188 Cal.App.3d 691, B015640, Chubb/pacific Indemnity Group v. Insurance Co. of North America

Docket Nº:B015640
Citation:188 Cal.App.3d 691, 233 Cal.Rptr. 539
Opinion Judge:[10] Feinerman
Party Name:Chubb/pacific Indemnity Group v. Insurance Co. of North America
Attorney:[7] Fidler & Bell and Michael A. Bell for Plaintiff, Cross-defendant and Appellant. [8] Wise, Wiezorek, Timmons & Wise, Michael J. Pearce and Anthony F. Wiezorek for Defendant, Cross-complainant and Respondent.
Case Date:January 08, 1987
Court:California Court of Appeals

Page 691

188 Cal.App.3d 691

233 Cal.Rptr. 539

CHUBB/PACIFIC INDEMNITY GROUP, Plaintiff, Cross-Defendant and Appellant,

v.

INSURANCE COMPANY OF NORTH AMERICA, Defendant, Cross-Complainant and Respondent.

B015640.

California Court of Appeal, Second District, Fifth Division

Jan. 8, 1987.

Page 692

Fidler & Bell and Michael A. Bell, Los Angeles, for plaintiff, cross-defendant and appellant.

Page 693

Wise, Wiezorek, Timmons & Wise and Michael J. Pearce and Anthony F. Wiezorek, Long Beach, for defendant, cross-complainant and respondent.

FEINERMAN, Presiding Justice.

This appeal involves four cases which were consolidated for trial. Each of these four consolidated cases concerns an insured physician who purchased primary malpractice insurance, up to a given policy limit, from appellant, Chubb/Pacific Indemnity Group (Pacific Indemnity) and excess insurance, for the same policy period, from respondent Insurance Company of North America (INA). The insured physician was sued for medical malpractice falling within the period of the Pacific Indemnity and INA coverage. Pacific Indemnity appointed an attorney to defend the physician and initially paid the defense costs, but later, while the litigation against the physician was still pending, Pacific Indemnity contacted INA, demanded that INA take over responsibility for the defense of the insured, and offered to pay its policy limit to INA if INA would accede to that demand. INA refused Pacific Indemnity's demands that it take over the defense, citing the relevant provisions from the INA and Pacific Indemnity insurance policies. Pacific Indemnity continued to defend the insured physician until either the case was settled or judgment was entered against the insured, but it brought the present actions against INA, claiming a right to reimbursement from INA for the attorneys' fees and litigation expenses incurred after it made demand upon INA to take charge of the defense.

Jury trial of the consolidated cases was waived and the matters were submitted for adjudication by the trial court upon agreed statements of facts and written trial briefs. The agreed statements of facts included the following:

In the first of the cases, a $437,821 settlement of claims against the parties' mutual insured, Dr. Austel, was reached after trial and the underlying action against Dr. Austel was dismissed on June 2, 1980. On February 8, 1979, during pendency of the litigation, appellant had sent a letter to respondent stating, "[W]e stand ready to cede our full policy limits of $100,000 to your company.... We expect that if you do not accomplish settlement within a reasonable time period, that you will then take over the responsibility for the future defense costs of this action." Appellant incurred $7,534 in defense fees and costs from the time it sent this letter until the case settled.

Page 694

In the second case, suit was brought against the parties' mutual insured, Dr. Jacques, on October 1, 1971. On November 14, 1979, appellant sent respondent a letter "making available [its] policy limit of $100,000 for settlement purposes." On January 16, 1980, appellant sent a second letter to respondent stating, "if and when a defense verdict is realized, our present offer to extend to INA our $100,000 for settlement purposes shall be deemed immediately withdrawn."

Following a February 11, 1980 jury verdict against Dr. Jacques, judgment was entered against him in the amount of $821,000. Thereafter, Dr. Jacques informed the parties, in writing, that he wished to appeal the verdict against him. Appellant did not feel that an appeal was justified and refused to finance one. Respondent "had reasonable grounds to believe that an appeal was justified...." Respondent paid Dr. Jacques' legal fees and...

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