PPG Industries, Inc. v. Transamerica Insurance Co.

PPG Industries, Inc. (PPG) (plaintiff) was the successor in interest to Solaglas California, Inc. (Solaglas). Solaglas made and distributed auto windshields. In 1982, George Miller was driving a truck when another vehicle hit the truck and caused the truck to jump the curb and hit a light pole. The Solaglas-manufactured windshield popped out, and Miller was ejected from the vehicle. Miller became a person with quadriplegia as a result of his injuries. Miller then sued Solaglas for both compensatory and punitive damages. Solaglas tendered the defense to its liability carrier, Transamerica Insurance Co. (Transamerica) (defendant). Transamerica agreed to defend Solaglas but told the business that the policies did not provide coverage for punitive damages. After settlement negotiations were unsuccessful (with Miller offering to settle within the limits of Solaglas’s policy), a trial resulted in a $6.1 million judgment against Solaglas, with $5.1 million in compensatory damages and $1 million in punitive damages. Transamerica paid the $1.5 million policy limits, and excess carrier Industrial Indemnity Company paid the remaining $3.6 million in compensatory damages. PPG then sued Transamerica for breach of the implied covenant of good faith and fair dealing in each Transamerica policy, premised on the notion that failing to settle unreasonably had exposed PPG (by this point acting in the stead of Solaglas) to the $1 million in punitive damages. At trial, Transamerica moved for summary judgment and won based on a rule prohibiting indemnity coverage for punitive damages. PPG then appealed.