Justia California Court of Appeals Opinion Summaries

Daer filed a personal injury suit, alleging material and design defects in a tire manufactured by Yokohama and sold by Costco. Costco settled for $5.5 million and Yokohama for $1.1 million. National, as excess insurer of Costco, sued Yokohama and its insurers (Tokio) to recover the costs of defending plus money paid on behalf of Costco to settle that lawsuit. National, as subrogee of Costco, sought recovery based on an express indemnity provision in the supplier agreement between Costco and Yokohama, and alleged breach of Yokohama’s contractual insurance obligations. It sued Tokio for indemnity and contribution. The court ruled in limine that National’s proof of a tire defect would be limited to the opinions of Daer’s expert in the underlying case. After National made its opening statement in a proceeding to determine whether a tire defect was a cause of Daer’s accident, the court dismissed the express indemnity claim. Having determined that the tire was not defective, the court granted summary adjudication as to claims based on refusal to defend and Yokohama’s breach of insurance obligations. The court awarded Yokohama $863,706.75 in fees as the prevailing party on the indemnity claim. The court of appeal reversed in part, holding that the court erred in excluding relevant, material expert evidence on a matter properly subject to expert opinion. View "Nat'l Union Fire Ins. Co. v. Tokio Marine & Nichido Fire Ins. Co." on Justia Law

A California resident owned an apartment building in Arkansas that was insured by a Michigan insurance company under a policy the owner obtained through an insurance agent in Arkansas. That policy included commercial property coverage for the Arkansas apartment building and commercial general liability coverage for the owner's property ownership business, which he operated from California. Other than writing this policy, the insurer did no business in California. Both the commercial property coverage and the commercial general liability coverage in the policy covered some risks, losses, or damages that could have arisen in California, but the dispute at issue here arose out of two fires that damaged the building in Arkansas. Initially, the insurer agreed to treat the two fires as separate losses but later reversed its position and took the position that both incidents were subject to only a single policy limit payment. As a result, the owner sued the insurer in a California state court for breach of contract and bad faith. The issue presented for the Court of Appeal's review was, under these circumstances, did the insurer have sufficient minimum contacts with California to allow the state court to exercise personal jurisdiction over the company in this action? The Court concluded the answer was "no." Accordingly, the Court affirmed the trial court's order granting the insurance company's motion to quash the service of summons. View "Greenwell v. Auto-Owners Ins. Co." on Justia Law

McMillin was general contractor and B&B Framing was a subcontractor in construction contracts for Temecula residential real estate development projects. ASIC issued B&B's commercial general liability insurance. Homeowners sued, alleging construction defects in their residences (Baker litigation). McMillin tendered the defense to ASIC, contending it was an additional insured. ASIC denied the tender. Later, McMillin-related entities (not McMillin) sued ASIC and other insurers, alleging that each was an insurer to subcontractors on the projects, that each was an additional insured under each policy, that each insurer owed each plaintiff a duty to defend the litigation, and that, by denying defense of the litigation each breached a contract of insurance and its implied covenant of good faith and fair dealing. Pretrial rulings resulted in agreement that, although ASIC had breached its duty to defend, the settlement proceeds ($690,154) would be applied as an offset to McMillin's Baker fees ($309,957), so that McMillin could not prove any contract damages, and without contract damages, McMillin could not maintain a cause of action for breach of the implied covenant of good faith and fair dealing. The parties stipulated to judgment in favor of ASIC. The court of appeal dismissed the appeal as to all parties other than McMillin and ASIC and reversed View "McMillin Co., LLC v. Am.. Safety Indem. Co." on Justia Law

Cross-defendant Michael Tope appealed the grant of summary judgment in favor of First American Title Insurance Company in a cross-action to recover money under a title insurance policy after default on a real estate loan to purchase and rehabilitate a home. The property was subject to a notice of abatement action issued by San Joaquin County requiring repair of defects in the rehabilitation of the residence. The subject of the suit was that First American allegedly breached the title insurance policy by failing to provide coverage for the notice of abatement action. Plaintiffs, investors in a real estate loan, sued defendants and cross-complainants Stockton Mortgage Real Estate Loan Servicing Corporation (SMRELS), Stockton Mortgage, Inc., Stockton Management & Development, Inc., and Ross Cardinalli Jr. (collectively cross-complainants) for damages arising from cross-complainants' alleged failure to follow up on the status of the release of a notice of abatement action. Cross-complainants, in turn, initiated this suit against First American, Alliance Title Company, and two of Alliance's employees for damages, indemnity, and declaratory relief arising out of First American's refusal to provide coverage under the title insurance policy, and Alliance's alleged representation, on behalf of First American, that it would obtain a release of the notice of abatement action prior to the close of escrow. First American moved for summary judgment mainly on grounds that the notice of abatement action was not covered under the title insurance policy, cross-complainants were not insured under the title insurance policy, and the preliminary title report relied on by cross-complainants was not a contract. The trial court granted First American's motion and entered summary judgment in its favor. Cross-complainants appealed. Finding no reversible error, the Court of Appeal affirmed the judgment. View "Stockton Mortgage, Inc. v. Tope" on Justia Law

Fireman’s Insurance issued a policy covering loss from property damage, including rent, on a building owned by Stephens XII. Three days after the policy became effective, Stephens XII discovered the property had been seriously damaged by burglars who stripped it of electrical and other conductive materials. Fireman’s delayed resolving the claim. Stephens XII filed suit. The policy provided that Stephens XII could recover either the full cost of repair, so long the repairs were actually made, or the depreciated value of the damaged property. As of the trial, Stephens XII had not repaired the damage. The jury awarded Stephens XII the full cost of repairing it plus lost business income (a theory not authorized by the policy), but declined to award lost rent, authorized by the policy. The trial court granted Fireman’s judgment notwithstanding the verdict, finding neither of the awards permitted under the policy. The appeals court reversed. Although Stephens XII is not entitled to an immediate award for the costs of repairing the damage, it is entitled to a conditional judgment awarding these costs if the repairs are actually made. The award for lost business income is properly construed as an award for compensable lost rent.View "Stephens & Stephens XII v. Fireman's Fund Ins." on Justia Law

Christina Elliott appealed the dismissal of her lawsuit against Geico Indemnity Company (Geico). Elliott’s husband was killed when his motorcycle was struck by a truck driven by a drunk driver, Lesa Shaffer, who was returning to her job at Peterson’s Corner, a restaurant and bar in Nevada City. The trial court concluded Geico was not required to pay underinsured motorist benefits under a motorcycle insurance policy issued to Elliott and her husband because Elliott recovered more than the $100,000 underinsured motorist coverage limits in settlement of a wrongful death action brought against Shaffer and the owners of the restaurant (Shaffer’s insurer paid $15,000 and the owners’ general liability insurer paid $250,000). The Court of Appeal agreed with the trial court: the Geico policy at issue here unambiguously allowed Geico to deduct from the underinsured motorist coverage limits “the amount paid to the insured by or for any person or organization that may be held legally liable for the injury.” Because $265,000 was paid to Elliott in settlement of her claims that both Shaffer and the owners may be held legally liable for the injury, Geico properly deducted this amount from the underinsured motorist coverage limits.View "Elliott v. Geico" on Justia Law

Plaintiff Sonia Graciano was injured after she was hit by a car driven by Saul Ayala. Ayala was insured by defendant California Automobile Insurance Company (CAIC). Three weeks after Graciano's attorney first contacted CAIC regarding the accident, Graciano misidentified both the driver and the applicable insurance policy. CAIC investigated the accident, identified the applicable policy and the correct driver, and offered to settle Graciano's claim with a "full policy limits offer." Graciano did not accept CAIC's full policy limits offer and, in this suit, alleged CAIC and its parent and affiliated companies acted in bad faith, based on an alleged "wrongful failure to settle." Graciano argued CAIC could have and should have earlier discovered the facts, and should have made the full policy limits offer more quickly. The jury found in favor of Graciano and this appeal followed. CAIC argued that, as a matter of law, there was no evidence to support the verdict that CAIC acted in bad faith by unreasonably failing to settle Graciano's claim against Saul. The Court of Appeal agreed, and reversed the judgment.View "Graciano v. Mercury General Corp." on Justia Law

RNT appealed the trial court's grant of summary judgment on its claim for breach of insurance contract against RNT, arguing that the trial court erroneously determined that the claim failed in light of the terms of RNT's policy. The court concluded that summary judgment on RNT's claim for breach of insurance contract was properly granted on the basis of the undisputed facts; condition 10(b) of the policy, which terminates an insurer's liability when the loan is paid off or the related mortgage is released; and exclusion 3(a) of the policy, which precludes coverage for defects, liens, encumbrances, adverse claims or other matters created, suffered, assumed, or agreed to by RNT. Accordingly, the court affirmed the judgment.View "RNT Holdings v. United Gen. Title Ins." on Justia Law

Plaintiff was employed as a massage therapist with HMWC when he was accused in an underlying action for sexually assaulting a client during a massage. In this case, plaintiff filed suit against Continental, HMWC's comprehensive general liability (CGL) insurer, alleging that Continental had a duty to defend and indemnify him in the underlying action. The court affirmed the trial court's conclusion that defendant was not entitled to a defense under the Continental policy where the intentional sexual assault alleged in the underlying action cannot not properly be characterized as within the scope of plaintiff's employment or having occurred while performing duties related to the conduct of HMWC's business. The trial court did not err in sustaining the demurrer without leave to amend.View "Baek v. Continental Casualty Co." on Justia Law

Ellena filed a complaint against Standard Insurance Company and the Department of Insurance, alleging that Standard failed to provide benefits under a group insurance policy issued through her employer (Sonoma County) after she stopped working due to her lupus disease. She asserted that the Department approved the policy without complying with its mandatory duty to review the policy form in accordance with established criteria. The trial court dismissed, finding that she did not sufficiently allege in her pleading that the Department violated a specific mandatory duty. The appeals court reversed, holding that Ellena stated a viable mandamus claim because, as alleged, the commissioner violated the mandatory duty under Insurance Code sections 12921.5(a), 12926, and 10291.5(b) to review a new group disability insurance policy form for compliance with the law prior to approving the policy for distribution in the state. View "Ellena v. Dept. of Ins." on Justia Law