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Recent California Caselaw Summaries

Recent Cases:

DATE CASE NAME / DESCRIPTION CATEGORY
     
November 2009 Kim Seng Co. v. Great Am. Ins. Co. of N.Y.
The Court of Appeal held that a prior publication exclusion in a liability insurance policy barred coverage for defense and indemnity for trademark infringement where the complained of use started before the policy incepted and was repeated during the policy period. 		Contract Interpretation
October 2009 Zhang v. Superior Court (California Capital Insurance Co.)
A California appellate court held that the Unfair Insurance Practices Act does not prevent a private cause of action where the plaintiff also alleges a violation of the Unfair Competition Law (“UCL”). 		Civil Procedure & Rules
October 2009 Westchester Fire Ins. Co. v. Northwest Airlines, Inc.
The Ninth Circuit held that an injured third-party could defend against a declaratory judgment action brought by the insurer after a default judgment had erroneously been entered against both the policyholder and the third party. Following prior decisions out of the Seventh and Third Circuits, the Ninth Circuit found that a default judgment entered against the policyholder in the declaratory judgment action does not affect the right of an injured third- party to defend against the insurer's action. 		Civil Procedure & Rules
October 2009 Laster v. AT&T Mobility LLC
The Ninth Circuit held that an arbitration provision containing a class action waiver clause was unconscionable even though the clause contained a “premium” payment provision that guaranteed the consumer a $7,500 payment should an arbitrator award the consumer an amount greater than AT&T’s pre-arbitration settlement offer. The premium payment provision did not distinguish the arbitration clause from others that courts have held to be unconscionable. 		Arbitration
October 2009 Kaldenbach v. Mutual of Omaha Life Ins. Co.
The Court of Appeal held that an insured who sued his life insurer for common law fraud and concealment as well as statutory Unfair Competition violations did not demonstrate common questions of law and fact required for certification of his lawsuit as a class action. 		Class Actions
October 2009 Great American Ins. Co v. Superior Court
The Court of Appeal held that when a liability insurer providing a defense believes there is no longer a duty to defend, it may bring a declaratory relief action seeking to be relieved from that duty. However, if factual issues overlap between the underlying litigation and the declaratory relief action, the trial court must stay the declaratory relief action. If no factual issues overlap, in determining whether to grant the stay, the court must balance the prejudice to the policyholder of defending two lawsuits against the prejudice to the insurer for having to continue to pay defense costs. 		Civil Procedure & Rules
September 2009 Merrill, et al. v. Leslie Controls, Inc.
The Court of Appeal (Second Dist., Div. Three) found a manufacturer of valves used on naval craft not liable for failure to warn or design defects. In contrast to the recent O’Neil decision, the Court approvingly cited Taylor, which held a component part manufacturer was entitled to rely on the component part defense, and extended Taylor to design defect claims. 		Asbestos Duty to Warn
September 2009 O’Neil, et al. v. Crane Co., et al.
The Court of Appeal held that manufacturers of pumps and valves used on an aircraft carrier power system were not manufacturers of component parts to which the component parts defense applied. Rather, the pumps and valves were finished products with a specific purpose and use that were not altered by customers. The Court rejected the recent Taylor decision that held a similar component part manufacturer was entitled to rely on the component part defense. 		Asbestos Duty to Warn
August 2009 Parada v. Superior Court
A California appellate court found that an arbitration clause was unconscionable because it required a three judge panel, which was prohibitively expensive under these circumstances. The court found that the defendant had no legitimate reason to impose this requirement, and thus would not sever the offending provisions. Important factors were that it was an adhesion contract and was drafted with the intent to dissuade claims. 		Arbitration
August 2009 Taheri Law Group v. Sorokurs
A California appellate court rejected a petition to vacate an arbitration award because the petition failed to allege facts satisfying the high burden imposed. The petition concluded that the arbitrator engaged in bias, prejudice, and fraud, but did not allege sufficient facts to support those conclusions. Thus, even though all factual allegations were deemed admitted (because of an untimely response), the petition to vacate was still denied. 		Arbitration
August 2009 Meza v. H. Muehlstein & Co.
A California appellate court applied the “common interest doctrine” in finding that defense attorneys “did not waive the attorney work product privilege by communicating with each other regarding their respective clients' common interests.” The court noted that “a defendant's attorney's disclosure of work product relating to the defendants' adverse interests results in a waiver” but only as to the specific communications that do not involve a common interest. 		Discovery Issues
August 2009 U-Haul International, Inc. et.al v. Lumbermans Mutual Casualty Company
The Ninth Circuit affirmed that a primary insurers’ computer-generated summaries of expenses paid on claims were properly admitted as evidence of exhaustion under the business record exception to the hearsay rule, FRCP 803(6). 		Evidence
July 2009 Griffin Dewatering Corporation v. Northern Insurance Company of New York
A California appellate court reversed a judgment in favor of a policyholder and held that where an insurer’s denial is supported by substantial case law, the denial of coverage could not be rendered retroactively unreasonable – and thus a breach of contract – as the result of a California Supreme Court decision issued after the insurer’s denial. 		Breach of Contract
July 2009 Superior Dispatch, Inc. v. Insurance Corporation of New York
A California appellate court found a contractual limitations period does not apply to bar a suit where the insurer did not notify the policyholder of the policy’s one-year limitations provision, even where the policyholder was represented by counsel who failed to discover the provision. The court distinguished another statutory provision requiring notice of suit limitations provisions to claimants only where the claimant is not represented by counsel. 		Statute of Limitations
July 2009 Bosetti v. US Life Ins. Co.
A claimant asserted breach-of-contract and bad faith claims against her group disability insurer. Although the court ruled against the insurer’s interpretation of a policy provision, the court dismissed the claimant’s bad faith cause of action on summary judgment because the insurer’s policy interpretation was at least objectively reasonable. The court further ruled so long as the denial of policy benefits is objectively reasonable, proof of an insurer's subject intent is irrelevant. 		Bad Faith
July 2009 Biltmore Associates, LLC v. Twin City Fire Insurance Co.
The Ninth Circuit Court of Appeal found that an exclusion in a directors and officers policy that precluded coverage for claims by the insured corporation against the insured Directors and Officers also operated to bar claims for coverage by the insured’s assignee, which, here, was the creditor's bankruptcy trustee. 		Named Insured
July 2009 Venoco, Inc. v. Gulf Underwriters Insurance Co.
California appellate court held that a provision in a liability policy requiring notice within 60 days of discovery of a pollution event is enforceable against a policyholder regardless of whether prejudice resulted because the requirement was part of a provision negotiated by the policyholder that expanded coverage beyond the terms of the pre-printed policy form. 		Notice and Tender
June 2009 OneBeacon v. Fireman’s Fund
The California Court of Appeal, Second District, held that actual notice of a lawsuit naming the policyholder amounted to a constructive defense obligation, thus entitling OneBeacon to equitable contribution from Fireman’s Fund. The court distinguished cases requiring policyholders to tender properly because this was an equitable dispute among insurers. 		Contribution
June 2009 Supervalu, Inc. v. Wexford Underwriting Mgrs.
The California Court of Appeal, Second District, allowed parol evidence provisionally to determine ambiguity, even though the policy language was not facially ambiguous. If, in light of the extrinsic evidence, the language had been reasonably susceptible to the interpretation urged, the evidence could be admitted. However, the language here contradicted the urged interpretation, and the extrinsic evidence was therefore not admitted. 		Evidence
May 2009 The Flintkote Co. v. Gen. Acc. Ass. Co. of Canada
The court followed a fairly well established line of California authority allowing discovery of reserves and disallowing discovery of reinsurance. The court noted that not all bad faith claims necessarily render reserves discoverable. Nevertheless, under this court’s holding, reserves may be discoverable with respect to bad faith claims alleging an insurer withheld payment for claims it thought might be covered. The court further held that the attorney-client privilege applies only where the insurer produces direct evidence that documents reflect communications with counsel. 		Reserves and Reinsurance
May 2009 Evanston Ins. Co. v. OEA, Inc.
The Ninth Circuit found the policyholder received notice of claims prior to issuance of the policy such that policy did not provide coverage entitling the insurer under a claims made policy to (1) reimbursement of defense and indemnity payments, and (2) prejudgment interest from the date of the payments. 		Duty to Defend
May 2009 Elkman v. National States Ins. Co.
The California Court of Appeal, Second District, ruled that an out-of-state insurer did not subject itself to either general or specific jurisdiction in California merely by accepting premium payments from California and by processing and paying claims submitted by its California insureds. 		Jurisdiction
Apr 2009 Goldman v. KPMG LLP
The California Court of Appeal, Second District, ruled that a third party (i.e., non-signator to the agreement) could not compel arbitration against a signator to the arbitration clause because the third party’s dispute was not inextricably bound with the agreement that contained the arbitration clause. 		Arbitration
Feb 2009 Taylor v. Elliott Turbomachinery Co., Inc.
The Court held that a manufacturer of equipment used in a ship’s propulsion system could not be held liable for failure to warn where the injuries were caused by exposure to asbestos from parts manufactured by others but incorporated in the manufacturer’s equipment. 		Asbestos Duty to Warn
Feb 2009 McCoy v. Progressive West Insurance Company
The California Court of Appeal for the Second District affirmed the trial court’s refusal of the insurer’s proposed jury instructions regarding the “genuine dispute” doctrine where there was substantial evidence that the insurer had violated certain Department of Insurance and internal company regulations and had failed to conduct a reasonable investigation of the claim. 		Bad Faith
Feb 2009 Executive Risk Indemnity, Inc. v. Jones
The court ruled that an insurer with notice and an opportunity to protect its interest in an underlying action is bound by the underlying determination of liability and damages, even where the insurer did not have a duty to defend a policyholder or was legally justified in refusing to participate in the proceeding. 		Duty to Defend
Feb 2009 Mundi v. Union Sec. Life Ins. Co.
The court ruled that a non-signatory cannot generally enforce an arbitration provision where the dispute is not intertwined with or arise directly out of the agreement containing the arbitration provision. 		Arbitration
Feb 2009 Kwok v. Transnation Title Insurance Co.
The Second District of California's Courts of Appeal held that a title insurance policy issued to an LLC terminated as a matter of law when the LLC voluntarily transferred the property to a revocable inter vivos family trust, even though the two trustees who received the property were also the sole members of the LLC. 		Successor Liability
Jan 2009 Safeco Insurance Co v. Parks
A California appellate court held that an insurer's duty to investigate extends beyond the facts and coverage theories in the insured's claim and the insurer may have a duty to investigate whether it issued any other policy that might cover the claim. 		Missing Policies
Oct 2008 Fasuyi v. Permatex, Inc.
A California appellate court held that a defendant was entitled to relief from default after its insurer had failed to respond to the underlying complaint and the underlying plaintiff had sought and obtained a default judgment without providing any warning to the defendant. 		Duty to Defend
Sep 2008 Trinity Universal Ins. Co. of Kansas v. Northland Ins. Co.
The court applied a known loss clause in a “Montrose endorsement” to find no coverage for water intrusion damage that the subcontractor had knowledge of before the policy period. 		Other Insurance Clauses
Sep 2008 Brehm v. 21st Century Ins. Co.
The California Court of Appeal reversed a trial court's dismissal of a policyholder's bad faith claim. 		Bad Faith
Aug 2008 Cable Connection Inc. v. Directv Inc.
The California Supreme Court held that California's arbitration statute differs from the Federal Arbitration Act (FAA) in that it permits parties to a contract to expand the scope of judicial review of an arbitrator's decision. 		Court Procedures and Rules
Jul 2008 Great American Ins. Co v. Gordon Trucking
The California Court of Appeal held that a policyholders' interrogatory responses that fail to state a factual basis for a claim against a third party were not binding against its insurer when the insurer has stepped into the shoes of the policyholder in equitable subrogation. 		Discovery Issues
Jul 2008 City of Hollister v. Monterey Insurance Company
A California appellate court held that an insurer that affirmatively failed to cooperate with its insured’s attempts to satisfy a time-limited condition precedent to coverage for a building damaged by fire was properly estopped to rely on the time limit as a condition precedent. 		Cooperation
Jul 2008 Great American Ins. Co v. Gordon Trucking
The California Court of Appeal held that a policyholders’ interrogatory responses that fail to state a factual basis for a claim against a third party were not binding against its insurer when the insurer has stepped into the shoes of the policyholder in equitable subrogation. 		Subrogation
Jul 2008 Crawford v. Weather Shield MFG, Inc.
The Court held that a subcontractor must defend a developer against a lawsuit brought by numerous homeowners for construction defects, under the indemnification provisions of the subcontract. 		Contract Interpretation
Jul 2008 Sony Comp. Entertain. America, Inc. v. American Home Assur. Co. et al.
The Ninth Circuit held that insurers had no duty to defend a class action lawsuit alleging the Sony PlayStation 2 was defective. 		Duty to Defend
Jun 2008 State Farm Fire and Casualty Co. v. Superior Court (Wright)
A California appellate court held that an insurance company owes a duty to defend the insured who acted intentionally but did not intend all of the acts in the causal chain or to inflict injuries suffered by the plaintiff. 		Duty to Defend
Jun 2008 Westrec Marina Management Inc. v. Arrowood Indemnity Co.
A California appellate court held that a policyholder did not timely report to its insurer a claim in the form of a letter it received from the third party claimant’s attorney. 		Notice
Apr 2008 Monticello Ins. Co. v. Essex Ins. Co.
A California appellate court held that a contractor’s insurer was not entitled to equitable contribution against a subcontractor’s insurer because the complaint contained no allegations showing a potential for coverage under the subcontractor’s policy. 		Contribution
Apr 2008 Everett v. State Farm Gen. Ins. Co.
A California appellate court found no liability for amounts in excess of the stated policy limits where a policy term that previously provided for replacement cost coverage regardless of limits was eliminated from the policy prior to the loss. 		Contract Interpretation
Apr 2008 Royal Indemnity Co. v. United Enterprises, Inc.
A California Court of Appeal held that a property owner who is suing the prior owner for environmental clean-up costs has no right to intervene in a related coverage action between that prior property owner and its insurers. 		Civil Procedure & Rules
Mar 2008 Great Western Drywall v. Interstate Fire Casualty Co.
A California Court of Appeal held that an insurer has no duty to defend a named insured subcontractor from the general contractor’s lawsuit because the absence of a underlying lawsuit against the general contractor meant that the action did not fall within the policy’s apportionment of liability exception to the Cross Suits Exclusion. 		Duty to Defend
Mar 2008 Manzarek v. St. Paul Fire & Marine Ins. Co.
The Ninth Circuit ruled on coverage in connection with underlying litigation between former members of The Doors, finding that St. Paul had a duty to defend because a potential for coverage existed. 		Duty to Defend
Mar 2008 Qualcomm, Inc. v. Certain Underwriters at Lloyd's, London
The California Court of Appeal for the Fourth District held, based on the language of Certain Underwriters at Lloyd's, London (Underwriters) excess directors and officers (D&O) policy, that Underwriters' coverage obligation did not arise because the primary insurer neither paid its full limit of liability nor had it become legally obligated to pay the full amount of its limit in connection with a settlement between it and the policyholder. 		Settlement Credit
Jan 2008 American Casualty Co. of Reading, PA. v. Miller
The court upheld an absolute pollution exclusion and found that an insurer had no duty to defend a policyholder for claims arising out of the discharge of the chemical solvent into a city sewer system. 		Pollution Exclusion
Dec 2007 Ticconi v. Blue Shield of Cal. Life & Health Ins. Co.
A California appellate court held that a trial court erroneously failed to certify a class action under California’s Unfair Competition Law (“UCL”) against an insurer by individuals whose policies had been rescinded for misrepresentation when the insurer failed to attach the application. 		Civil Procedure & Rules
Nov 2007 Richard Stellar v. State Farm Gen. Ins. Co.
The Court of Appeal upheld summary judgment that the insurer had no duty to defend because the allegations of the underlying action did not involve any unintentional or unintended acts by the insured. 		Duty to Defend
Oct 2007 Zurich Am. Ins. Co. v. Superior Court (Watts Indus., Inc.)
A California appellate court issued a writ of mandate directing the trial court to vacate its orders adopting a discovery referee’s recommendations limiting the scope of communications protected by the attorney-client privilege. 		Discovery Issues