Justia Insurance Law Opinion Summaries

The Court of Appeal annulled the decision of the appeals board and remanded with directions to find that the special employer had a valid endorsement in its workers' compensation insurance policy excluding coverage for special employees. The court held that while the appeals board was correct that the limiting endorsement had not been signed by the special employer, the written affirmation required by the regulation then in effect is not limited to a signature. Taking into account the circumstances of the entire transaction and its history, the court held that there was substantial compliance with the requirement of a written affirmation. Therefore, the court held that CIGNA was liable for the claim as a covered claim within the meaning of Insurance Code section 1063.1. View "Travelers Property Casualty Co. v. Workers' Compensation Appeals Board" on Justia Law

Appellants had been renting their San Francisco home to tenants for eight years when the front porch collapsed, causing injury to a tenant. When the tenants sued, appellants sought defense and indemnification from their insurance provider, respondent State Farm, which denied their claim, because appellants’ homeowners’ insurance policy excluded coverage for injuries arising out of an insured’s business pursuits or the rental of their home. Appellants sued State Farm for breach of contract and bad faith denial of their insurance claim. The court of appeal affirmed summary judgment in favor of State Farm. The court rejected an argument that coverage should be restored under an exception for activities that are “ordinarily incident to non-business pursuits.” Appellants sought “to fold into a homeowners policy coverage for the commercial risks attendant to renting their home as a for-profit venture. There is a separate policy tailored to those business risks, a rental dwelling policy, that appellants eschewed in favor of a cheaper policy. Appellants’ argument, if accepted, would upend the allocation of risks and costs associated with commercial or personal activities that insurers rely upon to keep homeowners’ premiums lower than that of business enterprises.” View "Terrell v. State Farm General Ins. Co." on Justia Law

In the context of a demurrer by defendant Certain Underwriters at Lloyd’s, London Subscribing To Policy Number 11EPL-20208, the trial court interpreted the term “wage and hour or overtime law(s)” to encompass all provisions of the Labor Code. Plaintiff owned and operated over 250 Pizza Hut and Wing Street restaurants. Defendant provided to plaintiff Southern California Pizza Company, LLC, an employment practices liability insurance policy, which covered certain losses arising from specified employment-related claims brought against plaintiff. The trial court sustained defendant’s demurrer, concluding all causes of action in the underlying employment lawsuit against plaintiff fell within the scope of the Policy exclusion. Using well-established insurance policy interpretation principles, the Court of Appeal found the wage and hour law language of the exclusion was more narrow in scope than stated by the trial court: it concerned laws regarding duration worked and/or remuneration received in exchange for work. Applying that interpretation, and taking into account the Policy’s general coverage, the Court concluded many of the disputed underlying lawsuit claims were potentially subject to coverage. Thus, the trial court erred in sustaining defendant’s demurrer. View "Southern Cal. Pizza Co., LLC v. Certain Underwriters, etc." on Justia Law

Plaintiffs rented cars from Midway and opted to purchase insurance coverage; Midway purchased the policies from KnightBrook and National Specialty; Midway was the insured but was authorized to extend coverage to its customers under the policies; and these policies and the rates charged Midway were approved by the California Department of Insurance. Plaintiffs brought a class action against Midway, asserting that they were economically harmed by unlawful and fraudulent business practices. Plaintiffs also named as defendants KnightBrook, National Specialty and their managing general agent.The Court of Appeal affirmed the trial court's judgment in favor of Midway and held that there was no fraudulent omission; the Rental Car Agents Act, not more general insurance provisions, applied to the disclosure at issue; and plaintiffs demonstrated no conflict between the Rental Car Agents Act and Proposition 10. The court also held that the insurer defendants did not charge an unapproved rate; Midway was not required to charge its customers the premium it paid to the insurer defendants; and the doctrine of judicial abstention was inappropriate here. View "Adhav v. Midway Rent A Car, Inc." on Justia Law

Plaintiff filed suit against AUIC, alleging that the release it procured from the insured was fraudulent conveyance under statutory and common law. In this case, the insured was involved in a car accident that injured plaintiff. AUIC paid the insured to release any bad faith claim he had against the company for AUIC's failure to accept an earlier settlement offer.The Court of Appeal held that California's Uniform Voidable Transactions Act (UVTA) filing deadlines did not pose a bar to plaintiff's UVTA cause of action; the operative complaint stated a valid UVTA claim against the insured; and plaintiff waived any challenge to the demurrer ruling on the common law cause of action. Accordingly, the court reversed the judgment of dismissal and remanded for further proceedings. View "Potter v. Alliance United Insurance Co." on Justia Law

Allstate filed suit under Insurance Code section 1871.7 on behalf of the People against defendant, her mother, and others for insurance fraud in violation of Penal Code section 550, which makes it unlawful to submit false or fraudulent claims to an insurance company. The jury found in favor of Allstate.The Court of Appeal affirmed, holding that the trial court did not abuse its discretion in denying defendant's ex parte application for a stay. The court also held that unlawful conduct under section 550 does not require a misstatement of fact in the insurance claim. In this case, defendant and her mother committed insurance fraud in violation of section 550 where they perpetrated a deceitful insurance scheme designed to acquire insurance proceeds illegally for personal gain. View "People ex rel. Allstate Insurance Co. v. Suh" on Justia Law

The Court of Appeal reversed the trial court's denial of plaintiff's motion for costs of proof after State Farm denied eight of his requests for admissions. The court held that the trial court incorrectly placed on plaintiff the burden to prove that none of the exceptions to an award of costs as set out in Code of Civil Procedure section 2033.420, subdivision (b) applied. Rather, State Farm should have carried the burden of proof and failed to do so. Therefore, the court remanded to the trial court to determine the reasonable costs of proof. View "Samsky v. State Farm Mutual Automobile Insurance Co." on Justia Law

A general contractor was covered as an additional insured on a commercial general liability (CGL) policy issued to its roofing subcontractor. The insurer refused to defend the general contractor after it was sued by homeowners for construction defects concerning roofing, prompting this lawsuit. After a bench trial, the trial court concluded the insurer owed no duty to defend. It believed the exclusion in the additional insured endorsement for damage to "property in the care, custody or control of the additional insured" precluded any duty to defend the general contractor in construction defect litigation. The general contractor disputed the insurer's interpretation of the policy and contended there was a duty to defend. After review, the Court of Appeal agreed and reversed judgment: “the facts indicate only shared control between the general contractor and its roofing subcontractor. Because the insurer did not prove coverage for the underlying construction defect litigation was impossible, it owed the general contractor a duty to defend the homeowner claim.” View "McMillin Homes Construction v. Natl. Fire & Marine Ins. Co." on Justia Law

Plaintiff Stanley Jozefowicz owned a mobilehome that was damaged in a fire. At the time, Jozefowicz’s mobilehome was insured under an Allstate homeowners policy. Jozefowicz submitted a claim to Allstate for the fire damage and retained Sunny Hills Restoration (Sunny Hills) to perform cleanup, repairs, and remediation of the mobile home. He told his insurer, defendant Allstate Insurance Company (Allstate), that Sunny Hills was to be named on all reimbursement checks and was permitted to deposit checks into its own account. The contractor then contacted Allstate for a check, Allstate sent it, and the contractor deposited it. At some point, Jozefowicz and the contractor were having a dispute over the scope and quality of the work. Jozefowicz sued Allstate under California Uniform Commercial Code section 3309, which provided a cause of action on a negotiable instrument where the payee has lost possession of the instrument. Allstate moved for summary judgment, contending section 3309 did not apply because Jozefowicz permitted Allstate to issue checks to the contractor. The trial court agreed. As did the Court of Appeals, which affirmed. View "Jozefowicz v. Allstate Ins. Co." on Justia Law

GEICO appealed a judgment awarding punitive damages to plaintiff for GEICO's bad faith breach of an insurance contract. The Court of Appeal affirmed the punitive damages award and held that there was sufficient evidence in the record to show that GEICO's managing agent ratified conduct warranting punitive damages. In this case, GEICO concluded that plaintiff's claim was worth far less than the policy limits by disregarding information provided by plaintiff showing that he had a permanent, painful injury, and instead selectively relied on portions of medical records that supported GEICO's position that plaintiff had fully recovered. Furthermore, the $1 million in punitive damages was within the constitutionally permitted range in view of the degree of reprehensibility of GEICO's conduct. View "Mazik v. GEICO General Insurance Co." on Justia Law