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Read the full article at https://lnkd.in/gC_ym3gF and see the full video at https://lnkd.in/gCF37aWz and at https://lnkd.in/gEf-yAff and at https://zalma.com/blog plus more than 4700 posts.
The
underwriting of an insurance policy requires evaluation of risks of
loss faced by the proposed insured. When a proposed insured advises the
underwriter that it has received an intent to sue from customers of the
insured a prudent underwriter will exclude the known risk faced by the
Sunnyside Mobile Estate was excluded.
California Capital Insurance
Company (CCIC), who defended and indemnified its insured Sunnyside
Mobile Estates appealed from a judgment rendered in favor of Gotham
Insurance Company (Gotham) on CCIC’s complaint for equitable
contribution toward funds it paid.
In California Capital Insurance Company v. Gotham Insurance Company,
F084350, California Court of Appeals, Fifth District (November 6, 2023)
the Court of Appeals interpreted the competing insurance policies.
On
April 8, 2016, mobilehome park residents, by and through one of the
residents, sent Ormond a Notice of Intention to Commence Action dated
March 1, 2016 (the “notice of intention to sue”) pursuant to the
Mobilehome Residency Law (MRL).
Equitable contribution apportions costs among insurers sharing the same level of liability on the same risk.
The Ormond Insureds’ Insurance and Their Tender of Defense and Indemnity of the Alonso Action to CCIC and Gotham
The
Gotham policy contained an endorsement titled “Failure to Maintain
Exclusion, Mobile Home Parks-California” addressed in the notice of
intention to sue.
Moreover, each and every cause of action
asserted in the Alonso complaint was premised, at least in part, on
provisions of the MRL.
As the California Supreme Court has said, “where there is no duty to defend, there cannot be a duty to indemnify.”
If
Sunnyside Mobile Estates did not tell Gotham of the notice of intent to
sue Gotham could have rescinded the policy for misrepresentation of
material facts. Sunnyside did not and, as a result, Gotham excluded the
type of loss that resulted in the Alonso suit. CCIC knew about the loss
before its policy expired and Gotham knew of it before it happened and
the Alonso suit was filed before the inception of the policy. There was
no equity involved in this attempt at equitable indemnity and CCIC
attempted to force Gotham to pay that which it did not owe.
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Underwriting Against a Certain Loss and Claim is AppropriateFACTUAL AND PROCEDURAL BACKGROUNDZALMA OPINION(c) 2023 Barry Zalma & ClaimSchool, Inc.