Home Ins. Co. v. Superior Court

• Decision Date: 22 August 2002
• Docket Number: No. B157650.,B157650.
• Citation: 124 Cal.Rptr.2d 314,101 Cal.App.4th 515
• Parties: The HOME INSURANCE COMPANY, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent; Montrose Chemical Corporation of California, Real Party in Interest.
• Court: California Court of Appeals Court of Appeals

124 Cal.Rptr.2d 314

101 Cal.App.4th 515

The HOME INSURANCE COMPANY, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent Montrose Chemical Corporation of California, Real Party in Interest.

No. B157650.

Court of Appeal, Second District, Division 1.

August 22, 2002.

Review Granted November 13, 2002.

Charlston, Revich, Chamberlin & Williams, Stephen P. Soskin, and Timothy F. Rivers, Los Angeles, for Petitioner.

Latham & Watkins, David L. Mulliken, San Diego, Diana Strauss Casey, and Marc D. Halpern, Menio Park, for Real Party in Interest.

No appearance for Respondent.

MIRIAM A. VOGEL, J.

In 1990, an insured sued its primary insurers to determine whether they had a duty to defend their insured in an environmental clean-up action. Over the course of 11 years and long after one of the primary insurers exercised a peremptory challenge against the judge to whom the case was originally assigned (Code Civ. Proc., § 170.6), the insured settled with all of the primary carriers, dismissed them from this action, and filed an amended complaint in which it added its excess insurer as a defendant and asked for a determination that the excess carrier had a duty to indemnify its insured. The excess insurer answered and filed a peremptory challenge against the judge to whom the case had been re-assigned in 1993. The insured objected, claiming the excess insurer was on the same "side" as the primary insurers and that the defense "side" had used its peremptory challenge. The trial court agreed with the insured and denied the motion for disqualification. In response to the excess carrier's writ petition, we hold that when primary and excess insurers are sued by their common insured in the same action, the interests of the two groups of insurers are substantially adverse to each other and they are on different sides within the meaning of Code of Civil Procedure section 170.6.

FACTS

In July 1990, Montrose Chemical Corporation of California sued its primary insurance carriers for declaratory relief, asking for a determination that the carriers were obligated to defend Montrose in an environmental clean-up action filed by the United States. Montrose's declaratory relief action was originally assigned to Judge G. Keith Wisot but one of the defendants (Travelers Indemnity Company) filed a motion to disqualify Judge Wisot (Code Civ. Proc., § 170.6) and the case was assigned to a different judge.¹ By mid-1993, the case had been assigned to Judge Joseph R. Kalin for all purposes.

In November 2001, Montrose filed a second amended complaint in which all of the primary insurers were dropped and The Home Insurance Company, Montrose's excess insurer, was added as a defendant. The duty to defend allegations were dropped and the only remaining cause of action sought a declaration that Home was obligated to indemnify Montrose in underlying clean-up action. In January 2002, Montrose filed a third amended complaint to add an allegation that the "limits of the coverage underlying one or more of the Home policies have been exhausted."

Home answered Montrose's complaint and timely moved to disqualify Judge Kalin. (§ 170.6, subd. (2).) Montrose objected to the challenge, reminded the court that Travelers had already filed a peremptory challenge, and contended that Home was on the same "side" as the original defendants. Following a hearing at which Judge Kalin found that Home's interests as Montrose's excess insurer were not "substantially adverse" to the interests of Montrose's primary carriers, Home's disqualification motion was denied.

Home then filed a petition for a writ of mandate, asking us to direct Judge Kalin to accept its peremptory challenge. Over Montrose's opposition, we stayed proceedings in the trial court, issued an order to show cause, and set the matter for hearing.

DISCUSSION

A.

As relevant to the issues before us, section 170.6 provides:

"(1) No judge ... shall try any civil or criminal action or special proceeding of any kind or character nor hear any matter therein that involves a contested issue of law or fact when it shall be established as hereinafter provided that the judge ... is prejudiced against any party or attorney or the interest of any party or attorney appearing in the action or proceeding.

"(2) Any party to ... such action or proceeding may establish this prejudice by an oral or written motion without notice supported by affidavit or declaration under penalty of perjury ... that the judge . .. before whom the action or proceeding is pending or to whom it is assigned is prejudiced against any such party ... so that the party ... cannot or believes that he or she cannot have a fair and impartial trial or hearing before the judge .... If directed to the trial of a cause that has been assigned to a judge for all purposes, the motion shall be made to the assigned judge or to the presiding judge by a party within 10 days after notice of the all purpose assignment, or if the party has not yet appeared in the action, then within 10 days after the appearance....

"(3) If the motion is duly presented and the affidavit or declaration under penalty of perjury is duly filed ..., thereupon and without any further act or proof, the judge supervising the master calendar, if any, shall assign some other judge ... to try the cause or hear the matter.... Except as provided in this section, no party or attorney shall be permitted to make more than one such motion in any one action or special proceeding pursuant to this section; and in actions or special proceedings where there may be more than one plaintiff or similar party or more than one defendant or similar party appearing in the action or special proceeding, only one motion for each side may be made in any one action or special proceeding." (Emphasis added.)

B.

According to Home, the defendants in this case cannot be lumped together and must be viewed as two sides with substantially adverse interests—the primary carriers on the one hand, the excess carrier on the other. (Johnson v. Superior Court (1958) 50 Cal.2d 693, 700, 329 P.2d 5 [holding that a defendant in a multi-defendant case is not in a less favorable position than a lone defendant because "[s]uch a party cannot possibly be placed at a disadvantage unless one of his coparties has already disqualified a judge in the same action, and then only if his interests are substantially the same as the interests of the one who exercised the challenge"].)

According to Montrose, there never was and is not now a "substantial" adverse interest between Home and the primary carriers, and the defendants together constitute one side within the meaning of section 170.6. (Pappa v. Superior Court (1960) 54 Cal.2d 350, 354-355, 5 Cal.Rptr. 703, 353 P.2d 311 [the burden is on the party seeking disqualification to establish that its interests are substantially adverse to those of the other defendants; although "differences of opinion between codefendants as to procedural matters ... might, under some circumstances, show the existence of substantially adverse interests, it should not be assumed that this is true in the absence of a showing of what the circumstances are and how they affect each of the parties and the relationship between them"].)

To resolve this issue, we look first at the nature of the relationship between primary and excess carriers and conclude, as explained below, that (when sued by their common insured) they are usually adverse to each other. Given that conclusion, we then consider whether an actual and present adversity must be shown in this context, or whether the potential suffices to create a third side for purposes of section 170.6 and conclude, as explained below, that in this context the potential is sufficient.

C.

"Separate policies with separate limits of liability often cover the same risk [and there] may be several layers of `excess' insurance .... [¶] Primary insurance (`the first layer') provides immediate coverage upon the `occurrence' of a `loss' or the `happening' of an `event' giving rise to liability: `Primary coverage is insurance coverage whereby ... liability attaches immediately upon the happening of the occurrence that gives rise to liability.'" (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2001) ¶¶ 8:74 to 8:75, pp. 8-31 to 8-32 (hereafter Rutter Insurance Litigation), quoting Olympic Ins. Co. v. Employers Surplus Lines Ins. Co. (1981) 126 Cal. App.3d 593, 597, 178 Cal.Rptr. 908; see also Community Redevelopment Agency v. Aetna Casualty & Surety Co. (1996) 50 Cal.App.4th 329, 337-338, 57 Cal.Rptr.2d 755.) In the context of liability insurance, "the insurer providing such coverage has the primary duty to defend and indemnify the insured ..., unless otherwise excused or excluded by specific policy language." (Rutter Insurance Litigation, supra, ¶ 8:75, p. 8-32.)

"Excess insurance (`the second layer') provides coverage after other identified insurance is no longer on the risk. `Excess' means `insurance that begins [only] after a predetermined amount of underlying coverage is exhausted and that does not broaden the underlying coverage.'" (Rutter Insurance Litigation, supra, ¶ 8:76, p. 8-32, quoting in part Wells Fargo Bank v. California Ins. Guarantee Assn. (1995) 38 Cal.App.4th 936, 940, fn. 2, 45 Cal.Rptr.2d 537; see also Fireman's Fund Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279, 1304, 77 Cal.Rptr.2d 296 ["Excess insurance provides coverage after other identified insurance is no longer on the risk"].) More specifically, an excess insurance policy may be written as excess to a particular policy identified by name and number, or as excess to coverage provided by a particular insurer, or as excess to the limits of any other underlying insurance policy—in which event the excess insurer has no duty to defend or indemnify until all underlying policies available to the insured, whether or not listed in the excess policy,...