The respondent's auto repair shop was destroyed by fire.
Despite investigations by the fire department and police concluding the fire was accidental, the appellant insurer denied the claim, alleging arson based on the flawed investigations of its independent adjuster and expert.
At trial, the jury awarded the respondent $157,000 for fire damage and $200,000 in punitive damages for the insurer's bad faith.
The insurer appealed the punitive damages award.
The Court of Appeal dismissed the appeal, finding that the insurer breached its duty of good faith by doggedly pursuing an unfounded arson defence and ignoring evidence to the contrary.
The court held that the $200,000 award was proportionate and justified to deter such reprehensible conduct.
