The State Bar of California
Insurance Law Committee of the Business Law Section
APPELLATE LAW UPDATE
December 8, 2010
Submitted by H. Thomas Watson
Horvitz & Levy LLP
SUPREME COURT: The California Supreme Court recently published one insurance law decision, and depublished one Court of Appeal insurance decision.
1. A “suit” covered by CGL policies includes a federal adjudicative proceeding before an administrative law judge of the U.S. Department of Interior Board of Contract Appeals. Ameron International v. Insurance Company Of The State Of Pennsylvania (Nov. 18, 2010, S153852) ___ Cal.4th ___ [2010 WL 4643779]. In Foster-Gardner, Inc. v. National Union Fire Ins. Co. (1998) 18 Cal.4th 857,887, the California Supreme Court held that the term “suit” in the coverage clause of a comprehensive general liability (CGL) policy meant “court proceedings initiated by the filing of a complaint.” Based on this definition, the insurer in Foster-Gardner had no duty to defend its insured against an environmental agency’s pollution abatement order, and no obligation to indemnify the insured against the cost of the ordered environmental cleanup.
In Ameron, the Court of Appeal held that the Foster-Gardner rule excused CGL insurers from defending their insured in administrative law proceedings before the U.S. Department of Interior Board of Contract Appeals. The Supreme Court reversed the Court of Appeal’s decision. Observing that the proceedings before the administrative law judge were initiated by a complaint and involved “22 days of trial, numerous witnesses, and substantial evidence,” the Supreme Court unanimously 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” and therefore that a CGL policy covering “suits” provides coverage for proceedings before the Interior Department’s Board of Contract Appeals
2. Commercial general liability insurer owes no duty to defend insured cab company for alleged liability stemming from an employee’s assault and battery of a customer because the employee’s acts were not an “accident” within the policy’s coverage clause regardless whether he acted in self-defense. (L.A. Checker Cab Cooperative, Inc. v. First Specialty Ins. Co. (2010) 186 Cal.App.4th 767, ordered DEPUBLISHED BY THE California Supreme Court on Oct. 27, 2010 (S185188).
COURT OF APPEAL: The California Court of Appeal recently published the following decision that may be of interest to attorneys practicing insurance law:
1. Health insurer has no duty to inform insured how to best structure health coverage to minimize premiums. (Levine v. Blue Shield of California (2010) 189 Cal.App.4th 1117 [Fourth Dist., Div. One].)
NINTH CIRCUIT COURT OF APPEALS: The Ninth Circuit published the following decisions that may be of interest to attorneys practicing insurance law:
1. Insurer that defended its insured against copyright infringement lawsuit is entitled to equitable contribution for pro rata share of defense costs from another insurer whose policy potentially covered unpled theory of slogan infringement based on facts alleged in the underlying complaint. (Hudson Ins. Co. v. Colony Ins. Co. (9th Cir. Nov. 5, 2010, No. 09-55275) __ F.3d __[2010 WL 4367014].)
2. Insurer properly terminated total disability benefits where claimant failed to prove his HIV status prevented him from performing the duties of any occupation for which he was reasonably qualified. (Muniz v. AMEC Construction Management, Inc. (9th Cir. 2010) 623 F.3d 1290.)