Justia Insurance Law Opinion Summaries

In this case, we deny relief on a petition for review of an award of benefits made by the Workers' Compensation Appeals Board (WCAB). In 2006, while working at Pearson Ford, Leopoldo Hernandez accidentally slammed the trunk of a car on his left hand and crushed one of his fingers. Although no bones in his hand were broken, he was unable to continue working at Pearson Ford because of continuing pain in his hand and shoulder. Hernandez applied for and received workers' compensation benefits. Pearson Ford's workers' compensation carrier retained the services of a private investigator, who conducted video surveillance of Hernandez following each of the three visits to his doctor in early 2010. Following each visit, Hernandez was observed taking off his sling, using his left hand to get in and out of his truck or a car, using his left hand to steer his truck or car, and on one occasion stopping at a grocery store and using his left hand to carry a bag of groceries. After the investigator witnessed other instances of Hernandez using his allegedly injured left hand, the carrier notified the district attorney, who in turn, commenced its own investigation. In specified circumstances, a worker who engages in criminal fraud in attempting to recover workers' compensation benefits and is convicted of doing so is thereafter barred from recovering benefits growing out of the fraud. However, in given circumstances where, independent of any fraud, a worker is able to establish his or her entitlement to benefits, benefits may be awarded. Here, the WCAB found evidence, independent of a worker's fraud, that he had suffered a compensable injury and was entitled to benefits. In doing so the WCAB relied on the determination of a medical expert. The Court of Appeal found no error in the WCAB's determination the workers' claim was not barred by the eventual misdemeanor conviction for workers' compensation fraud and in the WCAB's adoption of the expert's finding of a permanent disability. The Court denied the petitioner any relief on its petition asking that it vacate the WCAB's award. View "Pearson Ford v. Workers' Comp. Appeals Bd." on Justia Law

The State of California sued to recover from various insurers the costs of cleaning up the Stringfellow hazardous waste site, pending since 1993. The only remaining insurers were the Continental Insurance Company and Continental Casualty Company (collectively Continental), and the only remaining issues related to prejudgment interest. In 2015, Continental paid the State its full policy limits of $12 million. The trial court ruled that the State was entitled to mandatory prejudgment interest on that amount at seven percent, dating back to 1998. In the alternative, it also ruled that the State was entitled to discretionary prejudgment interest, at seven percent, dating back to 2002. Continental appealed. In the published portion of its opinion, the Court of Appeal addressed Continental’s contentions that the award of mandatory prejudgment interest was erroneous because: (1) the award was premised on the trial court’s erroneous ruling as to when Continental’s policies attached; and (2) the State was not entitled to mandatory prejudgment interest because the amount of its damages was uncertain. Continental further contended the award of discretionary prejudgment interest was erroneous because the trial court used an inapplicable interest rate. Finding no error affecting the award of mandatory prejudgment interest, the Court of Appeal affirmed. The Court did not review the award of discretionary prejudgment interest. View "California v. Continental Ins. Co." on Justia Law

This case arose out of an insurance dispute between a general contractor, its subcontractor, and the subcontractor’s general liability carrier over water damage to a construction site caused by heavy rains. The United States Department of Veterans Affairs (VA) hired Kadena Pacific, Inc. as the general contractor to oversee construction of a building in Menlo Park. Kadena hired Global Modular, Inc. to build, deliver, and install the 53 modular units that would comprise the building. Because Kadena had hired a different subcontractor to install the roofing, Global agreed to deliver the units covered only by a roof deck substrate. Kadena originally scheduled delivery in the summer months, but delivery was delayed until October and November. Despite Global’s efforts to protect the units by covering them with plastic tarps, the interiors suffered water damage from October through January. In February, Kadena and Global mutually agreed to terminate their contract and Kadena oversaw the remediation of the water-damaged interiors and completion of the project. Global sued Kadena for failure to pay and Kadena countersued, alleging Global had breached the contract in various ways, including by failing to repair the water-damaged interiors. Before trial, the parties entered a partial settlement. Global paid Kadena $321,975 to release all of Kadena’s claims arising from the VA project except for claims covered by Global’s insurance policy with North American Capacity Insurance Company (NAC), and Global received $153,025 to dismiss its failure-to-pay claims. At trial, Kadena presented evidence on the scope and cost of its water remediation and argued Global was contractually responsible for the damage. The jury agreed and awarded Kadena slightly over $1 million. In a separate suit brought by NAC, Kadena and NAC filed competing motions for summary judgment on the issue of whether NAC’s policy required it to indemnify Global for the jury’s damage award. The trial court ruled in favor of Kadena, finding the damage award covered under NAC’s policy as a matter of law. The court also ruled that the award must be offset by the $321,975 Global paid in settlement and that Global was liable to Kadena for $360,000 in attorney fees. The Court of Appeal concluded the trial court properly determined NAC’s policy covered the water damages and Kadena was entitled to fees. However, the Court reversed the offset order because Global’s settlement payment did not compensate Kadena for the costs of its water remediation; the parties agreed to reserve that issue for litigation. View "Global Modular v. Kadena Pacific, Inc." on Justia Law

Real parties in interest are insurers that issued excess comprehensive general liability (CGL) policies to Montrose, a manufacturer of the pesticide DDT. Montrose filed suit seeking a declaratory judgment that it may electively stack excess policies. The trial court rejected the elective stacking in favor of horizontal exhaustion, and denied Montrose's motion for summary adjudication, granting the excess insurers' cross-motion for summary adjudication. The Court of Appeal granted the petition for writ of mandate in part and denied in part, holding that the trial court correctly rejected Montrose's elective stacking approach and thus correctly denied Montrose's motion for summary adjudication and granted Continental Insurer's cross motion. The court also held that the record did not support a universal horizontal exhaustion approach. Therefore, the trial court erred in granting the insurers' motion on the issue of duty. View "Montrose Chemical Corp. v. Superior Court" on Justia Law

Defendant-appellant American Safety Indemnity Company (“ASIC”) challenged a judgment awarding over $1.4 million in compensatory and punitive damages to plaintiff-respondent Pulte Home Corporation (Pulte), who was the general contractor and developer of two residential projects in the San Marcos area. ASIC issued several sequential comprehensive general liability (CGL) insurance policies to three of Pulte's subcontractors, and during 2003 to 2006, it added endorsements to those policies that named Pulte as an additional insured. The projects were completed by 2006. In 2011 and 2013, two groups of residents of the developments sued Pulte for damages in separate construction defect lawsuits. After American Safety declined to provide Pulte with a defense, Pulte filed this action, asserting that the additional insured endorsements afforded it coverage and therefore required ASIC to provide it with defenses on the construction defect issues. After review, the Court of Appeal concluded the trial court was correct in ruling that the language of ASIC’s additional insured endorsements on the underlying insurance policies created ambiguities on the potential for coverage in the construction defect lawsuits, thus requiring it to provide Pulte with a defense to them. Additionally, the Court upheld the court's decision that Pulte was entitled to an award of punitive damages that was proportional, on a one-to-one basis, to the award of compensatory damages in tort. Although the Court affirmed the judgment as to its substantive rulings, the Court of Appeal was required to reverse in part as to the award of $471,313.52 attorney fees: the trial court abused its discretion in implementing an hourly attorney fee arrangement that Pulte did not arrive at until after trial, to replace the previous contingency fee agreement in a manner that Pulte intended would operate to increase its demand. Since the trial court calculated its $500,000 award of punitive damages by appropriately utilizing a one-to-one ratio to the compensatory, the trial court had to recalculate not only the fees award but also to adjust the amount of punitive damages accordingly. View "Pulte Home Corp. v. American Safety Indemnity Co." on Justia Law

Mercury filed suit against the City for inverse condemnation after a tree fell on the home of a couple insured by Mercury. The trial court entered judgment for Mercury, finding the tree that fell on the couple's home was a work of public improvement that supported an inverse condemnation claim. The Court of Appeal held, however, that the tree that fell on the couple's home did not constitute a work of public improvement for purposes of an inverse condemnation claim. In this case, there was no evidence that the City planted the tree as part of a construction project serving a public purpose, such as a roadway beautification project. Therefore, the court reversed the judgment and subsequent order awarding costs because the City could not be held inversely liable for the damage caused to the home. View "Mercury Casualty Co. v. Pasadena" on Justia Law

In November 2004, an excavator punctured a high-pressured petroleum line owned by Kinder. Gasoline, released into the pipe trench, was ignited by welding activities. The resulting explosion and fire killed five employees and seriously injured four others. Cal/OSHA issued Kinder two “Serious Willful” citations due to the failure of its employees to mark the location of the petroleum pipeline before the excavation to install a water line. Wrongful death and personal injury lawsuits were filed against several defendants, including Kinder and Comforce, which supplied Kinder with temporary employees. Kinder sought coverage under its insurance policies, and also under Comforce‘s primary and umbrella policies with ACE. ACE agreed to participate in Kinder‘s defense under Comforce‘s primary policy, but under a reservation of rights. ACE declined coverage under Comforce‘s umbrella policy, based on a policy exclusion for “professional services.” The lawsuits against Kinder settled before trial. When Kinder’s policy limit was exhausted, its insurer sued ACE, seeking full reimbursement of the payments it made under its excess policy, alleging that Kinder was an additional insured under Comforce‘s umbrella policy and that the ACE umbrella policy was a first-level excess policy. The court of appeal affirmed summary judgment in favor of ACE finding the policy excluded the claims in the underlying lawsuits. View "Energy Insurance Mutual Ltd. v. Ace American Insurance Co." on Justia Law

Plaintiff, a gas station owner, filed suit demanding that its insurer pay for damages when the fiberglass sheath of one of its underground gasoline storage tanks split after resting on a rock for 16 years. The Court of Appeal affirmed summary judgment to the insurer, holding that a substantial impairment of the tank's structural integrity did not constitute a "collapse" as a matter of law. View "Tustin Field Gas & Food v. Mid-Century Insurance Co." on Justia Law

Duarte's Oakland property was occupied by Bowers. Bowers’s daughter, Pleasants, moved into the property and remained after Bowers died. In February 2012, Duarte gave Pleasants a 45-day notice to quit, but she did not leave. On April 19, Duarte obtained landlord-tenant insurance coverage for the property with Pacific, including “Owners, Landlords & Tenants Liability Coverage,” effective April 19, 2012. In June 2012, Pleasants sued Duarte, alleging that habitability defects had allegedly existed throughout the tenancy. Duarte tendered defense of the suit to Pacific, which denied coverage. Duarte sought a declaration that the policy required Pacific to defend the tenant suit and sought damages for breach of contract. Pacific alleged material misrepresentations by Duarte on the application; he represented that there were no disputes concerning the property although he knew that the tenant had complained to the city and that there was no business conducted on the property although he knew the tenant was running a business. The court of appeal ruled in favor of Duarte. Pacific’s question about the existence of pending claims, property disputes, or lawsuits concerning the property was “utterly ambiguous.” Pacific did not show that Duarte knew a “business” was conducted on the property at the time he submitted his application. View "Duarte v. Pacific Specialty Insurance Co." on Justia Law

Plaintiff Carmen Zubillaga was injured in an automobile accident. The other driver was at fault. Her insurer, defendant Allstate Indemnity Company (Allstate), rejected her demand for $35,000, the full amount of her remaining underinsured motorist (UIM) coverage, although it made her a series of offers increasing to $15,584 instead. After an arbitrator awarded plaintiff $35,000, the amount of her demand, she sued Allstate for breach of the implied covenant of good faith and fair dealing. While an insurance company has no obligation under the implied covenant of good faith to pay every claim its insured makes, the insurer cannot deny the claim, without fully investigating the grounds for its denial. To protect its insured’s contractual interest in security and peace of mind, it is essential that an insurer fully inquire into possible bases that might support the insured’s claim before denying it. The Court of Appeal found the problem in this case was that the undisputed facts showed the insurer’s opinions were rendered in October and November 2012, but insurer continued to rely on them through the arbitration in September 2013, without ever consulting with its expert again or conducting any further investigation. Summary judgment in favor of the insurer was reversed and the matter remanded for further proceedings. View "Zubillaga v. Allstate Indemnity Company" on Justia Law