Murchison & Cumming LLP

Summary Judgment Granted in Favor of Excess Carrier in Bad Faith & Coverage Action

October 29, 2010

After six Amended Complaints, a trip to the Court of Appeals and a Phase I Declaratory Relief trial, summary judgment was granted in favor of the firm’s excess insurer client by the Orange County Superior Court on the threshold of the start of the Phase II trial.

This matter involved an underlying multi-million dollar claim that began with allegations that defective bags had been supplied by the insured for the packaging of boxed wines, allegedly resulting in wine contamination. The bags had been manufactured in the U.S., with the contaminated wine generating Australian and European losses/claims. Suit was never filed by the claimant against the insured supplier and the matter was eventually settled. The insured sought coverage for the claim under both its primary and excess policies of insurance. The primary and excess carriers investigated the claim and ultimately indemnified the insured for the loss, with a subrogation action being filed in Australia against the manufacturers of allegedly defective taps.

The insured filed an action for breach of contract and “bad faith” against both the primary and excess carriers in the Orange County Superior Court claiming that, among other things, the insurers had not properly investigated the claim and had not properly indemnified it for the loss. Early in the action, the defense prevailed on a “choice of law” motion, in which the court ruled that Illinois law applied, rather than CA law, and the excess carrier prevailed in having a demurrer sustained without leave to amend on other issues. After a trip to the appellate court on the demurrer resulted in the matter being returned to the trial court for trial, the matter proceeded to the Phase I trial. After receiving certain rulings in Phase I of the trial and prior to the start of the Phase II trial, summary judgment was sought on behalf of the excess carrier on the grounds that the firm’s client did not breach the insurance contract by either failing to indemnify the insured or by failing to investigate the loss. The trial court granted summary judgment for the excess carrier, finding that it had indeed investigated the claim and that it had fully indemnified its insured, thereby leaving plaintiffs with no viable cause of action against the excess carrier.

This matter was handled by attorneys Jean M. Lawler, Bryan M. Weiss and Daniel G. Pezold.

For More Information, Contact:

Jean M. Lawler


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