INSURANCE UPDATES

The following updates can be viewed or downloaded in PDF format.

The Second District reverses an order setting aside a default, holding that the insurer’s uncontested judgment provision required a showing of actual and substantial prejudice; 
January 22, 2008 [Issue 82]

Belz v. Clarendon America Insurance Company, 2007 Cal.App. Lexis 2104 (December 28, 2007) 

The First District holds that an insurer, in pursuing equitable contribution against other insurance carriers, was not subject to the arbitration provisions of the latter’s policies with the insured; 
January 22, 2008 [Issue 81]

Crowley Maritime Corporation v. Boston Old Colony Insurance Company, 2008 Cal. App. Lexis 36 (January 11, 2008)

The Second District holds that California’s efficient proximate cause doctrine does not invalidate a policy exclusion applicable to some, but not all, manifestations of water damage; 
January 22, 2008 [Issue 80]

De Bruyn v. Superior Court (Farmers Group, Inc.), 2008 Cal.App. Lexis 45 (January 14, 2008)

Lawsuit Against Insured Alleging Unsolicited Advertisements Sent Via Facsimile Did Not Allege “Advertising Injury” Or An “Accident” Within Meaning Of CGL Policy; 
February 21, 2007 [Issue 79]

ACS Systems, Inc. v. St. Paul Fire & Marine Equipment Company - California Court of Appeals, Second District – 07 C.D.O.S. 1049 (January 29, 2007)

“Occurrence” Meant Individual Claimants’ Exposure To Insured’s Asbestos Containing Products—Not The Manufacture Of Such Products; 
February 21, 2007 [Issue 78]

London Market Insurers v. Superior Court (Truck Insurance Exchange) - 07 C.D.O.S. 309, California Court of Appeals, Second District, January 11, 2007

No Coverage Under D&O Policy For Breach Of Contract Allegations Against Entertainment Firm And Its Officer; 
January 22, 2007 [Issue 77]

August Entertainment, Inc. v. Philadelphia Indemnity Insurance Company – 07 C.D.O.S. 105, California Court of Appeals, Second District, January 8, 2007

Insured Not Required To Allocate Damages Between Covered And Uncovered Damages In Order To Be Entitled To Coverage For Pollution Loss; 
January 11, 2007 [Issue 76]

State of California v. Underwriters At Lloyd's London – 06 C.D.O.S. 30, California Court of Appeals, Fourth District December 28, 2006. 

Subrogating Insurer Lacked Standing To Seek Recovery Of Insured’s Deductible; 
November 6, 2006 [Issue 75]

Pacific Gas & Electric Company v. Superior Court (American Guarantee & Liability Insurance Company) – 06 C.D.O.S. 9918, California Court of Appeals, Third District October 24, 2006. 

Insurance Code §533 Prohibited Recovery of Attorney’s Fees In A Default Case Involving Intentional Conduct;
November 6, 2006 [Issue 74]

Combs v. State Farm Fire & Casualty Company, et al. – 06 C.D.O.S. 9709, California Court of Appeals, First District, October 16, 2006.

Intervention By Liability Insurer Rejected After Denial Of Additional Insured’s Tender Of Defense;
November 6, 2006 [Issue 73]

Noya v. A.W. Coulter Trucking, et al – 06 C.D.O.S. 9388, California Court of Appeals, Second District, October 5, 2006.

Excess Liability Coverage Negated Obligation Of CIGA To Pay On Behalf Of Insolvent Primary Insurer;
August 16, 2006 [Issue 72]

Parkwoods Community Association v. California Insurance Guarantee Association - 06 C.D.O.S. 7238, California Court of Appeals, First District - (August 7, 2006).

Liability Insurer Was Not Relieved Of Duty To Defend Insured Developer Who Was Sued By Condominium Homeowners Association For Property Damage That Occurred Before The Association Existed;
August 16, 2006 [Issue 71]

The Standard Fire Insurance Company v. The Spectrum Community Association - 06 C.D.O.S. 6986, California Court of Appeals, Fourth District, July 31, 2006.

Standard CGL Pollution Exclusion Bars Coverage For Unauthorized Discharge Of Dirt And Rock Into State Waters;
August 16, 2006 [Issue 70]

Ortega Rock Quarry v. Golden Eagle Insurance Company- 06 C.D.O.S. 6864, California Court of Appeals, Fourth District, July 27, 2006.

Excess Liability Insurer Has No Claim Against Primary Insurer For Failure To Accept A Reasonable Settlement Offer Within The Primary Insurer’s Policy Limits Where Suit Is Ultimately Settled In Excess Of Those Limits; 
July 25, 2006 [Issue 69]

RLI Insurance Company v. CNA Casualty of California – 06 CDOS 6125, California Court of Appeal, Second District, July 7, 2006.

In An Action For Equitable Contribution, A Settling Insurer Need Only Prove A Potential For Coverage Under Non-Participating Insurer’s Policy To Establish Right To Contribution For Costs Of Defense And Amount Paid For Settlement; 
July 25, 2006 [Issue 68]

Safeco Insurance Company of America v. Superior Court (Century Surety Company) – 06 CDOS 5462, California Court of Appeal, Second District, June 22, 2006.

An Assignee Of An Insured’s Third-Party Bad Faith Claims May Recover Brandt Fees; 
July 25, 2006 [Issue 67]

Essex Ins. Co. v. Five Star Dye House, Inc. – 06 CDOS 5990, Supreme Court of California, July 6, 2006.

Cost-Shifting Provisions Of CCP §998 Apply To Uninsured Motorist Arbitrations And May Result In Recovery In Excess Of Policy Limits; 
July 25, 2006 [Issue 66]

Pilimai v. Farmers Insurance Exchange Company – 06 CDOS 6237, Supreme Court of California, July 13, 2006.

An Insurer May Not Be Held Liable For Bad Faith Breach Of Reformed Insurance Policy Where Unreformed Policy, As Written, Provides No Coverage ; 
July 7, 2006 [Issue 65]

R&B Auto Center, Inc. v. Farmers Group, Inc. - 06 C.D.O.S. 4950, California Court of Appeal, Fourth District, June 9, 2006.

The Federal Circuit Clarifies The Scope Of The Waiver Of Attorney Work Product That Results When A Party Asserts The "Advice Of Counsel" Defense; 
July 7, 2006 [Issue 64]

In re Echostar Communications Corporation - 448 F.3d 1294 United States Court of Appeals, Federal Court (May 1, 2006).

Liability Insurer Owes Duty To Defend Named-Insured Spouse, Even Where Spouse Is Not Named In Subject Lawsuit; 
June 12, 2006 [Issue 63]

Century Surety Company v. Polisso - 06 C.D.O.S. 4273, California Court of Appeal, Third District, May 22, 2006.

Liability Insurer Has No Obligation To Notify Additional Insured Of Policy Cancellation; 
June 12, 2006 [Issue 62]

The Gorham Company, Inc. v. First Financial Insurance Company - 06 C.D.O.S. 4559, California Court of Appeal, Second District, May 30, 2006.

Environmental “Response Costs” Do Not Constitute “Damages” In The Absence Of A Lawsuit Against The Insured; 
June 12, 2006 [Issue 61]

CDM Investors v. Travelers Casualty & Surety Company - 06 C.D.O.S. 4490 California Court of Appeal, Sixth District, May 26, 2006.

An Insured Cannot Split Breach of Contract and Bad Faith Actions Arising out of the Same Conduct by the Insurer; 
May 1, 2006 [Issue 60]

Lincoln Property Company v. The Travelers Indemnity Company – 06 C.D.O.S. 2315 California Court of Appeals, First District. March 20, 2006.

Coverage For “Wrongful Acts” Is Limited To Negligent, As Opposed To Deliberate Conduct; 
March 22, 2006 [Issue 59] 

Oak Park Calabasas Condominium Assn. v. State Farm Fire & Cas. Co. California Court of Appeal, Second District, February 21, 2006.

Claim Was Necessarily First “Brought” Within United States Where It Was First “Made” In California; 
March 22, 2006 [Issue 58] 

National Casualty Co. v. Sovereign General Insurances Services, Inc. 06 C.D.O.S. 2224, California Court of Appeal, Third District, March 14, 2006.

Employer/Insured Had No Claim Against Workers Compensation Carrier For Failure To Diligently Pursue Subrogation; 
March 20, 2006 [Issue 57] 

Tilbury Constructors Inc. v. State Compensation Insurance Fund06 C.D.O.S. 2026, California Court of Appeal, Third District, March 7, 2006.

Insured Cannot State Cause Of Action For Failure To Investigate In The Absence Of A Covered Claim; 
March 20, 2006 [Issue 56] 

Benavides v. State Farm General Insurance Company 06 C.D.O.S. 1593, California Court of Appeal, Second District, February 23, 2006.

Insurers Who Fail To Intervene In Lawsuits Filed Against Their Suspended Corporation Insureds Lack Standing To Defend; 
February 27, 2006 [Issue 55] 

Kaufman & Broad Communities, Inc. v. Performance Plastering - 06 C.D.O.S. 984 California Court of Appeals, Third District, January 31, 2006.

Confirmation Of A Bankruptcy Plan Fixing Liability Against An Insured Does Not Constitute An "Actual Trial" Of The Insured's Liability; 
February 24, 2006 [Issue 54] 

Fuller-Austin Insulation Company v. Highlands Insurance Company - 06 C.D.O.S. 538, California Court of Appeals, Second District, January 19, 2006.

Schwartz v. State Farm Fire & Casualty Company (California Court of Appeal, Second Appellate District) 01 C.D.O.S. 3747; 
June 22, 2001 [Issue 53] 

A California Court of Appeal has held that an excess uninsured motorists insurer faced with competing claims that could exceed policy limits owes an immediate duty to treat both insureds fairly, and could breach that obligation by paying full benefits to one insured with knowledge of the other insured' s competing claim to the same pool of funds. 

Blue Ridge Insurance Company v. Jacobsen California Supreme Court, 01 C.D.O.S. 3736; 
June 1, 2001 [Issue 52] 

The California Supreme Court has held that an insurer may be reimbursed for a reasonable settlement payment made over the insureds’ objection if at the time it accepted defense of the insureds, the insurer reserved its rights to seek reimbursement for any settlement contribution, notified the insured of its intent to accept a settlement offer, and offered to allow the insureds to assume costs of defense. 

Lomes v. Hartford Financial Services Group, Inc. (Second Appellate District February 27, 2001) 01 C.D.O.S. 2607; 
April 9, 2001 [Issue 51] 

A director of an insured corporation acts in his individual capacity, and not in his capacity as a director of the corporation, when he slanders the corporation. In a recent decision, California Court of Appeal clarified the standard for determining whether an individual was acting in an insured capacity. 

Centennial Insurance Company v. United States Fire Insurance Company (California Court of Appeal, First Appellate District) 01 C.D.O.S. 2596; April 2, 2001 [Issue 50] 

A California Court of Appeal has rejected a single, bright-line rule mandating equal apportionment of defense costs among multiple insurers in all cases. Instead, the appropriate allocation of defense costs is addressed to the sound discretion of the trial court, based upon equitable principles. Moreover, where one insurer provided coverage for only five and a half months as compared to 36 months by another insurer, an equal shares method of allocation would be “patently arbitrary and inequitable.”.