“Every contract contains an implied covenant of good faith and fair dealing that neither party will do anything to interfere with the other party’s right to receive the benefits of the agreement. The precise nature and extent of the duty depends on the nature and purpose of the underlying contract and the parties’ legitimate expectations arising from the contract.”
“An insured’s claim against an insurance company for breach of its implied covenant of good faith and fair dealing may be brought on either a tort or contract theory. The applicable limitations period depends on which form of action plaintiff chooses. The limitations period for a bad faith action brought on a tort theory and seeking tort damages is two years. The limitations period for a bad faith action brought on a contract theory and seeking contract damages (generally because the two-year statute of limitations has expired) is four years.”
“Plaintiff may recover the amount of contract (policy) benefits the insurer wrongfully withheld. This item of damages is limited to amounts recoverable under the contract.”
[California Practice Guide: Civil Procedure Before Trail Claims & Defenses [citations to primary sources omitted]]
