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J. B. Aguerre Inc. v. American Guarantee and Liability Insurance Co.11/10/1997
California Court of Appeals
B100535
59 Cal.App.4th 6, 68 Cal.Rptr.2d 837, 1997.ca.2
November 10, 1997
J. B. AGUERRE, INC., ET AL, PLAINTIFFS AND APPELLANTS,
v.
AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY ET AL, DEFENDANTS AND RESPONDENTS.
APPEAL from an order of dismissal of the Los Angeles County Superior Court. Super. Ct. No. BC 126315. Edward Y. Kakita, Judge.
Shernoff, Bidart, Darras & Arkin, Michael J. Bidart and Sharon J Arkin for Plaintiffs and Appellants.
Sedgwick, Detert, Moran & Arnold, Lane J Ashley and Robert F. Helfing for Defendants and Respondents.
Neal, J. We concur: Johnson, Acting P.j. Woods, J.
The opinion of the court was delivered by: Neal
SUMMARY
A liability insurer was not in bad faith in funding a settlement with a contribution from its insured where the insured allegedly feared punitive damages, the insurer did not coerce the contribution, the contribution was modest and in reasonable proportion to punitive damage exposure, and where the contribution was the product of collusion between the insured and claimant. We affirm the trial court's judgment for the insurer following sustaining of a demurrer.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs and appellants J.B. Aguerre, Inc., Jean B. Aguerre, and Claudia Aguerre (collectively Aguerre) appeal from an order sustaining a demurrer to their first amended complaint for bad faith breach of an insurance policy, without leave to amend.
Aguerre's first amended complaint alleged the following pertinent facts:
Aguerre operates a dairy business. Aguerre bought primary and excess auto liability policies from defendants and respondents American Guaranty And Liability Insurance Company and Zurich-American Insurance Company of Illinois (collectively Zurich). The primary policy had a limit of $1 million, the excess, $5 million.
The policies (attached with the first amended complaint) afforded coverage for "accidents."
The policy required Aguerre to:
"Assume no obligation, make no payment or incur no expense without our consent, except at the 'insured's' own cost.
"...
"Cooperate with us in the investigation, settlement or defense of the claim or 'suit.'"
The policy included the following "no action" provision:
"LEGAL ACTION AGAINST US
"No one may bring a legal action against [Zurich] under this Coverage Form until:
"...
"Under Liability Coverage, we agree in writing that the 'insured' has an obligation to pay or until the amount of that obligation has finally been determined by judgment after trial."
Westenberg, Aguerre's employee , seriously injured Sandra, Jillian, and Kimberly Kersten (Kerstens) in an accident while driving Aguerre's truck insured under Zurich's policy. Westenberg was convicted of driving drunk at the time of the accident.
Kerstens sued Aguerre and Westenberg (Kersten Action). Aguerre tendered defense of the Kersten Action to Zurich, who agreed to defend.
The trial court ordered the Kersten Action to a non-binding "judicial" arbitration. (Code Civ. Proc., § 1141 et seq.). The award is an exhibit to Aguerre's first amended complaint. The arbitrator awarded the following damages:
Sandra Kersten
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