INSURANCE LAW

General liability coverage is typically triggered by an “occurrence,” which is defined, in part, as an accident that causes bodily injury or property damage for which the insured is responsible. Musick Peeler’s recent summary judgment success in District Court underscores the rule that deliberate acts of the insured that cause injury do not constitute an accident under California insurance law, even if they are alleged to have caused unexpected harm.

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California case law allows for extracontractual damages to be awarded for a breach of the implied covenant of good faith and fair dealing (also known as “bad faith”) where an insurer unreasonably refused to accept a settlement offer within a policyholder’s liability policy limits.  California courts have struggled for decades to define the elements of an insurer’s bad faith failure to settle.  Some decisions focused on the reasonableness of the settlement demand, whereas others focused on whether the insurer’s rejection of the settlement demand was unreasonable.

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On March 30, 2023, the California Court of Appeal issued a new published decision, affirming orders granting summary adjudication and summary judgment in favor of an insurer on the “no voluntary payments” issue. 

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Last month, we reported on the California Supreme Court’s decision in Yahoo, Inc. v. National Union Ins. Co. of Pittsburgh, PA involving coverage for claims under the Telephone Consumer Protection Act of 1991 (“TCPA”). The Court concluded: “A CGL insurance policy that provides coverage for “personal injury,” defined, in part, as “injury . . . arising out of . . . [o]ral or written publication, in any manner, of material that violates a person’s right of privacy,” can cover liability for violations of the right of seclusion if such coverage is consistent with the insured’s objectively reasonable expectations.

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The Ninth Circuit Court of Appeals held in an unpublished decision in Chevron Env’t. Mgmt. Co. v. Env’t. Prot. Corp. (Chevron Env’t. Mgmt. Co.), No. 20-16206, 2022 WL 10966098 (9th Cir. Oct. 19, 2022) that an insurer’s attempt to intervene in an underlying action against its insured was untimely as the insurer received notice of its insured’s suspended status five months before plaintiff obtained an $18 million default judgment against the insured.

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On November 17, 2022, the California Supreme Court issued its Opinion in Yahoo, Inc. v. National Union Ins. Co. of Pittsburgh, PA. This landmark decision affecting CGL insurers holds that class action complaints alleging violations of the federal Telephone Consumer Protection Act of 1991 (TCPA), 42 U.S.C. § 227, are covered under a CGL policy’s “personal and advertising injury” coverage applicable to injury arising from the offense of “[o]ral or written publication, in any manner, of material that violates a person’s right of privacy.”

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A recent California appellate court decision held that a broad “catch-all” provision in an exclusionary endorsement to an insurance policy applied to bar coverage for all claims asserted in an underlying lawsuit, even though the lawsuit was a “mixed” action containing some otherwise covered claims.

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In Ghukasian v. Aegis Security Insurance Company, 2022 WL 1421511 (Cal. App. 2 Dist. 2022), the California Court of Appeal recently confirmed that, under established California law, an intentional action by an insured is not an “accident” even if the insured believed it had the legal right to take that action.

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In Certain Underwriters at Lloyd’s London v. ConAgra Grocery Prod. Co., 2022 WL 1164981 (Cal. Ct. App. Apr. 19, 2022), the California Court of Appeal rejected an insured’s attempt to foist onto its insurers a $102 million lead abatement settlement that followed from an underlying class action judgment.

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On March 8, 2021, a California appellate court reversed a $9.935 million bad faith verdict against an insurer by drawing a distinction between rejection of a reasonable settlement offer within policy limits and unreasonable rejection of such a settlement offer. In Alexander Pinto v. Farmers Insurance Exchange, 2021 WL 857776 (March 8, 2021), a three judge panel unanimously reversed a jury verdict in favor of the plaintiff and remanded the case to the trial court instructing that a judgment ...

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In Murray v. UPS Capital Ins. Agency (Sept. 11, 2020) 2020 WL 5508039, the Fourth District Court of Appeal reversed and remanded  the granting of a summary judgment motion in favor of insurance broker UPS Capital Insurance Agency, a wholly owned subsidiary of United Parcel Service (UPS).  The reviewing court found the insured, David Murray, presented sufficient evidence in opposition to the motion to raise a triable issue of fact concerning the nature of the duty owed by UPS ...

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This week, the Ninth Circuit of the United States Court of Appeals addressed an issue of first impression in the circuit: under what circumstance may an excess insurer argue improper erosion of underlying policy limits to limit the amount of its obligation?  The Ninth Circuit rejected an excess insurer’s attempt to exclude settlement amounts paid by underlying insurers for allegedly uncovered claims in calculating exhaustion of underlying limits, absent the excess insurers’ showing of fraud or bad faith by ...

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In Ghazarian, et al. v. Magellan Health, Inc., et al., __ Cal.Rptr.3d __, 2020 WL 4558915 (as modified on denial of rehearing, August 31, 2020), the Fourth District Court of Appeal of California recognized that, “Generally, an insurer is not liable for bad faith if its denial of a claim was reasonable.”  However, the Court stated, “In this appeal, we clarify that to avoid bad faith liability, it is not enough than an insurer’s ultimate ...

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In Storm v. Standard Fire Ins. Co., No. B299277 (Cal. Ct. App. July 24, 2020) (“Storm”), the California Court of Appeal held that policy language providing that each party will pay its expenses in arbitration and bear expenses of the arbitrator equally did not preclude recovery of those costs by a party under California Code of Civil Procedure Section 998 (“Section 998”).  Pursuant to Section 998, if (a) a party rejects an offer for settlement prior to trial ...

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Following the California Supreme Court’s decision applying vertical exhaustion in Montrose Chemical Corp. of California v. Superior Court (2020) 9 Cal.5th 215 (“Montrose III”), on July 13, 2020, the California Court of Appeal issued its decision in SantaFe Braun, Inc. v. Insurance Company of North America, 2020 WL 3957290, Case No. A151428 (Ct. App. 1st Dist., Div. 4, July 13, 2020) (“Braun v. INA”), holding that all primary policies covering all time periods do not have to be exhausted before coverage can be triggered under any excess policies.

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