Justia California Court of Appeals Opinion Summaries

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

Plaintiffs filed suit against Scottsdale for breach of its insurance contract and tortious breach of the implied covenant of good faith and fair dealing. At issue was whether plaintiffs can pursue a claim for preforeclosure damage to the property at issue deliberately caused by the purchaser under an insurance policy issued by Scottsdale containing a mortgage coverage provision. The court concluded that plaintiffs' full faith and credit bid at the foreclosure sale under the second deed of trust precluded them from making a claim on the insurance proceeds. Further, the trial court did not abuse its discretion in finding that a defense offer to compromise under Code of Civil Procedure section 998 was reasonable. Accordingly, the court affirmed the judgment of the trial court.View "Najah v. Scottsdale Ins. Co." on Justia Law

Mercury Casualty Company filed an action seeking declaratory relief regarding its obligation to students Hung Chu and his roommate Tu Pham. Mercury issued an automobile policy to Chu insuring his 1995 Honda Accord. Chu was driving, and Pham was a passenger, when Chu collided with a vehicle driven by Krystal Nguyen Hoang. Pham filed a personal injury action against Chu and Hoang and obtained a $333,300 judgment against Chu. Mercury sought a judicial determination confirming Mercury’s decision Chu’s policy excluded coverage for Pham’s judgment under a “resident exclusion.” Mercury also sought an order requiring Chu to reimburse Mercury the fees and costs it incurred in defending him against Pham’s lawsuit. Chu cross-complained against Mercury for breach of contract, bad faith, and general negligence. Mercury prevailed on the issue of whether the policy provided coverage for Pham’s judgment. The court determined Mercury had no duty to indemnify Chu with respect to the judgment. It granted Mercury’s motion for judgment on the pleadings (JOP) on Chu’s cross-complaint but determined Mercury could not seek reimbursement of its attorney fees and costs in defending Chu because such damages were not sought in the JOP. Both parties appealed. Chu and Pham appealed the determination that Mercury’s policy excluded coverage for Pham’s personal injury lawsuit against Chu. Mercury appealed the court’s ruling Chu was not required to reimburse Mercury for the defense fees and costs. After its review of the record, the Court of Appeal reversed, concluding the policy provision excluding Pham from coverage was an overbroad expansion of the statutorily permitted exclusion and was also contrary to public policy. Based on this ruling, the Court did not address the issue raised in Mercury’s cross-appeal regarding its entitlement to defense costs and fees.View "Mercury Casualty v. Chu" on Justia Law

Manuel Lainez had been independently driving commercial vehicles for eight and a half years. He owned his own truck and his own business, Lainez Trucking. He purchased a trucker’s liability policy from Scottsdale Indemnity Company with a $1 million liability limit. Lainez entered into a motor carrier agreement with Western Transportation Services. Western did not own tractors or trailers, but contracted with owner/operators or drivers. The agreement provided that Lainez was an independent contractor and was responsible for all costs and expenses incidental to the performance of transportation services. He agreed to maintain liability insurance and to name Western Transport as an additional insured. Western Transport, through the California Automobile Assigned Risk Plan (CAARP), purchased a commercial assigned risk policy from National Continental Insurance Company (NCI), which stated "'Named Insured’s Business: 1 Trucker for Hire-Excess'" and named Lainez as a driver. It did not list, describe, or rate any vehicle. It was rated on an excess cost of hire basis at a premium that was 4 to 10 percent of the cost of a policy rated on a primary cost of hire basis. The issue this case presented for the Court of Appeal's review was whether the two insurance companies were coprimary insurers or whether NCI was an excess insurer for an underlying fatality involving Lainez. The trial court granted NCI’s motion for a summary judgment, concluding that Scottsdale was the primary insurer pursuant to California Insurance Code section 11580.9, subdivisions (d) and (h). The Court of Appeal agreed that Scottsdale was the primary insurer and NCI was the excess insurer and affirmed the judgment. View "Scottsdale Indemnity v. National Continental Insurance Co." on Justia Law

Trustees of the Western Asbestos Settlement Trust, charged with paying bodily injury claims against companies that distributed asbestos-containing building materials, sought coverage under the companies’ insurance policies. In 2004, after the insurer was declared insolvent, the trust sought declaratory relief against the California Insurance Guarantee Association (CIGA). CIGA filed an answer denying any obligation to pay claims against the insolvent insurer. The proceedings remained dormant for six years. In 2011, the Western Trust dismissed its complaint without prejudice. The present declaratory relief action by the Western Trust against CIGA was filed in 2013. The trial court dismissed, citing the three-year statute of limitations. Western Trust argued that the limitations period does not begin to run until CIGA denies a specific claim for payment and that no such claim has yet been submitted. The appeals court reversed, holding that a cause of action against CIGA for breach of statutory duties does not accrue until all of the events necessary to create a covered claim have occurred, giving rise to the insured’s right to demand payment from CIGA. The complaint alleged no facts indicating that all those events occurred more than three years before the complaint was filed, if they have occurred. View "Snyder v. CA Ins. Guar. Ass'n" on Justia Law