http://www.lexisnexis.com/mealeys/news.aspx Headline California Insurance Legal News from LexisNexis® en-us http://www.lexisnexis.com/mealeys/images/lexismealeyslogo.gif 130 29 http://www.lexisnexis.com/mealeys/news.aspx Copyright 2012 http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%201%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - Excess insurers are not responsible for an insured's pollution cleanup costs imposed by the California Department of Toxic Substances, a California judge ruled May 2, granting the excess insurers' motion for summary judgment but finding that another insurer cannot avoid liability (Arrow Electronics Inc v. Aetna Casualty & Surety Company, et al., No. BC342044, Calif. Super., Los Angeles Co.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%202%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - A general liability insurer sufficiently proved a potential for coverage under another insurance policy regarding the settlement of construction defects claims against a mutual insured, a California appeals panel affirmed April 11, also finding that the judge did not abuse his discretion in allocating the amounts of contribution (Axis Surplus Insurance Co. v. Glencoe Insurance Ltd., No. D058963, Calif. App., 4th Dist., Div. 1; 2012 Cal. App. LEXIS 410). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%203%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - A trial court did not abuse its discretion in denying a motion for attorney fees brought by a policyholder who prevailed on breach of contract and bad faith claims against his auto insurance provider, a California appeals panel ruled April 26, finding that a fees award was precluded by state law and precedential authority (Marcus D. Benning v. Wawanesa General Insurance Co., No. D058442, Calif. App., 4th Dist.; 2012 Cal. App. Unpub. LEXIS 3166). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%204%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank WASHINGTON, D.C. - In an asbestos-related arbitration dispute, an insurer asked the U.S. Supreme Court on April 30 to consider inherent conflict between arbitration and the underlying purpose of the Bankruptcy Code (Continental Insurance Company v. Thorpe Insulation Company, et al., No. 11-1310, U.S. Sup.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%205%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank FRESNO, Calif. - A business liability insurance policy's professional services exclusion precludes coverage for an insured's liability for underlying wrongful death claims that resulted in a $29 million judgment, a California appeals panel ruled May 14, affirming a lower court's ruling that the insurer has no duty to indemnify the portion of the judgment attributed to its insured (Golden Eagle Insurance Corporation v. Lemoore Real Estate and Property Management, Inc., et al., No. F061735, Calif. App., 5th Dist.; 2012 Cal. App. Unpub. LEXIS 3584). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%206%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - Allegations of intentional actions by an insured leave no room for possible coverage as an "accident" or "occurrence" under a property liability policy, a California appeals panel ruled May 2, affirming a lower court's dismissal of bad faith and breach of contract claims against an insurer (Chi Kin Hui v. Fire Insurance Exchange, No. A133238, Calif. App., 1st Dist.; 2012 Cal. App. Unpub. LEXIS 3305). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%207%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - A federal judge in California on April 25 granted summary judgment to an insurance company regarding its duty to defend a construction defects action, finding that the construction company suing the insurer is not a party to the policies (McMillin Construction Services L.P. v. Arch Specialty Insurance Co., et al., No. 10-2592, S.D. Calif.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%208%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - A California appeals panel on May 8 reversed a lower court's ruling that an insurer has no duty to defend the rock band Tool against an underlying lawsuit alleging copyright infringement and defamation (Tool Touring Inc., et al. v. The American Insurance Company, No. B230136, Calif. App., 2nd Dist., Div. 7; 2012 Cal. App. Unpub. LEXIS 3461). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%209%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - A commercial general liability insurance company waived its right to control an insured's defense of underlying construction defects actions, a California federal judge found May 10, dismissing the insurer's claim for breach of the covenant of good faith and fair dealing (Travelers Property Casualty Company of America, et al. v. Centex Homes, et al., No. 11-3638, N.D. Calif.; 2012 U.S. Dist. LEXIS 65834). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2010%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank OAKLAND, Calif. - A California federal judge on May 10 refused to dismiss a declaratory relief action filed by an insurer that asserts that it has no obligation to indemnify or defend a landlord in an underlying state court case in which various tenants seek damages for illnesses and property damage allegedly caused by mold in their rental property (Indian Harbor Insurance Co. v. Rockcliff Realtors, et al., No. 11-CV-05499, N.D. Calif.; 2012 U.S. Dist. LEXIS 66462). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2011%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on May 2 affirmed a $19.3 million award to the receiver of an insolvent insurance company, which represented the amount due and unpaid for workers' compensation claims paid by the insurer for more than 15,000 workers (Mike Kreidler, Washington insurance commissioner and as receiver for Cascade National Insurance Co. in liquidation v. Danny L. Pixler, et al., No. 11-35095, 9th Cir.; 2012 U.S. App. LEXIS 8949). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2012%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SANTA ANA, Calif. - Comparable sales upon which an insured relied did not support its valuation opinion regarding an insurance broker's alleged failure to secure insurance for an office building that was later damaged by arson, a California appeals panel held April 25, affirming that the broker is entitled to a new trial on damages (Main Street-Santa Ana LLC v. Donald Kappauf, No. G044446, Calif. App., 4th Dist., Div. 3; 2012 Cal. App. Unpub. LEXIS 3115). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2013%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank VENTURA, Calif. - An insured has failed to demonstrate that an underlying lawsuit alleged potential "disparagement" or "misappropriation of style of doing business" within two liability insurance policies' definition of "advertising injury," a California appeals panel affirmed May 3, further finding that there was no extrinsic information that would have alerted the insurers of a further need to investigate the potential for coverage (Southern California Gold Products Inc. v. Zurich-American Insurance Group, et al., No. B234720, Calif. App., 2nd Dist., Div. 6; 2012 Cal. App. Unpub. LEXIS 3355). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2014%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - An insurer filed a declaratory judgment lawsuit in a California federal court on April 10, contending that four exclusions in its business and management indemnity policy preclude coverage for underlying lawsuits against the insured and its directors and officers arising from an alleged manufacturing defect in the insured's injectable dermal fillers (Scottsdale Insurance Co. v. Coapt Systems Inc., et al., No. 12-1780, N.D. Calif.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2015%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - A California federal judge on April 24 denied summary judgment to both parties in a reimbursement dispute between a health benefit plan and a hospital, saying remand to the plan administrator for review of the denial of benefits was warranted (Scripps Health v. Food Employers & Bakery & Confectionery Workers Benefit Fund of Southern California, et al., No. 10-2484, S. D. Calif.; 2012 U.S. Dist. LEXIS 58012). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2016%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SACRAMENTO, Calif. - An insurer had no duty to name its insured as a co-plaintiff in seeking recovery from the manufacturer of a defective chair massager, a California appeals panel affirmed April 30, further finding that the insured's negligence claim against the insurer constituted a nonviable cause of action (James Sedlar v. USAA Casualty Insurance Company Inc., No. C066089, Calif. App., 3rd Dist.; 2012 Cal. App. Unpub. LEXIS 3226). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2017%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - A California judge on April 24 found that coverage for underlying negligence claims against an insured and its officers is not precluded by a commercial general liability insurance policy's molestation exclusion, denying the insurers' motion for summary adjudication (Society for Creative Anachronism, et al. v. Fireman's Fund Ins. Co., et al., No. 10-498672, Calif. Super., San Francisco Co.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2018%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank OAKLAND, Calif. - A commercial general liability insurance company breached its duty to defend allegations against insureds regarding construction defects in their work in a home, a California federal judge found April 26, awarding damages of $301,334 plus interest to the insureds (Swi-Co Construction Inc., et al. v. AMCO Insurance Co., et al., No. 10-3122, N.D. Calif.; 2012 U.S. Dist. LEXIS 59391). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-11%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2019%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - A California federal judge on April 30 held that an accounting company and one of its accountants were fraudulently joined to a fire damages lawsuit, denying a motion to remand for lack of diversity jurisdiction based on their citizenship (Villains Inc., et al. v. American Economy Insurance Co., et al., No. 3:12-cv-00828, N.D. Calif.; 2012 U.S. Dist. LEXIS 60140). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%201%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - A trial court erred in disposing of bad faith and breach of contract claims based on the financial status and assets of a plaintiff estate, a Ninth Circuit U.S. Court of Appeals panel ruled April 3, reversing summary judgment granted in favor of the estate's insurer (Fernando Avila, et al. v. Century National Insurance Co., No. 10-16386, 9th Cir.; 2012 U.S. App. LEXIS 6630). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%202%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SANTA ANA, Calif. - Because it has been previously determined that MGA Entertainment's primary insurers have a duty to defend an underlying Bratz Dolls trademark dispute, the excess insurance policies are not implicated, a California federal judge ruled April 12, further finding that the bad faith counterclaim against the excess insurers must be dismissed (MGA Entertainment, et al. v. The Hartford Insurance Group, et al., No. 08-0457, C.D. Calif.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%203%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - An insured's two-year delay in providing a professional liability insurer with a copy of a 2005 complaint relieved the insurer of any duty to defend the insured, a California appeals panel affirmed March 16 (Novapro Risk Solutions L.P. v. TIG Insurance Company, No. D059066, Calif. App., 4th Dist., Div. One; 2012 Cal. App. Unpub. LEXIS 2035). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%204%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - A general liability insurer sufficiently proved a potential for coverage under another insurance policy regarding the settlement of construction defects claims against a mutual insured, a California appeals panel affirmed April 11, also finding that the judge did not abuse his discretion in allocating the amounts of contribution (Axis Surplus Insurance Co. v. Glencoe Insurance Ltd., No. D058963, Calif. App., 4th Dist., Div. 1; 2012 Cal. App. LEXIS 410). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%205%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - A California federal judge on March 27 entered final judgment in favor of a real estate errors and omissions liability insurer, finding that because claimants gained their right to sue the insurer through an assignment in a fraudulent settlement agreement with the insured, they have lost their standing to sue the insurer for the resulting $3.3 million default judgment (Ron Carlson, et al. v. Century Surety Co., No. C 11-00356 SI, N.D. Calif.; 2012 U.S. Dist. LEXIS 40986). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%206%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on April 6 asked whether an insurance policy's exclusions regarding carbon monoxide indoor pollution exclude coverage of wrongful death suits in a question certified to the Nevada Supreme Court (Century Surety Company v. Casino West, Inc., No. 10-17309, 9th Cir.; 2012 U.S. App. LEXIS 6958. http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%207%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - The abuse-of-discretion standard is the proper standard of review in an Employee Retirement Income Security Act dispute over disability benefits where the plan properly confers discretion to the administrator, a California federal judge ruled March 22 (Ruben Gonzales v. Unum Life Insurance Co., et al., No. 09-CV-0468, S.D. Calif.; 2012 U.S. Dist. LEXIS 39391). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%208%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on March 28 affirmed that the efficient proximate cause rule does not apply to an insured's claim for damages arising out of a fuel spill and determined that the policy's corrosion exclusion and hidden defects provision are not ambiguous (Mike Goodman v. New Hampshire Insurance Co., No. 11-35349, 9th Cir.; 2012 U.S. App. LEXIS 6290). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%209%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - A California federal bankruptcy judge on March 15 - in an opinion on three key issues and in additional findings of fact and conclusions of law - overruled "myriad" objections filed by insurance companies and confirmed Plant Insulation Co.'s Chapter 11 plan of reorganization (In re Plant Insulation Co., No. 09-31347, N.D. Calif. Bkcy.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2010%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - The Thorpe Insulation Co. Asbestos Settlement Trust can continue to operate in the wake of the Ninth Circuit U.S. Court of Appeals' remand of the case so insurers can object to Thorpe's confirmed Chapter 11 plan of reorganization, though the amount of money the trust can pay to satisfy claims is now limited, a California federal bankruptcy judge ruled Feb. 28 (In re Thorpe Insulation Co., No. 07-19271, C.D. Calif. Bkcy.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2011%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on April 3 denied an en banc rehearing of its decision to remand approval of Thorpe Insulation Co.'s Chapter 11 plan of reorganization so a bankruptcy court can hear objections by insurance companies on grounds that the plan violates their legal rights (Motor Vehicle Casualty Company, et al. v. Thorpe Insulation Company, et al.[In The Matter of Thorpe Insulation Company] and National Fire Insurance Company of Hartford, et al. v. Thorpe Insulation Company, et al. [In the Matter of Thorpe Insulation Company], Nos. 10-56543 and 10-56622, 9th Cir.). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2012%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank PASADENA, Calif. - A lower court failed to consider whether an insured's alleged noncompliance with the disclosure requirements of Federal Rules of Civil Procedure 26(a) and 26(e) involved willfulness, fault or bad faith and whether sanctions were available that were less harsh than barring the insured from presenting its attorney fees evidence, the Ninth Circuit U.S. Court of Appeals ruled March 21, reversing and remanding the lower court's ruling in favor of an insurer on the insured's claim for bad faith (R & R Sails Inc. d/b/a Hobie Cat Co. v. Insurance Company of the State of Pennsylvania, Nos. 10-55115 and 10-55888, 9th Cir.; 2012 U.S. App. LEXIS 5866). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2013%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - A California federal judge on March 22 remanded a professional negligence lawsuit filed against an insurance agent regarding a life insurance policy because the court lacked subject matter jurisdiction (Rosa Tovar and Alexander Saenz v. Western Reserve Life Assurance Company of Ohio and Ana Fuentes, No. 11-02999, C.D. Calif.; 2012 U.S. Dist. LEXIS 40152). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2014%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - A former employee's allegations against his employer insured raise the potential for coverage under an insurance policy's definition of "injury" that includes "common law claims for invasion of the right of privacy," a California federal judge ruled March 20, denying the insurer's motion for summary judgment in part (Twin Star Ventures Inc., et al. v. Universal Underwriters Insurance Co., No. 10-04284, N.D. Calif.; 2012 U.S. Dist. LEXIS 37628). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-10%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2015%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank FRESNO, Calif. - A California federal judge on March 28 ruled that a disability insurer is entitled to rescind its policy after learning that the insured failed to disclose past chiropractic treatment for back pain (Keith Warkentin v. Federated Life Insurance Co., No. 1:10cv0221, E.D. Calif.; 2012 U.S. Dist. LEXIS 42975). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%201%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - In light of a prior stipulation that an insurer did not have a duty to defend or indemnify its insured in an underlying negligence lawsuit, a California federal judge on March 5 granted the insurer's motion to dismiss the policyholder's breach of contract, bad faith and emotional distress counterclaims (Allstate Insurance Company v. Richard Barnett, et al., No. 10-0077, N.D. Calif.; 2012 U.S. Dist. LEXIS 28775). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%202%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - A real estate errors and omissions liability insurer's breach of its duty to defend was not unreasonable, a California federal judge ruled Feb. 23, further finding that an underlying settlement agreement and a resulting $3.3 million default judgment were collusive (Ron Carlson, et al. v. Century Surety Co., No. C 11-00356 SI, N.D. Calif.; 2012 U.S. Dist. LEXIS 23119). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%203%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - Although the insurers in an underlying lawsuit ultimately paid to settle a default judgment against one of the defendants, a panel in the Fourth District California Court of Appeal held that he did not provide the necessary "substantial evidence" to show that the insurers had assumed a duty to defend or that coverage had been determined by the court to support a bad faith claim (Donald DeWitt v. Monterey Insurance Co., et al., No. D057887, Calif. App., 4th Dist.; 2012 Cal. App. LEXIS 283). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%204%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - Although a California federal judge on March 13 held that a woman seeking long-term disability (LTD) benefits was not collaterally estopped from litigating contract claims against her insurer, the judge granted summary judgment to the insurer on her bad faith and intentional infliction of emotional distress claims against it (Wendy Collier v. Reliastar Life Insurance Co., No. 3:11-cv-01760, N.D. Calif.; 2012 U.S. Dist. LEXIS 33577). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%205%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on Feb. 27 reversed the entry of summary judgment to insurers regarding breach of contract and breach of the implied covenant of good faith and fair dealing claims filed by insurance brokers regarding earn-out payments (Eastwood Insurance Services Inc., et al. v. Titan Auto Insurance of New Mexico Inc., et al., No. 10-56314, 9th Cir.; 2012 U.S. App. LEXIS 3924). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%206%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN FRANCISCO - A California appeals panel on Feb. 23 affirmed a preliminary injunction against an insurance agent prohibiting him from using confidential policyholder information to solicit insurance business (Farmers Insurance Exchange, et al. v. David Song, No. A131132, Calif. App., 1st Dist., Div. 3; 2012 Cal. App. Unpub. LEXIS 1363). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%207%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - A California appeals panel on Feb. 23 reversed a judgment denying costs to an insurance agency against another insurance agency regarding a dispute over responsibility for medical expenses of a surrogate mother under a secondary insurance policy (New Life Agency Inc. v. Beitler Services Inc., No. B224724, Calif. App., 2nd Dist., Div. 1; 2012 Cal. App. Unpub. LEXIS 1333). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%208%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - Parties to a multimillion-dollar life insurance policy had an insurable interest at the time the policy was procured, a California federal judge ruled Feb. 3 (Hartford Life & Annuity Ins. Co. v. Doris Barnes Family 2008 Irrevocable Trust, et al., No. 10-7560, C.D. Calif.; 2012 U.S. Dist. LEXIS 17770). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%209%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - The California Legislature did not intend for a state regulation regarding punitive damages to apply to claim against health care service plans, a state appeals court held Feb. 15. The court, however, declined to review whether a plaintiffs' claim for punitive damages should have been stricken from the complaint because the plaintiffs dismissed the claim and ordering the trial court to strike the allegations would be an idle act (Kaiser Foundation Health Plan Inc., et al. v. The Superior Court of Los Angeles County, No. B233759, Calif. App., 2nd Dist., Div. 7; 2012 Cal. App. LEXIS 138). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2010%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - An ERISA-governed disability insurer that failed to conduct an independent medical exam and relied solely on record reviews in its decision to deny benefits to a claimant with a cardiovascular condition abused its discretion, a California federal judge ruled Feb. 27 (Donald J. Kurth v. Hartford Life and Accident Insurance Co., No. 2:10-cv-01229, C.D. Calif.; 2012 U.S. Dist. LEXIS 25485). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2011%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - A California federal judge on Feb. 27 ruled that a primary insurer exhausted its policy and, therefore, an excess insurer has a duty to defend an underlying negligence lawsuit against a claims administrator insured (Liberty Mutual Insurance Company, et al. v. Indian Harbor Insurance Company, et al., No. 11-cv-0624 BEN [NLS], S.D. Calif.; 2012 U.S. Dist. LEXIS 25500). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2012%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank SAN DIEGO - Absent the assumption of a contractual duty to do so, insurance brokers had no duty to apprise an additional insured under a policy of the insurer's subsequent insolvency, a California appeals panel ruled Feb. 28 on an issue it said was of first impression in California (Pacific Rim Mechanical Contractors Inc. v. Aon Risk Insurance Services West Inc., et al., No. D058321, Calif. App., 4th Dist., Div. 1; 2012 Cal. App. LEXIS 232). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2013%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on March 12 affirmed a lower court's ruling that an underlying negligence lawsuit against an insured is not covered under a real estate agent and broker professional liability insurance policy because the insured failed to comply with the policy's 30-day reporting requirement (RE/MAX Mega Group v. Maxum Indemnity Company, No. 11-55142, 9th Cir.; 2012 U.S. App. LEXIS 5117). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2014%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank FRESNO, Calif. - Two insurance companies had no duty to defend an insured for an underlying construction defect action based on their respective "your product" and business risk exclusions, a California federal judge ruled March 6, granting summary judgment to the insurers on an equitable contribution claim asserted against them (St. Paul Fire & Marine Insurance Co. v. Vadnais Corp., et al., No. 10-1669, E.D. Calif.; 2012 U.S. Dist. LEXIS 29696). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2015%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - A commercial general liability insurer has no duty to defend against a class action suit alleging that its insured fraudulently conspired with insurers to conceal errors in its software program that undervalued bodily injury claims, a California appeals panel affirmed Feb. 27 (The Travelers Property Casualty Company of America, et al. v. Computer Sciences Corporation, No. B229033, Calif. App., 2nd Dist., Div. 8; 2012 Cal. App. Unpub. LEXIS 1452). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2016%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank LOS ANGELES - A California appeals panel on March 1 affirmed that a reinsurance broker did not breach a fiduciary duty because it did not fail to obtain the best terms for reinsurance; the panel also denied a reinsurer's request to conduct discovery on and add allegations for price fixing against the broker (Workmen's Auto Insurance Co. v. Guy Carpenter & Co. Inc., No. B211660 c/w B213853, Calif. App., 2nd Dist., Div. 2; 2012 Cal. App. Unpub. LEXIS 1601). http://www.lexis.com/research/xlink?canceldest=form&keyenum=25271&keytnum=0&searchtype=get&search=11-9%20Mealey%27s%20Litig.%20Rep.%20Cal.%20Ins.%2017%20(2012)&view=full&ORIGINATION_CODE=00144 target=_blank By Cassandra S. Franklin Since the last California case law update, the California courts have decided a number of interesting insurance coverage cases. They are summarized below.