Truck Ins. Exch. v. Fed. Ins. Co.
| Decision Date | 07 April 2021 |
| Docket Number | B302365 |
| Citation | 63 Cal.App.5th 211,277 Cal.Rptr.3d 579 |
| Court | California Court of Appeals Court of Appeals |
| Parties | TRUCK INSURANCE EXCHANGE, Plaintiff and Respondent, v. FEDERAL INSURANCE COMPANY, Defendant and Appellant. |
Chamberlin & Keaster, Kirk C. Chamberlin and Michael C. Denlinger, Encino, for Defendant and Appellant.
Pia Anderson Moss Hoyt, Scott R. Hoyt and John P. Mertens for Plaintiff and Respondent.
Appellant asks us to reverse the trial court's order denying its special motion to strike a civil complaint for fraud as a strategic lawsuit against public participation under Code of Civil Procedure section 425.16. Appellant also asks that we reverse the trial court's order overruling its evidentiary objections.
We affirm both orders.
We recite only the facts relevant to the issue before us. Since 1986, more than 30,000 plaintiffs have filed lawsuits against Moldex-Metric, Inc. (Moldex), alleging Moldex manufactured defective air respirators and masks that failed to protect them from exposure to silica, asbestos, and other hazardous substances, leading to bodily injury.
Moldex gave notice of the lawsuits to its primary liability insurers, which provided indemnity and coverage for Moldex's defense of the lawsuits until the year 2003, when the primary liability policies’ limits were exhausted. Moldex then gave notice of the lawsuits to its excess and umbrella liability insurers—namely, appellant Federal Insurance Company (Federal) and First State Insurance Company (First State)—which began to indemnify and defend Moldex in the lawsuits.
On December 20, 2004, Moldex discovered that it was additionally insured under a primary liability policy issued by Truck Insurance Exchange (Truck) and sought coverage from Truck.1 Federal and First State sought contribution from Truck for the indemnity and defense fees they had already paid under their respective umbrella policies. As a result, litigation ensued between Truck, Federal, and First State over coverage and the extent to which Truck was obligated to reimburse Federal and First State for payments made for Moldex's defense and indemnity, plus interest.
On September 20, 2007, Federal filed a complaint for contribution, reimbursement, and declaratory relief against Truck, First State, and Moldex, in Los Angeles Superior Court case No. BC377842. Federal alleged it "undertook Moldex's defense" and indemnified Moldex "without reservation pursuant to the terms of the Federal policy,"2 a copy of which was attached as an exhibit to the complaint. However, "in light of the existence of available and unexhausted primary insurance," Federal believed it had "no duty to defend and no duty to reimburse defense costs" incurred by Moldex. "[A]s the Truck policy is a primary policy and the Federal policy is an umbrella policy, it is the Truck policy that should have responded to [Moldex's] actions." As such, Federal alleged it had no obligation to pay "unless and until the Truck policy has properly exhausted ." Federal sought reimbursement from Truck for approximately $4.5 million in defense costs and $98,945 in indemnity costs, plus interest thereon.
Truck filed an answer denying the allegations contained in Federal's complaint. It asserted 38 affirmative defenses, including the following as and for its 23rd defense: "To the extent that Moldex and/or Federal voluntarily paid, assumed an obligation to pay, or incurred an expense without notice and approval by Truck, Truck has no obligation to Moldex and/or Federal for any such payment, obligation or expense." (Some capitalizations omitted.)
Following years of litigation, in February 2013, the court entered judgment against Truck, awarding approximately $6 million to Federal ($3,854,391 in defense costs plus $1,992,058 interest and $98,213 in indemnity costs plus $56,835 interest). The court found Federal had paid and/or reimbursed "the defense costs Moldex incurred after December 20, 2004 under an umbrella policy ." The court found Truck had a duty to defend Moldex in the lawsuits pursuant to its primary liability policy upon Moldex's December 20, 2004 notice to Truck about the lawsuits. The court further found Truck had a duty to reimburse Federal and First State for all payments each had made for Moldex's defense and indemnity costs incurred between December 2004 and June 2011.
Truck filed an appeal from the February 2013 judgment in this court (Case No. B248065).
While Truck's appeal was pending, Truck, Federal, and First State reached a "settlement agreement and release" signed July 24, 2013. Per the terms of the settlement, Truck agreed to pay Federal the total amount of $4,858,700 for the defense and indemnity costs. Truck agreed to "continue to defend and indemnify Moldex ... until such time as Truck establishes that it has properly exhausted the Truck Policy," in which case "Truck agrees to work with Moldex, Federal, and First State to ensure an orderly transition of the defense." Additionally, Truck agreed to file a request for an order of dismissal of its pending appeal, with prejudice and without costs, within five days.
"In consideration of all of the terms of this Agreement ..., the Parties each release[d] each other from any and all Claims that are, were or could have been asserted in the Action." (Italics added.) However, the agreement carved out an exception: the releases set forth "shall not apply to, have any effect on or constitute a release" of "any of Truck's rights to claim contribution for any indemnity paid over its limit and defense fees incurred therewith," to the extent such rights exist. The releases were not "intended to, nor shall be construed to, release, waive or otherwise affect the Parties’ rights and obligations under th[e] Agreement." And finally, each party "represent[ed] and warrant[ed] that ... this Agreement has been ... executed and delivered in good faith, and for ... valuable consideration."
Truck thereafter dismissed its pending appeal.
In January 2014, Truck filed a complaint against Federal, First State, and Moldex that included a cause of action for reimbursement and/or contribution of defense fees and indemnity payments Truck made post-exhaustion of its primary policy's limit (Los Angeles Superior Court Case No. BC534069). Truck sought to establish that its primary policy's limit was exhausted in July 2013.
Litigation continued for some time. In May 2017, the Court of Appeal reversed the trial court's determination that Truck's primary policy had not exhausted, and found it was indeed exhausted on July 24, 2013 (Case No. B272378). On remand, Truck sought to recover from Federal and First State the defense fees it paid after its primary policy was exhausted. It was at this point that Federal raised for the first time that it never had a duty to defend Moldex and had only voluntarily done so as a business decision.
More specifically, via a declaration filed on December 1, 2017 in support of Federal's motion for summary adjudication "re: the duty to defend post July 24, 2013 expenses," Federal revealed it had "made [a] business decision, at its option , to exercise its right to associate in the defense of the Underlying Lawsuits and began to defend." (Italics added.) Because it had no duty to defend, Federal argued it could not be liable for contribution and refused to reimburse Truck.
The trial court agreed with Federal and entered judgment against Truck. We were not provided a copy of the complaint, order, or resulting judgment; however, the parties’ briefing provides the trial court found the language set forth in Federal's umbrella policy did not impose on Federal a duty to defend and, instead, afforded Federal the right to associate in the defense. Truck appealed from the judgment, and its appeal is currently pending before Division 5 of this Court of Appeal (Case No. B298906).
For purposes of this appeal, on July 30, 2019, Truck filed a civil complaint against Federal in Los Angeles Superior Court for "fraud perpetrated by Federal in support of its efforts to obtain contribution for amounts it paid to defend Moldex." Truck claimed it was fraudulently induced to execute the July 24, 2013 settlement agreement due to Federal's failure to disclose that its payment of Moldex's defense fees and indemnity costs was the result of a voluntary business decision.
We summarize the allegations set forth in Truck's complaint: Federal made statements in case #1 (i.e., Federal's reimbursement action) in a manner so as to conceal the fact that Federal made a voluntary business decision to pay the defense fees without any duty under its policy to do so. Federal represented to the court and named parties that it paid the defense fees "under its policy" and "pursuant to" its policy, as though it paid defense fees in satisfaction of its duty to defend Moldex.3 For instance, in its motion for summary adjudication filed November 2009, Federal argued it "defended and indemnified [Moldex] pursuant to an excess policy of insurance." Federal made no mention that it had voluntarily opted to make the payments, as a business decision.
Truck posited: "[H]ad Federal taken the position in [case #1] that it was not obligated to pay the Defense Fees, it would have immediately lost the ... Action and been denied a reimbursement judgment against Truck." Truck further posited: "Had Federal acknowledged its payments were voluntary before July 24, 2013, rather than in December 2017, Truck would not have entered into the Settlement, nor paid Federal nearly five million dollars thereunder." Truck alleged the February 2013 judgment and July 2013 settlement agreement were not entered in good faith and were obtained via Federal's "knowingly false statements" and "fraudulent...
To continue reading
Request your trial
- Sonoma Cnty. Human Servs. Dep't v. S.T. (In re A.T.)
-
Truck Ins. Exch. v. Fed. Ins. Co.
...not to publish in the Official Appellate Reports the opinion in the above- entitled appeal filed April 7, 2021, which appears at 63 Cal.App.5th 211. (Cal. Const., art. VI, section 14; Rules of Court, rule 8.1125(c)(1).) ...