Procedural Posture

Procedural Posture

Real Parties in Interest, the insureds, petitioned for review of an order from the Court of Appeal of California, Second Appellate District, Division Three, determining petitioner insurers’ duty to indemnify was limited to money ordered by a court, and did not extend to any expenses required by an administrative agency pursuant to an environmental statute. Appellants sought counsel from a small business attorney.

Overview

The supreme court held petitioner insurers’ duty to indemnify the real party in interest, the insureds, for all sums the insureds became legally obligated to pay as damages, as imposed by the standard comprehensive general liability insurance policy, was limited to money ordered by a court. The standard insurance policy stated the insurer had a “duty to defend” the insured “in any suit seeking damages” for harm alleged within coverage. Limiting coverage to a civil action prosecuted in a court did not run counter to the insured’s objectively reasonable expectations. The court refused to rewrite any provision of any contract, including the standard policy underlying any individual policy, for any purpose. The duty to defend was broader than the duty to indemnify. The duty to defend was not broad enough to extend beyond a “suit.” Thus, the duty to indemnify was not broad enough to extend beyond “damages” ordered by a court. Expenses required by an administrative agency pursuant to an environmental statute, whether for the cleanup of a contaminated site and the abatement of the contamination’s effects or otherwise, did not constitute money ordered by a court.

Outcome

Judgment affirmed. Petitioners duty to indemnify insureds, the real parties in interest, for “all sums that the insured became legally obligated to pay as damages” was limited to money ordered by a court. The duty did not extend to expenses required by an administrative agency pursuant to an environmental statute, including any expenses required by the regional water boards pursuant to the Porter-Cologne Act.

Procedural Posture

Appellants claimants sought review of a judgment notwithstanding the verdict from the Superior Court of El Dorado County (California) after a jury had ruled against appellees banks in a fraud action for appellants’ failure to list or otherwise identify their claims during their bankruptcy proceedings.

Overview

Appellants claimants filed a lawsuit against appellee bank based on an alleged false promise to enter into a loan contract with them. The jury found in favor of appellants in the fraud action; however, the trial court granted appellees banks’ motion for judgment notwithstanding the verdict based upon appellants’ failure to list or otherwise identify their claims during their bankruptcy proceedings. On appeal, the court held that appellants’ claim for fraud was barred since they failed to list or otherwise identify the claim in their bankruptcy proceedings up to and through the time the bankruptcy court issued orders confirming their reorganization plans. The court found that the evidence was insufficient to support a cause of action for fraud. Appellants failed to show damage specifically attributable to the short-lived promise of a loan and accordingly failed to establish a cause of action for fraud based upon that promise. Therefore, the judgment of the trial court was affirmed.

Outcome

The court affirmed the trial court’s grant to appellees banks of a judgment notwithstanding the verdict. Appellants claimants’ claim for fraud was barred since they failed to list or otherwise identify the claim in their bankruptcy proceedings up to and through the time the bankruptcy court issued orders confirming their reorganization plans.