California Insurance Law Quarterly - Spring 2014 Newsletter
FEATURED ARTICLE
California Court of Appeal Holds Adjusters May Be Sued For Negligent Misrepresentations Made Within the Course and Scope of Their Employment
By William D. Burger, Jr. and Negar Azarfar
On April 2, 2014, the California Court of Appeal held in Bock v. Hansen, 225 Cal. App. 4th 215 (2014) that an insurance adjuster may be held liable to an insured under a negligent misrepresentation theory. If followed, this published decision, which departs from how prior courts have addressed negligence-based claims against claims representatives, could have significant implications for insurance coverage matters throughout the state.
California Insurance Case Summaries, January-March 2014
Transport Ins. Co. v. Superior Court , 222 Cal. App. 4th 1216 (2014)
In Transport Insurance Co., the California Court of Appeal held that because the additional insured was the party seeking coverage, ambiguities found in the insurance policy had to be resolved in a manner consistent with the objectively reasonable expectations of the additional insured—rather than the objectively reasonable expectations of the named insured.
LAC Basketball Club, Inc. v. Federal Insurance Co. , 2014 U.S. Dist. Lexis 58836 (C.D. Cal. Feb. 14, 2014)
In LAC Basketball Club, the district court held that an exclusion for any claim based on or arising out of invasion of privacy applied to a suit alleging violations of the Telephone Consumer Protection Act (“TCPA”) because the TCPA was enacted in order to protect the privacy of telephone subscribers.
Guidry v. U.S. Department of the Interior , 2014 U.S. Dist. LEXIS 24787 (N.D. Cal. Feb. 25, 2014)
In Guidry, the district court held that, in an action where an underlying co-defendant (the “conservancy”) breached a contract by failing to name the other underlying co-defendant (the “tour company”) as an additional insured under its insurance policy, the tour company’s insurer could not maintain a claim for equitable subrogation to recover all the underlying defense costs it paid because it did not allege that the conservancy’s negligence was the cause of the accident that led to the underlying lawsuit.
North Coast Med., Inc. v. Hartford Fire Ins. Co. , 2014 U.S. Dist. LEXIS 20701 (N.D. Cal. Feb. 17, 2014)
In North Coast Medical, the district court held that the insurer had no duty to defend or indemnify its insured in connection with an underlying trademark infringement action because the Intellectual Property Exclusion in its policy barred coverage as a matter of law.
NewLife Scis. LLC v. Landmark Am. Ins. Co. , 2014 U.S. Dist. LEXIS 21469 (N.D. Cal. Feb. 18, 2014)
In NewLife Sciences, the district court held that the notice-prejudice rule was applicable to a policy that had a condition requiring claims to be reported “as soon as practicable, but in no event later than 30 days after the Policy Period.”
Mortazavi v. Federal Ins. Co. , 2014 U.S. Dist. LEXIS 31555 (S.D. Cal. Mar. 11, 2014)
In Mortazavi, the district court found in favor of a carrier on its motion to dismiss the insureds’ claim for breach of contract, but found that the insured had properly pled its claim for bad faith.
North Counties Engineering, Inc. v. State Farm General Ins. Co. , 224 Cal. App. 4th 902 (2014)
In North Counties Engineering, the California Court of Appeal held that an insurer’s duty to defend its insured under a comprehensive business liability policy was triggered based on limited allegations relating to the insured’s non-professional work.
Barks v. Castlepoint Nat’l Ins. Co. , 2014 U.S. Dist. LEXIS 43447 (C.D. Cal. Mar. 26, 2014)
In Barks, the district court found that there was an issue of material fact as to whether the general contractor’s alleged failure to construct a home in accordance with the residential community’s Covenants, Conditions and Restrictions (“CC&Rs”) was an “accident” that would be covered as an “occurrence” under the insurance policy at issue.
Dillon v. Continental Casualty Co. , 2014 U.S. Dist. LEXIS 41709 (N.D. Cal. Mar. 26, 2014)
In Dillon, the district court held that Insurance Code Section 533 (“Section 533”) precluded insurance coverage for the insured’s alleged operation of a “Ponzi Scheme” relating to the exchange of real estate.
Isaacs v. Chartis Specialty Ins. Co. , 2014 U.S. Dist. LEXIS 44053 (S.D. Cal. Mar. 31, 2014)
In Isaacs, the district court held that the insurer breached its duty to defend an underlying action alleging that the insureds were negligent and breached their fiduciary duties in providing investment advice because the conduct in question potentially involved covered professional services.
Am. States Ins. Co. v. Travelers Prop. Cas. Co. of Am. , 223 Cal. App. 4th 495 (2014)
In American States, the California Court of Appeal held that the primary purpose of a food truck was to serve as a mobile kitchen and was not to transport people, that the “mobile equipment” exception to the automobile exclusion of the CGL policy therefore applied, and that the CGL policy provided coverage.
Travelers Prop. Cas. Co. of America v. LK Transportation, Inc. , 2014 U.S. Dist. LEXIS 33660 (E.D. Cal. Mar. 13, 2014)
In LK Transportation, the district court found that “hired” or “borrowed” automobiles, as those terms were used in an automobile policy, did not include vehicles owned and driven by the insured’s agents and, therefore, an accident caused by the agent did not come within the policy’s coverage for “hired” or “borrowed” vehicles.
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