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CASE UPDATE: The California Supreme Court granted review of Clarendon America Ins. Co. v. Starnet Ins. Co. (appellate court found the Calderon process constituted a "suit" under general liability policies). It will be interesting to see how the Supreme Court decides the issue.
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· In October 2010, after a 4-week jury trial, we obtained a $56,000 judgment for our client, an insurance broker, after receiving a settlement demand in excess of $400,000. In addition, we obtained a defense verdict against a co-defendant who was seeking to enforce an indemnity contract that would have required our client to pay the co-defendant's attorney's fees. The plaintiff claimed he contacted our client to obtain a general contractor insurance policy, but instead received a policy for a drywall subcontractor. When the plaintiff was sued related to his construction project, the insurer denied coverage because he was acting as a general contractor and there was no coverage under the policy. The plaintiff sought to recover the $380,000 in attorney's fees he incurred as well as emotional distress damages. Just prior to closing arguments and after the presentation of all of the evidence, we successfully persuaded the judge to reverse his previous ruling and order that emotional distress damages were not recoverable. The jury only found 20% liability against our client.
· Upon a California Code of Civil Procedure section 583.310 motion which mandates cases be brought to trial within five years of the date of filing, we obtained a dismissal of the entire action with prejudice for our client. Plaintiffs, represented by two law firms, filed their complaint on October 31, 2005, seeking damages for wrongful death and personal injuries resulting from an electrocution accident in early 2004. Trial was previously set for early October 2010; however, plaintiffs' counsel's requested the court to continue the trial date to November 15, 2010. In deciding the motion, and dismissing the plaintiffs' case, the court was clearly troubled by the seeming failure of plaintiffs' counsel to recognize, or even consider, the effect of section 583.310.
· Plaintiffs alleged their rental property suffered substantial construction defects and water damage related to storm damage mitigation and repair work performed by our client. Our client was hired to provide emergency damage mitigation and repairs. Plaintiffs alleged that our client failed to perform the work in a timely and workmanlike manner, which resulted in additional property damage and mold growth. There were also allegations that our client made misrepresentations and inaccurate or false payment claims to plaintiffs. Plaintiffs claimed over $1 million in damages that included costs of repair, lost rents, damage to fixtures and appliances, and attorney's fees. We contended that much of the water damage had been caused by the storm itself and not by our client's work. In addition, we asserted that plaintiffs' discovery showed insufficient evidence to establish fraud or misrepresentation claims against our client. These arguments were included in the motion for summary judgment/summary adjudication we filed on behalf of our client. The motion was set for hearing on December 1, 2010, and plaintiffs' opposition was coming due when plaintiffs' counsel agreed to settle the case for $21,000.
Ameron International Corporation v. Insurance Company of the State of Pennsylvania (November 18, 2010)
In this case, the California Supreme Court decided the narrow question of whether a federal administrative adjudicative proceeding before an administrative law judge was a "suit" for purposes of the duty to defend and potentially indemnify an insured under general liability policies. The proceeding included 22 days of trial, numerous witnesses and substantive evidence.
The Court held that this quasi-judicial adjudicative proceeding, employed to resolve government demands against insured parties, is a "suit" as a reasonable insured would understand that term.
The trial court granted the insurers' demurrers and dismissed the insured's complaint, relying upon Foster-Gardner, Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857, 887, which held that an environmental agency's order identifying the insured as a party responsible for remediating environmental pollution was not a "suit" that would trigger an insurer's duty to defend its insured or provide insurance coverage. The appellate court partially reversed the trial court's judgment and awarded defense and coverage costs for the policies that defined 'suit" as a "civil proceeding"; however, it held that the insurers whose policies contained the same language as Foster-Gardner did not owe any obligation to the insured.
The Court held that this federal administrative adjudicative proceeding dictates a departure from Foster-Gardner's rule and stated that the issue of whether the insurers owe a duty to defend and potentially indemnify the insured under policies that do not specifically define "suit" is one of first impression. The Court stated that the pleading requirements for this proceeding met the standards for a complaint under Code of Civil Procedure and this proceeding provides insureds with "their day in court". Therefore, insureds would reasonably expect insurers would defend them for this type of adjudicative proceeding under the definition of "suit" in general liability policies. The Court reversed the appellate court's judgment to the extent it held otherwise.
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| Everyone may reach us at the following office locations:
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Los Angeles: 445 S. Figueroa Street, Suite 2700, Los Angeles, CA 90071
San Diego: 1230 Columbia Street, Suite 800, San Diego, CA 92101
San Francisco: 33 New Montgomery Street, Suite 710, San Francisco, CA 94105 Las Vegas: 1120 Town Center Drive, Suite 200, Las Vegas, NV 89144
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