{"id":487422,"date":"2015-02-12T06:56:33","date_gmt":"2015-02-12T13:56:33","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=487422"},"modified":"2015-02-02T15:57:57","modified_gmt":"2015-02-02T22:57:57","slug":"california-guidance-complex-duty-defend-disputes-additional-insured-status","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/california-guidance-complex-duty-defend-disputes-additional-insured-status\/","title":{"rendered":"California Guidance on Complex Duty to Defend Disputes over Additional Insured Status"},"content":{"rendered":"<p>Max H. Stern | Duane Morris LLP | \u00a0January 28, 2015<\/p>\n<p>In\u00a0McMillin Companies, LLC v. American Safety Indemnity Co.\u00a0(4th Dist. Div. 1, No. D063586, January 22, 2015 (published in relevant part)), the California Court of Appeal for the Fourth District has provided some meaningful guidance on how a trial court should handle issues that regularly come up in cases where an alleged additional insured claims breach of the duty to defend by multiple insurers, including explaining the significance of an insurer\u2019s unsuccessful attempt to obtain summary judgment on the duty to defend, the significance of other insurer settlements on claims against the remaining insurer, and the procedure for applying an offset to the policyholder\u2019s claim for such settlements.<\/p>\n<p>Most importantly, the decision corrects a common mistake made about the California duty to defend determination: the misperception that the trial court\u2019s pre-trial denial of an insurer\u2019s motion for summary judgment on the duty to defend establishes that the duty to defend is owed to the policyholder.\u00a0 The seminal\u00a0Montrose\u00a0decision set forth the rule that an insurer can only get summary judgment that it has no duty to defend when it establishes by undisputed facts that there is no potential for coverage, and the\u00a0Horace Mann\u00a0decision added that, when coverage depends on an unresolved dispute of fact as to the claim, that dispute not only requires denial of the insurer\u2019s motion but further establishes the potential for coverage and thus the duty to defend.\u00a0 But that does not mean that every denial of an insurer\u2019s motion for summary establishes the duty to defend.<\/p>\n<p>In\u00a0McMillin Companies, the trial court accepted the policyholder\u2019s contention that the insurer\u2019s earlier unsuccessful motion for summary judgment established the duty to defend, and so the trial court granted the policyholder\u2019s motion in limine to bar evidence at trial as to whether the duty to defend was triggered under the insurer\u2019s blanket additional insured endorsement.\u00a0 The Court of Appeal reversed, noting that the insurer lost the summary judgment motion because it had not met its initial burden of proof, not because the judge had found any genuine issue of material fact as to the potential for coverage.\u00a0 Because a denial for failing to meet the initial burden of proof does not establish an issue of material fact or the potential for coverage, the insurer was entitled to a retrial to contest the duty to defend.<\/p>\n<p>The Court of Appeal also addressed how the trial court should have dealt with the policyholder\u2019s prior settlements of its additional insured claims against other insurers. Where damages are disputed, the offset for such settlements should be treated as a limit on the policyholder\u2019s eventual recovery and determined after trial had established the recoverable damages.\u00a0 The Court of Appeal recognized the principle that a policyholder who is defended by another insurer has no damages for breach of the duty to defend (from cases such as Emerald Bay), but it explained that post-breach settlements do not directly reduce damages and so generally should not be applied to reduce the claim in a motion in limine before trial.<\/p>\n<p>The decision includes discussion about appellate procedure that may be of interest to practitioners.\u00a0 The unpublished portion of the decision has some strong criticism of both sides in the case for not providing adequate citation to the record with respect to the material issues in the case and applies the remedy of ignoring points not supported by record cites.\u00a0 The decision also discusses the complexity of determining the appropriate standard of review when motions in limine are used to exclude all evidence and dispose of issues, instead of the preferred procedures of substantive motions (such as motions for summary judgment, nonsuit, and directed verdict).<\/p>\n<p>via <a href=\"http:\/\/www.lexology.com\/library\/detail.aspx?g=d41f0aca-8bf3-43ed-950c-275932425cd0&amp;utm_source=Lexology+Daily+Newsfeed&amp;utm_medium=HTML+email+-+Other+states+section&amp;utm_campaign=Lexology+subscriber+daily+feed&amp;utm_content=Lexology+Daily+Newsfeed+2015-02-02&amp;utm_term=\">California guidance on complex duty to defend disputes over additional insured status &#8211; Lexology<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Max H. Stern | Duane Morris LLP | \u00a0January 28, 2015 In\u00a0McMillin Companies, LLC v. American Safety Indemnity Co.\u00a0(4th Dist. Div. 1, No. D063586, January 22, 2015 (published in relevant part)), the California Court of Appeal for the Fourth District has provided some meaningful guidance on how a trial court should handle issues that regularly&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/california-guidance-complex-duty-defend-disputes-additional-insured-status\/\">Continue reading <span class=\"screen-reader-text\">California Guidance on Complex Duty to Defend Disputes over Additional Insured Status<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10,3],"tags":[382,88,57],"class_list":["post-487422","post","type-post","status-publish","format-standard","hentry","category-duty-to-defend","category-insurance-claims","tag-additional-insured","tag-california","tag-duty-to-defend-2","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>California Guidance on Complex Duty to Defend Disputes over Additional Insured Status - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/california-guidance-complex-duty-defend-disputes-additional-insured-status\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"California Guidance on Complex Duty to Defend Disputes over Additional Insured Status - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Max H. Stern | Duane Morris LLP | \u00a0January 28, 2015 In\u00a0McMillin Companies, LLC v. American Safety Indemnity Co.\u00a0(4th Dist. 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