Justia Insurance Law Opinion Summaries

An insurance company issued a workers’ compensation policy to a business, which included provisions requiring the insured to provide payroll records for audit to determine the final premium. After the expiration of the initial policy, the insurer repeatedly requested payroll records from the insured over a period of more than three months, including sending a certified letter and cancellation notice. The insured did not respond to these requests. Subsequently, the insurer cancelled the renewed policy for failure to permit a payroll audit. When an employee of the insured was injured, the insurer denied the workers’ compensation claim on the basis that the policy had been cancelled.The dispute was brought before the Workers’ Compensation Appeals Board (Board) after arbitration. The arbitrator found that the policy and the relevant provisions of the Insurance Code did not clearly define what constitutes a failure to permit an audit, and concluded the cancellation notice was ineffective. The Board adopted the arbitrator’s recommendation and denied the insurer’s petition for reconsideration.The California Court of Appeal, Third Appellate District, reviewed the Board’s decision after issuing a writ of review. The appellate court held that the insured’s repeated failure to respond to audit requests constituted a failure to permit the audit as required by the policy. The court found that the policy language, read in light of applicable statutes and principles of contract interpretation, provided a reasonable basis for cancellation under these circumstances. The court annulled the Board’s order and remanded for further proceedings, holding that the insurer’s cancellation of the policy was effective and in compliance with the policy and statutory requirements. The insurer was awarded its costs. View "Employers Preferred Ins. Co. v. Workers' Compensation Appeals Bd." on Justia Law

A driver insured by a reciprocal insurance exchange rear-ended another individual while stopped at a red light, causing injuries. The injured party, represented by counsel, made a prelitigation offer to settle her bodily injury claim against the insured driver for the “total available policy limit of $100,000, or less,” requiring acceptance in writing by a specified date and a copy of the policy declarations. The insurer responded within the deadline, accepting the offer and providing the requested documentation, confirming the policy’s bodily injury liability limit was $15,000 per person. The injured party refused to execute the settlement documents and instead pursued litigation against the insured driver.The insurer then filed a separate action against the injured party for breach of contract, declaratory relief, and specific performance, resulting in consolidation of the two cases in the Superior Court for the County of San Bernardino. The insurer moved for summary judgment or summary adjudication on its declaratory relief claim, arguing that a binding settlement agreement had been formed when it accepted the settlement offer according to its terms. The Superior Court denied this motion.The California Court of Appeal, Fourth Appellate District, Division Two, reviewed the case on a petition for writ of mandate. The appellate court held that the insurer’s timely acceptance of the offer, along with provision of the policy declarations, satisfied all conditions of the injured party’s settlement demand and created a binding settlement agreement. The court rejected arguments that the settlement was contingent on an asset declaration or that subsequent events nullified the agreement. The appellate court granted the petition, directing the trial court to vacate its denial and instead grant summary adjudication for the insurer on the declaratory relief claim. The insurer was also awarded its costs. View "Farmers Ins. Exchange v. Superior Court" on Justia Law

In early 2021, the owner of a rental property discovered water damage and mold in his garage, caused by a leaking water heater. He reported the loss to his property insurer, which investigated and initially denied coverage for mold and wear-and-tear damage but issued a partial payment for covered water damage. The insurer closed the claim, explicitly stating that the claim would not be reopened unless the company notified the insured in writing. Over the next two years, the property owner intermittently submitted additional estimates and information, but the insurer maintained its denial of further coverage and repeatedly referenced the policy’s one-year limitations period for filing suit.The property owner eventually filed suit in January 2023, asserting claims for breach of contract, bad faith, misrepresentation, fraud, and unfair competition, seeking damages for repair costs and loss of use. The Superior Court of Alameda County granted summary judgment for the insurer, finding the suit time-barred by the policy’s one-year limitations clause. The court rejected the plaintiff’s arguments that the denial was not unequivocal, that equitable tolling or estoppel applied, and that the limitations period was extended by the state of emergency related to COVID-19.On appeal, the Court of Appeal of the State of California, First Appellate District, Division Two, affirmed the trial court’s judgment. The appellate court held that the insurer’s written communications constituted unequivocal denials, starting the one-year limitations period when the partial payment was made and the claim was closed. The court found no basis for equitable tolling, estoppel, or a longer limitations period due to the COVID-19 state of emergency, and determined that all causes of action arose under the policy and were subject to the one-year period. The judgment in favor of the insurer was affirmed. View "Kumar v. Mid-Century Insurance Co." on Justia Law

A group of unmarried automobile insurance policyholders challenged a California Department of Insurance regulation that allows private auto insurers to use marital status as a factor in setting rates, so long as there is a substantial relationship between marital status and risk of loss. Their argument was that after legislative amendments in 2005 and 2008, the regulation conflicted with the Unruh Civil Rights Act—which was amended to prohibit businesses from discriminating based on marital status—and the Rosenthal Auto Insurance Nondiscrimination Law (RAIN law), which similarly restricted insurers from using protected characteristics for rate-setting.The Superior Court of Alameda County denied the petition for a writ of mandate, concluding that a limiting clause in the Unruh Civil Rights Act—stating it confers no right or privilege “conditioned or limited by law”—meant the preexisting marital status regulation, which specifically addressed insurance rating factors, was not overridden by the later amendments to the Act. The court found that the regulation could be harmonized with the Act and that Proposition 103, which authorized the regulation, anticipated that the Unruh Act might be amended but included the limiting language to avoid conflict.The Court of Appeal of the State of California, First Appellate District, Division Three, affirmed the lower court’s decision. It held that the regulation does not conflict with the Unruh Civil Rights Act or the RAIN law. The court found that the Act’s limiting provision requires deference to the specific insurance regulation on marital status, which has the force of law and was validly adopted under Proposition 103. It also determined that legislative history of the RAIN law showed no intent to strip the Insurance Commissioner of authority over rating factors. The judgment denying the writ of mandate was affirmed. View "Ison v. Lara" on Justia Law

Two individuals filed a lawsuit on behalf of themselves and a proposed class, alleging that a life insurance company’s “Trendsetter LB” term life insurance policy misrepresented its premium structure. The plaintiffs argued that policy language stating the annual premium was “excluding riders” and that additional accelerated death benefit riders were included at “no charge” was misleading. They claimed consumers were led to believe these extra benefits were free, when in fact the premium included undisclosed charges for these riders. The plaintiffs did not allege they were denied any promised benefits, but contended the policy failed to break down the cost of its bundled components, allegedly causing consumers to misunderstand their options and overpay compared to a more basic policy.The case began in Alameda County Superior Court. Plaintiffs sought class certification for claims under California’s Unfair Competition Law (UCL), focusing only on alleged misrepresentations in the policy’s standardized language. The trial court initially found ascertainability and numerosity met, but denied class certification for most claims, ruling that determining liability would require individualized inquiries into what information each customer received from agents or marketing materials. The court certified only a narrow claim regarding compliance with a statutory notice requirement, but later, at plaintiffs’ request, denied certification entirely when they clarified they did not intend to pursue that claim.The Court of Appeal of the State of California, First Appellate District, Division One, affirmed the trial court’s denial of class certification. The court held that the policy language was, at best, ambiguous and that resolving liability would depend not just on the form policy language but also on individualized evidence about communications with each purchaser. The court determined that common issues did not predominate and that the trial court did not abuse its discretion in denying certification. The judgment was affirmed. View "Guthrie v. Transamerica Life Ins. Co." on Justia Law

A defendant charged with felonies in San Mateo County was released from custody after a $100,000 bond was underwritten by Bankers Insurance Company. The defendant failed to appear at a pretrial conference in April 2024, at which point his counsel indicated to the trial court, off the record, that there was a reason for the absence and stated the defendant would be available soon. Based on this information, the court decided not to forfeit the bond and continued the hearing. At the next pretrial conference, the defendant again failed to appear, prompting the court to declare the bond forfeited.Bankers Insurance Company subsequently made several attempts to vacate the forfeiture and exonerate the bond, first arguing the defendant was unable to appear because he had been deported. These motions were denied by the San Mateo County Superior Court, including motions for reconsideration. Eventually, Bankers moved to set aside the judgment on the grounds that the court had lost jurisdiction by not forfeiting the bond after the first nonappearance. This argument was raised for the first time months after the initial forfeiture and was also denied, with Bankers failing to appear at the hearing on its motion.The California Court of Appeal, First Appellate District, Division Three reviewed the case. The court held that the trial court retained jurisdiction over the bond because counsel had conveyed, off the record, a reason for the defendant’s absence, and the trial court found this reason sufficient to continue the matter without forfeiting the bond under Penal Code section 1305.1. The appellate court found no abuse of discretion in this determination, affirmed the judgment, and concluded that the People are entitled to recover their costs on appeal. View "People v. Bankers Insurance Co." on Justia Law

The plaintiff, a homeowner, discovered that tiles on his kitchen floor were unusually warm and, upon further inspection, found water leaking from a hot water pipe beneath his kitchen. He quickly engaged a plumber, who identified and repaired the leak, and then began remediation efforts and reported a claim to his insurer. The homeowner’s insurance policy covered accidental direct physical loss but excluded losses caused by “continuous or repeated seepage or leakage” from plumbing systems. The insurer, after an investigation that included expert review, denied the claim on the grounds that the loss fell within this exclusion, asserting the leak was gradual in nature.In the Superior Court of Los Angeles County, the insurer sought and was granted summary judgment, arguing that the exclusion for continuous or repeated leakage applied, that there was no breach of contract or bad faith, and that punitive damages were unwarranted. The trial court found that the insurer had met its initial burden to show the exclusion applied and determined that the homeowner’s evidence disputing the expert report and the insurer’s handling of the claim was insufficient to establish that the insurer’s denial was unreasonable.On appeal, the California Court of Appeal, Second Appellate District, Division Seven, reversed the grant of summary judgment. The appellate court held that triable issues of material fact remained regarding whether the water loss was sudden or gradual, and thus whether the policy exclusion applied. The court also found that a jury could reasonably conclude the insurer failed to conduct a sufficient investigation and ignored available evidence, precluding summary adjudication on the claims for breach of the implied covenant of good faith and fair dealing and punitive damages. The case was remanded for further proceedings consistent with these findings. View "Nargizyan v. State Farm Gen. Insurance Co." on Justia Law

A pedestrian was fatally struck by a vehicle on a public roadway in Riverside, California. The decedent’s family sued the City of Riverside and others for wrongful death and dangerous condition of public property. In response, the City filed a cross-complaint against various contractors and their insurers, including Design Services, Inc. (DSI) and RLI Insurance Company (RLI). The City alleged that DSI had contracted to perform street lighting evaluations and upgrades, and that the contract required DSI to obtain insurance from RLI naming the City as an additional insured. The City contended RLI refused to defend and indemnify the City against the wrongful death lawsuit, despite its obligations under the policy.The Superior Court of Riverside County sustained RLI’s demurrer without leave to amend, finding that under Royal Globe Ins. Co. v. Superior Court, a plaintiff may not sue both the insurer and the insured in the same action. The court held that joining RLI in the same lawsuit as its insured, DSI, would risk prejudice by alerting the jury to the existence of insurance, in violation of California Evidence Code section 1155. The court dismissed the City’s cross-complaint as to RLI but allowed the City to pursue its claims in a separate action.The California Court of Appeal, Fourth Appellate District, Division One, reversed the judgment of dismissal. The appellate court held that the prohibition on joining an insurer and its insured in the same action does not apply when the City, as an additional insured, asserts its own contractual rights against RLI. The court found the City’s contractual privity with RLI distinguishable from the situation in Royal Globe and noted that any risk of prejudice could be addressed through severance or bifurcation. The case was remanded for further proceedings on the City’s claims against RLI. View "City of Riverside v. RLI Insurance Co." on Justia Law

Daevieon Towns purchased a new Hyundai Elantra in 2016, and over the next 19 months, the car required multiple repairs for alleged electrical and engine defects. In March 2018, either Towns or his wife, Lashona Johnson, requested that Hyundai buy back the defective vehicle. Before Hyundai acted, the car was involved in a collision, declared a total loss, and Johnson’s insurance paid her $14,710.91.Towns initially sued Hyundai Motor America in the Superior Court of Los Angeles County for breach of express warranty under the Song-Beverly Consumer Warranty Act. As trial approached, Towns amended his complaint to add Johnson as a plaintiff, arguing she was the primary driver and responsible for the vehicle. The trial court allowed the amendment, finding Johnson was not a buyer but permitted her to proceed based on its interpretation of Patel v. Mercedes-Benz USA, LLC. At trial, the jury found for Towns and Johnson, awarding damages and civil penalties. However, the court reduced the damages by the insurance payout and adjusted the prejudgment interest accordingly. Both parties challenged the judgment and costs in post-trial motions.The California Court of Appeal, Second Appellate District, Division Four, reviewed the case. It held that only a buyer has standing under the Act, so Johnson could not be a plaintiff. The court also held that third-party insurance payments do not reduce statutory damages under the Act, following the Supreme Court’s reasoning in Niedermeier v. FCA US LLC. Furthermore, prejudgment interest is available under Civil Code section 3288 because Hyundai’s statutory obligations do not arise from contract. The court affirmed in part, reversed in part, and remanded for the trial court to enter a modified judgment and reconsider costs. View "Towns v. Hyundai Motor America" on Justia Law

A longtime deputy sheriff was convicted by a federal jury of mail and wire fraud after she submitted an insurance claim for items stolen during a burglary at her home, some of which she falsely claimed as her own but actually belonged to her employer, the sheriff’s office. She also used her employer’s fax machine and cover sheet in communicating with the insurance company and misrepresented her supervisor’s identity. The criminal conduct arose after a romantic relationship with a former inmate ended badly, leading to the burglary, but the fraud conviction was based on her false insurance claim, not on the relationship or the burglary itself.Following her conviction, the California Public Employees’ Retirement System (CalPERS) determined that her crimes constituted conduct “arising out of or in the performance of her official duties” under Government Code section 7522.72, part of the Public Employees Pension Reform Act, and partially forfeited her pension. The administrative law judge and the San Francisco Superior Court both upheld CalPERS’s decision, reasoning that her actions were sufficiently connected to her employment, particularly in her misuse of employer property and resources and in the context of her relationship with the former inmate.The Court of Appeal of the State of California, First Appellate District, Division One, reversed the trial court’s judgment. The appellate court held that the statute requires a specific causal nexus between the criminal conduct and the employee’s official duties, not merely any job-related connection. The court found that the deputy’s fraudulent insurance claim, although it referenced employer property and resources, did not arise out of or in the performance of her official duties as required by the statute. Accordingly, the pension forfeiture determination was set aside. View "Myres v. Bd. of Admin. for CalPERS" on Justia Law