Dissenting. — I agree with the majority that the evidence supported the jury’s finding of estoppel and that, therefore, CalFarm Insurance Company (CalFarm) was obligated to pay the full amount of the arbitration award. However, I respectfully disagree with the majority’s analysis regarding the bad faith claim against CalFarm.
As Hand v. Farmers Ins. Exchange (1994) 23 Cal.App.4th 1847 [29 Cal.Rptr.2d 258] makes clear, “a judgment creditor of an insured enjoys third party beneficiary status and rights under the policy” and “may enforce implied contractual covenants, including the covenant of good faith.” (Id. at p. 1857.) That is precisely what judgment creditors Tadeusz and Betty Krusiewicz sought to do — to enforce the covenant of good faith and fair dealing as implied in the policy.
The policy requires CalFarm to pay on Laynescape, Inc.’s (Laynescape) behalf all sums which Laynescape becomes legally obligated to pay as damages because of covered property damage. Clearly, once the binding arbitration award was confirmed to judgment, Laynescape was legally obligated to pay the damages set forth therein. CalFarm apparently asserted that just because Laynescape had become legally obligated to pay the award that *293did not mean the entirety of the award represented covered property damage. However, the jury rejected this premise. The jury found that DeGrave was the agent of CalFarm, who had the authority to bind CalFarm, and did bind CalFarm to pay the entire amount of the arbitration award. Since CalFarm was then obligated to pay the full amount of the award pursuant to the policy, and the Krusiewiczes as judgment creditors had a right to require CalFarm to make good on the policy terms, CalFarm was obligated to make full payment, in good faith, to the Krusiewiczes.
The majority says this analysis is faulty because an award of punitive damages can only be made under the cause of action for bad faith breach of the policy and the agreement to pay the arbitration award is not a part of the policy — it arises only out of the application of the doctrine of promissory estoppel. However, we cannot forget that trial court judgments are presumed to be correct on appeal. (In re Marriage of Cohn (1998) 65 Cal.App.4th 923, 928 [76 Cal.Rptr.2d 866].) Here, it is not crystal clear whether the jury found that the policy had in effect been amended to require automatic payment in full of the arbitration award once confirmed to judgment and whether this was the basis of the jury’s award of punitive damages. However, we must indulge all intendments and presumptions to support the judgment. (In re Marriage of Zimmerman (1993) 16 Cal.App.4th 556, 561 [20 Cal.Rptr.2d 132].) “The right to a jury trial [is] embodied in article I, section 16 of the California Constitution .... [Citation.]” (Bahl v. Bank of America (2001) 89 Cal.App.4th 389, 395 [107 Cal.Rptr.2d 270].) As we have stated, the right to have a dispute settled by a jury of one’s peers is a hallowed right. (Ibid.) When it is a close call, we must support the jury award, and that includes the award of punitive damages in this case.
In any event, there are other reasons why I do not agree with the majority’s analysis regarding the availability of punitive damages under the bad faith breach of insurance policy cause of action. The test for bad faith liability is generally “ ‘ “whether the refusal to pay policy benefits [or the alleged delay in paying] was unreasonable.” ’ [Citations.] While the reasonableness of an insurer’s claims-handling conduct is ordinarily a question of fact, it becomes a question of law where the evidence is undisputed and only one reasonable inference can be drawn from the evidence. [Citation.]” (Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th 335, 346 [108 Cal.Rptr.2d 776].) This is not a case where only one reasonable inference can be drawn from the evidence. The question of bad faith in this instance is a question of fact that was properly submitted to the jury. The jury found that CalFarm had acted in bad faith, and there is substantial evidence to support this finding.
*294The majority contends that the issue of bad faith is not a question of fact in this instance, but a question of law, relying on Morris v. Paul Revere Life Ins. Co. (2003) 109 Cal.App.4th 966, 973-974 [135 Cal.Rptr.2d 718]. In that case, this court held that the question of insurance bad faith there at issue “turn[ed] on the reasonableness of the legal argument advanced by Revere, [and] presented] a pure question of law .... [Fn. omitted]” (Id. at p. 973.) In its first footnote, the court explained: “We recognize there are numerous cases reciting that [the] ‘reasonableness’ of a defendant’s conduct is a factual question for the jury. However, the reasonableness of the legal position taken by Paul Revere depends entirely on an analysis of legal precedent and statutory language. Those are matters of law, not facts which can effectively be ascertained by lay jurors.” (Id. at p. 973, fn. 1.)
In Morris v. Paul Revere Life Ins. Co., supra, 109 Cal.App.4th 966, an insurance company denied disability benefits on account of its interpretation of Insurance Code section 10350.2, pertaining to certain circumstances under which the insurer cannot deny disability benefits. At the time, there was a split of legal authority nationwide and a case on point pending before the California Supreme Court. Under the circumstances, it was clear that the case law interpreting the statutory provision at issue was unsettled. Clearly, the issue of bad faith turned “on an analysis of legal precedent and statutory language” which could not be performed by lay jurors. (109 Cal.App.4th at p. 973, fn. 1.) In that case, then, the issue of bad faith was a question of law.
Contrast the situation before us. Here, we do not have a question of statutory interpretation. No one has mentioned a case on point pending before the Supreme Court. For reasons I will show, I simply do not agree with the majority’s characterization of the applicable law as unsettled. Consequently, I also disagree with its conclusion that the state of the law excused CalFarm’s behavior and that bad faith in this context is a question of law.
There is no claim that the walls Laynescape built are defective. Put another way, there is no assertion that the work product of the insured is defective such that the work product exclusion under the policy would apply. To the contrary, CalFarm itself has acknowledged that the walls are sound. The only issue is the damage to the paint, which occurred because the walls were not sealed properly. As the majority acknowledges, “[t]o prevent paint damage from reoccurring, the back of the walls had to be resealed, which required removing the backfilled soil and landscaping, and replacing the soil and landscaping after the walls had been resealed.” (Maj. opn., ante, p. 278.) The resealing was not necessary to correct a defective wall; the wall was not defective. The resealing, and the work that had to be done to permit the *295resealing, were necessary to prevent paint damage from reoccurring perpetually. Under these circumstances, California law is clear. All the work that must be performed in order to correct the continuing damage to the paint constitutes covered damages. To the extent the majority disagrees, I disagree with the majority.
As the majority states, the trial court cited several cases in support of its conclusion that the cost of removing and replacing the backfilled dirt and landscaping was a covered risk. Those cases include Geddes & Smith, Inc. v. St. Paul Mercury Indem. Co. (1965) 63 Cal.2d 602 [47 Cal.Rptr. 564, 407 P.2d 868], Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co. (1996) 45 Cal.App.4th 1 [52 Cal.Rptr.2d 690], Baugh Const. Co. v. Mission Ins. Co. (9th Cir. 1988) 836 F.2d 1164, and Hauenstein v. St. Paul-Mercury Indem. Co. (1954) 242 Minn. 354 [65 N.W.2d 122], The majority says that these cases show that the damaged paint was a covered risk and the cost of the sealant was not, but that none of them answers the question whether the cost of removing the backfilled dirt and landscaping and replacing the same, in order to permit resealing, was a covered risk. I disagree.
We need only look at the California Supreme Court case to answer the question. In Geddes & Smith, Inc. v. St. Paul Mercury Indem. Co., supra, 63 Cal.2d 602, the insured supplied defective doors for a housing project. The contractor who installed the doors obtained a $100,000 judgment against the insured and then proceeded against the insured’s insurance company for the amount of the judgment. Under the insurance policy, damage to the insured’s goods was excluded from coverage, but because the policy insured against damage to other property, the expenses incurred in repairing the houses were covered. The court held that the insurance company was “liable for the expense of. installing the replacement doors in addition to the cost of removing those that were defective.” (Id. at p. 607.) It stated the general rule that “the damages should be measured by the diminution in the value of the building or the cost of removing the defective product and restoring the building to its former condition, whichever is less.” (Id. at pp. 604-605.) Here, the issue is not diminution in value, but the cost of removing completed work in order to permit the resealing of the walls, so that the paint may be restored to its former condition.
The Geddes court cited with approval the case of Bundy Tubing Company v. Royal Indemnity Company (6th Cir. 1962) 298 F.2d 151. (Geddes & Smith, Inc. v. St. Paul Mercury Indem. Co., supra, 63 Cal.2d at p. 607.) In Bundy, the insured manufactured steel tubing for use in radiant heating systems. After some of the tubing had been installed in cement floors, it *296became defective. While the cost of the tubing itself was not covered under the insurance policy, the cost of removing the defective tubing (including ripping up the old concrete) and installing new tubing within the cement floors (apparently including laying new concrete) was covered. (Bundy Tubing Company v. Royal Indemnity Company, supra, 298 F.2d at pp. 153-154.)
Applying these two cases to the one before us, it is obvious that the cost of the sealant itself is not covered, as the majority states. However, the cost of removing as much of the work as necessary in order to bare the walls and enable the application of the sealant is covered, so as to return the paint to its original condition and ensure that it does not forever bubble and peel.
As the majority sees it, CalFarm has cited three cases undermining this conclusion, i.e., Blanchard v. State Farm Fire & Casualty Co. (1991) 2 Cal.App.4th 345 [2 Cal.Rptr.2d 884], Golden Eagle Ins. Co. v. Travelers Companies (9th Cir. 1996) 103 F.3d 750, and New Hampshire Ins. Co. v. Vieira (9th Cir. 1991) 930 F.2d 696. However, I do not view these cases in the same light as does the majority.
In Blanchard v. State Farm Fire & Casualty Co., supra, 2 Cal.App.4th 345, the issue was whether the insurance company was liable for failure to appoint independent counsel. This is not an issue in the case before us. Blanchard is inapplicable, notwithstanding its dictum concerning property damage exclusion endorsements.
In Golden Eagle Ins. Co. v. Travelers Companies, supra, 103 F.3d 750, the insured had installed defective concrete floors. The court held that the defective workmanship was not covered under the insurance policy in question. The case is distinguishable from the one before us because in the case before us the product is not defective. Therefore, Golden Eagle also has no application in the context at hand.
Finally, in New Hampshire Ins. Co. v. Vieira, supra, 930 F.2d 696, the court addressed whether the diminution in value of housing due to the defective installation of drywall constituted property damage as defined under the insurance policy at issue. The court concluded that it did not. (Id. at pp. 697-698, 700-701.) However, in the case before us, whether “diminution of value . . . constitutes ‘physical injury to or destruction of tangible property)]’ ” is not at issue. (Id. at p. 698.) Simply put, New Hampshire, like the other two cases, is inapposite.
*297The majority states that because case law does not clearly resolve the coverage issue presented in this case, CalFarm could make an objectively reasonable determination “that its indemnity obligation was limited to removing the damaged paint and repainting the exterior of the walls.” (Maj. opn., ante, at p. 292.) Having concluded that CalFarm’s position was objectively reasonable, the majority further concludes that CalFarm could not be held liable for bad faith breach of the policy and that punitive damages were unavailable under that cause of action. As indicated above, I disagree with the assertion that California case law would permit an objectively reasonable determination that covered damages included only the cost of removing the damaged paint and repainting the walls. Therefore, even were I to agree that the issue of bad faith was a question of law in this instance, I would still disagree with the majority’s conclusion that CalFarm did not act in bad faith in failing to pay the entirety of the award as covered damages for which Laynescape had become liable.
A petition for a rehearing was denied July 19, 2005, and respondents’ petition for review by the Supreme Court was denied October 19, 2005. Kennard, J., did not participate therein.