Rptr. 528 (1984), & Coe v. State Farm Mut. Auto. Ins. Co., 66 Cal.App.3d 981, 991-92, 136 Cal.Rptr. 331 (1997)).

With respect to the asset disclosure condition, Plaintiffs argue that Allstate is not entitled to judgment as a matter of law because the evidence at trial established that Mr. Tang, through his wife’s conversations with Varela, did not refuse to provide an asset sheet. (JMOL Opp. at 16-17). Plaintiffs assert that the evidence showed that there was no impediment to disclosure because the Tangs did not have any substantial assets. (Id. at 16). Plaintiffs also argue that Allstate’s claim that it categorically could not comply with the asset disclosure requirement is not credible. Plaintiffs note that despite knowing that Mr. Tang was illiterate and was not fluent in English, Allstate did not provide him with a form to disclose his assets, even though it provided him a form so he could confirm that he had no other insurance and was not in the course or scope of employment at the time of the accident. (Id.). As such, Plaintiffs argue that Allstate could have obtained an asset sheet and bears responsibility for the failure to do so. (Id.).

B. Standard For Judgment As A Matter Of Law

Rule 50(b) provides:

If the court does not grant a motion for judgment as a matter of law made under Rule 50(a), the court is considered to have submitted the action to the jury subject to the court’s later deciding the legal questions raised by the motion. No later than 28 days after the entry of judgment — or if the motion addresses a jury issue not decided by a verdict, no later than 28 days after the jury was discharged — the movant may file a renewed motion for judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59. In ruling on the renewed motion, the court may:

(1) allow judgment on the verdict, if the jury returned a verdict;

(2) order a new trial; or

(3) direct the entry of judgment as a matter of law.

Fed. R. Civ. P. 50(b).

“Under Rule 50, a party must make a Rule 50(a) motion for judgment as a matter of law before a case is submitted to the jury. If the judge denies or defers ruling on the motion, and if the jury then returns a verdict against the moving party, the party may renew its motion under Rule 50(b).” Equal Emp’t Opportunity Comm’n v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009). Accordingly, “[a] Rule 50(b) motion for judgment as a matter of law is not a freestanding motion. Rather, it is a renewed Rule 50(a) motion.” Id. As such, “[t]he standard for granting a motion under Rule 50(b) is the same as the standard for granting a motion under Rule 50(a).” In re Homestore.com, Inc. Sec. Litig., 2011 WL 1564025, at *1 (C.D. Cal. Apr. 22, 2011) (quoting In re Vivendi Univ., S.A. Sec. Litig., 765 F.Supp.2d 512, 535 (S.D.N.Y. 2011)); see also 9B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2537 (3d ed. 2008) (“The standard for granting a renewed motion for judgment as a matter of law under Rule 50(b) is precisely the same as the standard for granting the pre-sub-mission motion under Rule 50(a).”).

Under Rule 50(a), if “the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for” a party on a particular issue, “the court may ... resolve the issue against the party; and grant a motion for judgment as a matter of law .... ” Fed. R. Civ. P. 50(a)(1). A party seeking judgment as a matter of law has a “very high” standard to meet. Costa v. Desert Palace, Inc., 299 F.3d 838, 859 (9th Cir. 2002). A district court may grant judgment as a matter of law against a party only if “there is no legally sufficient basis for a reasonable jury to find for that party on that issue.” Jorgensen v. Cassiday, 320 F.3d 906, 917 (9th Cir. 2003) (citation and internal quotation marks omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (judgment as a matter of law may be granted only where “there can be but one reasonable conclusion as to the verdict”); Wallace v. City of San Diego, 479 F.3d 616, 624 (9th Cir. 2007) (judgment as a matter of law may not be granted unless the “evidence permits only one reasonable conclusion”); Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002) (the jury’s verdict must be upheld if there is “evidence adequate to support the jury’s conclusion, even if it is also possible to draw a contrary conclusion.”) (internal citations omitted).

In sum, the standard for judgment as a matter of law “mirrors” the standard for summary judgment, “such that the inquiry under each is the same.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) (internal quotation marks and citation omitted). Accordingly, in reviewing a Rule 50 motion, “[t]he court ... may not make credibility determinations or weigh the evidence.” Krechman v. County of Riverside, 723 F.3d 1104, 1110 (9th Cir. 2013) (internal quotation marks and citation omitted). Furthermore, the court must draw all reasonable inferences in favor of the nonmoving party. Reeves, 530 U.S. at 150, 120 S.Ct. 2097; see also Costa, 299 F.3d at 859 (the “high hurdle” a party must meet on a motion for judgment as a matter of law “recognizes that credibility, inferences and factfinding are the province of the jury, not [the] court”).

C. Allstate Is Not Entitled To Judgment As A Matter Of Law On Plaintiffs’ Bad Faith Claims

Judgment as a matter of law is appropriate only when a jury would not have a legally sufficient evidentiary basis to find for the prevailing party on that issue. Krechman, 723 F.3d at 1110. Allstate has failed to show that the jury lacked a legally sufficient evidentiary basis to support the verdict for Plaintiffs on their bad faith claims. Accordingly, Allstate’s Motion for Judgment as a Matter of Law is DENIED.

1. The Settlement Demand’s Failure To Expressly Release Anna Tang

Allstate argues that Madrigal’s settlement demand was unreasonable as a matter of law because it did not specifically offer to release Anna Tang. The gravamen of Allstate’s position is that the “strict compliance” language in the demand, which was specifically directed to Mr. Tang only, precluded any possible interpretation of the demand that would permit a release of Mrs. Tang, and thereby made it “impossible” for Allstate to accept the demand as presented. (See JMOL Motion at 7-9; see also Cannon, Tr. 11/20/15 PM at 136:5-21).

As a preliminary matter, the Court finds that the question of the reasonableness of Madrigal’s settlement demand was properly submitted to the jury because the meaning of the demand’s terms and conditions depended on the resolution of many disputed facts. “Whether an issue is a question of law or a question of fact is a substantive question, to which state law applies” in diversity cases. Encompass Ins. Co. v. Coast Nat. Ins. Co., 764 F.3d 981, 984 (9th Cir. 2014). Under California law, it is “solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence.” Cty. of Solano v. Handlery, 155 Cal.App.4th 566, 574, 66 Cal.Rptr.3d 201 (2007) (internal quotation marks and citation omitted; emphasis added); see also Barnett v. State Farm Gen. Ins. Co., 200 Cal.App.4th 536, 543, 132 Cal.Rptr.3d 742 (2011) (“The interpretation of an insurance policy is ... a question of law when ... the facts are undisputed.”) (emphasis added); Hervey v. Mercury Cas. Co., 185 Cal.App.4th 954, 962-63, 110 Cal.Rptr.3d 890 (2010) (“When the facts are undisputed, ... the interpretation of a contract ... is a question of law.”) (emphasis added). Because the facts here were strongly disputed, the Court properly required a jury to resolve the reasonableness of Madrigal’s settlement demand.

The California Supreme Court has specifically recognized that “the reasonableness of a rejected settlement offer is often an issue of fact to be determined by the jury.” Samson, 30 Cal.3d at 243, 178 Cal.Rptr. 343, 636 P.2d 32 (citing Critz, 230 Cal.App.2d at 796-97, 41 Cal.Rptr. 401); Brown v. Guarantee Ins. Co., 155 Cal.App.2d 679, 689, 319 P.2d 69 (1957) (same). Furthermore, where facts are disputed, “expert testimony is competent to establish whether a particular contract meets particular industry criteria and to establish the meaning of technical terms used in insurance industry practice.” Texas Commerce Bank v. Garamendi, 11 Cal.App.4th 460, 486, 14 Cal.Rptr.2d 854 (1992). Should expert testimony conflict, as it did here, judging the “credibility of expert witnesses is a matter for the jury.” Williams v. Volkswagenwerk Aktiengesellschaft, 180 Cal.App.3d 1244, 1264, 226 Cal.Rptr. 306 (1986). The jury was properly entrusted with the determination of the reasonableness of Madrigal’s offer.

Madrigal’s January 15, 2010 settlement demand was directed to “Defendant RICHARD TANG and his insurance carrier,” and $d not expressly include an offer to release Mrs. Tang. To meet the terms of the settlement, the demand required that Allstate affirmatively satisfy four conditions by delivering, within 30 days: (1) a photocopy of “all available liability insurance policies,” (2) an “appropriate release of all claims,” (3) a declaration stating that “the insured” has no other liability insurance policies and was not acting in the course and scope of his employment at the time of the accident, and an “asset sheet of all assets or lack thereof,” and (4) a settlement draft “equal to the amount of all available liability insurance policy limits.” (Tr. Exh. 251 at 3). The demand further provided that that performance “of some, but not all, of the above condition[s] precedent will be deemed” to be a counteroffer, and that any counteroffers will be rejected. (Id. at 3-4).

It is undisputed that, despite months of communications with the Tangs and the lawyer for Madrigal, Allstate’s adjuster, Teresa Varela, failed to disclose Mrs. Tang’s existence or Mrs. Tang’s status as an insured until Allstate’s policy limits offer of January 29, 2010, two weeks after Madrigal had tendered his demand. Even in Varela’s January 29, 2010 letter, Varela only mentions Richard Tang as “the insured” and he is identified as “the insured” in capital letters at the top of the page.

For the very first time, in “copied” section of the January 29, 2010 letter, Varela identifies Mrs. Tang. However, the letter itself does not advise Madison that Madrigal’s demand was defective for failing to include Anna Tang. (Varela, Tr. 11/17/15 AM at 16:12-24 & 17:20-18:2). It is also undisputed that from July 30, 2009, when Varela was assigned to Madrigal’s case, through January 15, 2010, when Allstate received Madison’s demand letter, Varela sent Madison at least seven letters, all of which identified only Richard Tang as Allstate’s insured, without any mention of Anna Tang as a second insured. (See Tr. Exhs. 214 (Aug. 4, 2009); 217 (Aug. 21, 2009); 234 (Sept. 24, 2009); 236 (Sept. 28, 2009); 148 (Nov. 2009); 149 (Dec. 11, 2009); 247 (Jan. 15, 2010)). Varela and Madison also spoke on the phone at least once, on September 2, 2009, before Madison sent the demand. (Varela, Tr. 11/16/15 at 139:21-140:4). It is similarly undisputed that Varela did not inform Madison about Mrs. Tang during this conversation, even though Varela testified that she had det