The State Bar of California
Insurance Law Committee of the Business Law Section

APPELLATE LAW UPDATE
April 13, 2012

Submitted by H. Thomas Watson
Horvitz & Levy LLP

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SUPREME COURT: The California Supreme Court did not publish any recent insurance law opinions.

COURT OF APPEAL: The California Court of Appeals recently published the following decisions that may be of interest to attorneys practicing insurance law:

1.  In an insurer’s action for equitable contribution against another insured following the settlement of a lawsuit against a common insured, the insured’s payment of its self-insured retention (SIR) at the time of settlement does not prevent the settling insurer from establishing the non-participating insurer’s legal obligation to cover the underlying claim even where the nonparticipating insurer’s policy provides that the insurer’s duty to defend does not arise until after payment of the SIR. In addition, the trial court may order equitable allocation of the settlement amount based on various factors including
time on risk and policy limits, even though both policies specify equal share apportionment. (Axis Surplus Ins. Co. v. Glencoe Ins. Ltd. (Apr. 11, 2012, D058963) __ Cal.App.4th __ [2012 WL 1193203] [Fourth Dist., Div. One].)

2.  Insured seeking to recover bad faith damages for an insurer’s decision to deny an offer to settle a third-party claim within policy limits must prove that the insurer either (1) assumed control of the defense without a reservations of rights, or (2) owed a duty to indemnify the insured under the terms of the policy. (DeWitt v. Monterey Ins. Co. (2012) 204 Cal.App.4th 233 [Fourth Dist., Div. One].)

NINTH CIRCUIT COURT OF APPEALS: The Ninth Circuit Court of Appeals did not publishe any recent opinions addressing California insurance law.