Phoenix Insurance v. Sukut Construction Co.

California Court of Appeal Sep 23, 1982 No. Civ. 62033Published

Before: Klein

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Holding. The court held that the Phoenix insurance policy did not provide coverage because the insured could have reasonably foreseen the claim, and that the Mission insurance policy did provide coverage because a claim was made during its policy period.

Issues

Whether the trial court erred in finding the Phoenix policy excluded coverage due to a failure of a condition precedent.
Whether the trial court erred in finding that a claim was made against the insured during the Mission policy period.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The trial court therefore did not err in denying coverage under the Phoenix policy.”

“Since the Mission policy was in force at the time of the meeting, Mission is responsible for defending the legal malpractice action and for any liability resulting from it.”

Opinion

KLEIN, P. J.

Defendant and appellant Mission Insurance Company (Mission) appeals from the judgment in a declaratory relief action which holds it responsible for defending Attorney Arnold S. Malter and Arnold S. Malter, a professional corporation, (Malter) in the legal malpractice suit brought by Sukut Construction, and which holds plaintiff and respondent Phoenix Insurance Company (Phoenix) not liable for such defense.

Defendants Sukut Construction Company and Myron C. Sukut (Sukut) appeal only that portion of the judgment which relieves Phoenix of responsibility.

Because we find no error, we affirm the decision of the trial court.

Procedural and Factual Background

In 1972 Malter executed a mechanics lien for its client, Sukut Construction. In November 1975 during a foreclosure action on the property subject to the mechanics lien, Sukut discovered that because of the narrow drafting, the lien might inadequately protect him. Sukut immediately notified Malter of the potential problem.

On December 9, 1975, Sukut and Malter met at the Marcus Restaurant, at which time and place Sukut asked Malter to work without pay to correct the problem with the lien. Malter agreed subject to three conditions. Because Sukut would not accept the conditions, Malter did nothing more on the case.

A professional liability insurance policy issued by Mission covered Malter from January 4, 1975, to January 4, 1976. Malter then changed insurance carriers and was insured from January 8, 1976, to January 8, 1977, by Phoenix Insurance Company.

[676]

On May 5, 1976, Sukut notified Malter by letter that he was holding him responsible for damages resulting from the defective lien. On August 16, 1976, Sukut filed a legal malpractice action. Phoenix, after reserving its rights, defended the action on Maker’s behalf.

Phoenix brought this action seeking a declaration that it had no duty to defend or indemnity Malter in the legal malpractice case, and to determine whether either or both companies’ insurance policies cover the Sukut suit which is still pending.

Phoenix Insurance v. Sukut Construction Co.

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KLEIN, P. J.

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