Justia Insurance Law Opinion Summaries

In this insurance coverage action, Defendant Stillwater Insurance Company (Stillwater) contends that an animal liability exclusion in the insured’s homeowner’s insurance policy (the policy) precludes any duty to defend because the third parties sued the insured for injuries they and their dogs sustained when their dogs were bitten by two pit bulls on a public street. The insurer determined that the exclusion applied because the underlying complaint alleged that the pit bulls lived at the insured’s home and, therefore, it had no obligation to indemnify an excluded claim. The insured denied any ownership or control of the pit bulls, which were owned by her boyfriend, who did not live at her home. The insurer did not conduct any further investigation. Plaintiff argued that the trial court erred in granting summary judgment in favor of Stillwater on her claims based on Stillwater’s refusal to defend Plaintiff in the third-party lawsuit.   The Second Circuit reversed. The court concluded that the trial court erred in granting summary judgment to Stillwater because there is evidence that Stillwater breached its duty to defend. The court also reversed the trial court’s grant of summary judgment in favor of Stillwater on Plaintiff’s claim for breach of the duty of good faith and fair dealing. The court explained that even if the insured was correct and the pit bulls were not under her ownership, the third party still might have raised a claim potentially covered by the policy. An insurer can be excused from the duty to defend only if the third-party complaint can by no conceivable theory raise an issue within the policy’s coverage. View "Dua v. Stillwater Insurance Company" on Justia Law

Starlight Cinemas, Inc., Akarakian Theaters, Inc. (collectively, Starlight) appealed from a judgment entered in favor of Defendant Massachusetts Bay Insurance Company (MBIC) after the trial court granted MBIC’s motion for judgment on the pleadings without leave to amend. Starlight, which owns and operates movie theaters in Southern California, sued MBIC for breach of an insurance contract and bad faith denial of coverage after MBIC denied Starlight’s claim for losses sustained when it was compelled by government orders to suspend operations during the COVID-19 pandemic. Starlight contends a policy term providing coverage for lost business income due to a suspension of operations “caused by direct physical loss of or damage to property” can be reasonably construed to include loss of use of its theaters without any physical alteration to the property.   The Second Appellate District affirmed. The court concluded Starlight has not alleged a covered loss because the policy language requires a physical alteration of the covered property, which was not alleged. The court explained that Starlight did not allege that the COVID-19 virus was present in its theaters or that there was any physical alteration of its property as a result of either the virus or the government orders. As discussed, most California appellate courts have held the allegation of temporary loss of use of property resulting from pandemic-related government closure orders—without any physical loss of the property—is not sufficient to support a claim against an insurer for business income coverage under a policy that requires the suspension be caused by “direct physical loss of or damage to” insured property. View "Starlight Cinemas, Inc. v. Massachusetts Bay Insurance Company" on Justia Law

Glassman prevailed in an uninsured motorist (UIM) arbitration against Safeco. The arbitration agreement was contained in a Safeco umbrella policy that provided excess UIM benefits, above those afforded by Glassman’s concurrent Safeco auto-liability policy. Glassman had sustained bystander emotional distress damages after witnessing her mother’s fatal injuries when an underinsured driver hit them both while they were in a crosswalk. The arbitrator’s award determined that Glassman’s compensable damages exceeded the required threshold to entitle her to the umbrella-policy excess UIM limits of $1 million.Before the arbitration, Glassman had issued to Safeco a Code of Civil Procedure section 998 offer of $999,999.99. Safeco did not accept the offer. Glassman sought prejudgment interest under section 3287(a) from the date of her section 998 offer. Under section 3287(a), a liquidated damage claim triggers entitlement to prejudgment interest as a form of additional compensatory damages if the defendant knew or was able to calculate from reasonably available information the amount of the plaintiff’s liquidated claim owed as of a particular day. The trial court denied Glassman’s request, concluding that the amount of her claim was not certain or capable of being made certain.The court of appeal affirmed. An insured’s prevailing section 998 offer in a UIM proceeding does not effectively liquidate the insured’s claim in the amount and as of the date of the offer under section 3287(a). The court noted the lack of evidence of Safeco’s knowledge that Glassman’s economic losses or special damages resulting from the accident already exceeded the umbrella-policy limits when her section 998 offer was made. View "Glassman v. Safeco Insurance Co. of America" on Justia Law

The Santa Ynez Band of Chumash Mission Indians of the Santa Ynez Reservation California (Chumash) appealed a judgment following the granting of a motion for summary judgment in favor of Lexington Insurance Company (Lexington) in Chumash’s lawsuit against Lexington for denial of insurance coverage.   The Second Appellate District affirmed. The court concluded that, among other things, Chumash did not present sufficient evidence to show that the COVID-19 virus caused physical property damage to its casino and resort so as to fall within the property damage coverage provisions of the Lexington insurance policy. The court explained that had the Chumash Casino and Resort sustained property damage, it was required to specify what property was damaged and to submit a claim for the dollar amount of that loss. The absence of such information supports Lexington’s decision to deny coverage. View "Santa Ynez Band of Chumash etc. v. Lexington Ins. Co." on Justia Law

Coast Restaurant Group appealed the dismissal of its case. The trial court sustained respondent AmGUARD Insurance Company’s demurrer to the operative complaint without leave to amend. Appellant contended the court erred in sustaining the demurrer because it showed business income losses resulting from governmental orders prohibiting on-site dining at its restaurant due to the COVID-19 virus were covered under the relevant insurance policy. The Court of Appeal concluded appellant did show there was potential coverage under the policy, but respondent showed that an exclusion in the policy applied to preclude coverage as a matter of law. View "Coast Restaurant Group, Inc. v. AmGUARD Insurance Company" on Justia Law

Santa Clara Valley Water District was insured by Century. In 2000, the District notified Century that it had been advised by the federal government of potential claims for natural resource damages resulting from mercury contamination in the Guadalupe River Watershed (NRD Claim). Century requested additional information, including the status of negotiations. Century made several similar requests to the District between 2000-2002. In 2001, Century indicated that it had no duties under the primary policies because there was no lawsuit pending, had no duty to indemnify the District under the excess policies until the underlying limits of the policies had been exhausted, and was reserving its rights under the policies. The District subsequently signed a tolling agreement, was sued in federal court, and entered a Consent Decree without notifying Century.In 2008, the District notified Century of the existence of the lawsuit and the Consent Decree and stated that it had incurred $4 million in costs to comply with the Consent Decree. Century cited a No Voluntary Payment (NVP) provision. The District did not contact Century until 2014, when it completed its required Consent Decree work. In 2015, the District sued Century.The court of appeal affirmed summary judgment for Century. The NVP provisions barred the District from seeking indemnification for the expenses it incurred under the Consent Decree, without notifying Century or obtaining its consent. Those provisions apply to the settlement even though it was achieved through a consent decree rather than a traditional settlement agreement. Because the NRD Claim was disposed of by that settlement, there was no “adjudication” that gave rise to an “ultimate net loss” that gave the District the right to pay and seek indemnification. View "Santa Clara Valley Water District v. Century Indemnity Co." on Justia Law

An insured’s general liability insurer defended under a reservation of rights, and paid out its $2 million policy limits to settle the lawsuit. The insured’s workers’ compensation and employers’ liability insurer denied coverage and did not participate in the defense or settlement. This lawsuit followed, with the general liability insurer suing the workers’ compensation and employers’ liability insurer for equitable contribution. Following a bench trial, the trial court entered judgment for the general liability insurer, awarding roughly half the cost of defense and indemnity. The Court of Appeals reversed: an equitable contribution claim only lies if the two insurers share the same level of liability on the same risk as to the same insured. In this case, the general liability insurer is not entitled to equitable contribution because it did not insure the same risk as the workers’ compensation and employers’ liability insurer. View "California Capital Ins. Co. v. Employers Compensation Ins. Co." on Justia Law

This appeal from summary judgment in favor of Sequoia Insurance Company (Sequoia) was one of thousands of cases nationwide involving a claim for business interruption coverage arising out of the COVID-19 pandemic. The outcome here turned on whether there was evidence creating a triable issue that the insured, Best Rest Motel, Inc. (Best Rest), sustained lost business income “due to the necessary ‘suspension’ ” of its operations “caused by direct physical loss of or damage” to the insured property. Best Rest contended its case fell directly within the exception discussed by the Court of Appeal in Inns-by-the-Sea v. California Mut. Ins. Co., 71 Cal.App.5th 688 (2021). Though the Court found Inns might undermine, if not entirely foreclose Best Rest’s case, the Court limited its holding by positing in dicta a “hypothetical scenario” where “an invisible airborne agent would cause a policyholder to suspend operations because of direct physical damage to property.” Here, the Court determined Best Rest's argument failed because the record contained no evidence creating a triable issue that the hotel “could have otherwise been operating” but for the presence of COVID-19 on the premises. Best Rest’s own evidence established the exact opposite was true: its vice president and operating partner testified that the phones were “ringing off the hook[ ]” with cancellations—not because of COVID-19 in the hotel, but because of government shut down orders and travel restrictions that shuttered tourism. Accordingly, the Court affirmed summary judgment in the insurance company's favor because there was no evidence creating a triable issue that COVID-19 in the hotel caused the claimed lost income. View "Best Rest Motel, Inc. v. Sequoia Insurance Co." on Justia Law

The prosecution filed a complaint alleging that a defendant committed a lewd or lascivious act on a child by force, violence, duress, menace, and fear. The North River Insurance Company and its bail agent (collectively, North River) posted a $100,000 bond to release the defendant. The trial court declared the bond forfeited when the defendant did not appear for a hearing on February 22, 2018. North River moved to vacate the forfeiture and to exonerate the bond under section 1305, subdivision (d) or (g). In the alternative, it moved to toll time under section 1305, subdivision (e) or (h). On July 10, 2019, the court entered a judgment of $100,000 against North River. North River appealed.   The Second Appellate District affirmed. The court explained it decided a similar case against a surety in People v. Tingcungco (2015) 237 Cal.App.4th 249 (Tingcungco). The court reasoned that North River’s position is contrary to the language and legislative history of Penal Code section 1305, subdivisions (g) and (h). North River posted a bail bond on a defendant who fled California. North River chased him but found him too late to get the prosecution’s decision on extradition, which is a necessary part of the statutory process. To save itself now, North River maintains legislative purpose should override, or guide, the interpretation of the words of this statute. However, the court wrote, rescuing anyone who may have pledged assets as security for the bond is not an issue before the court. View "P. v. The North River Insurance Company" on Justia Law

This case arose out of a qui tam action against Prime Healthcare Services—Encino Hospital, LLC (Encino Hospital) and others to impose civil penalties for violation of the Insurance Fraud Prevention Act (IFPA), Insurance Code section 1871 et seq. The State of California and relator (Plaintiffs) appealed from a judgment entered after a bench trial in which the court found insufficient evidence to support their allegations that Defendants engaged in insurance fraud by billing insurers for services performed in a detox center for which they had no appropriate license, and by employing a referral agency to steer patients to the center.   The Second Appellate District affirmed the judgment. The court explained that, CDI alleged that Encino Hospital misrepresented to insurers that it was properly licensed to provide detox services when it was not. The trial court found no evidence suggesting that Defendants presented a false claim to any insurer. The court agreed, reasoning that no authority of which it is aware or to which it has been directed obligates Encino Hospital to hold any license other than its license as a general acute care hospital. Because Encino Hospital needed no separate license or approval, and no evidence showed it concealed any provider, the CDI’s cause of action for false claims failed for lack of a predicate. View "State of Cal. v. Encino Hospital Medical Center" on Justia Law