Hartford Casualty Insurance v. Mid-Century Insurance

California Court of Appeal Jul 27, 1994 No. H011280Published

Before: Premo

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Holding. An insurer's payment of the financial responsibility limit on behalf of a named insured satisfies its total obligation to defend and indemnify all other insureds, including permissive users and their employers, when the policy limits coverage for such parties to the statutory minimum.

Issues

Whether an insurer's payment of the financial responsibility limit on behalf of a named insured satisfies its defense and indemnity obligations to other insureds under the same policy.
Whether policy language limiting coverage for permissive users to the financial responsibility law is conspicuous and unambiguous.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Mid-Century’s payment of $15,000 to Haines on Solomon’s behalf extinguished Solomon’s liability as owner.”

“We hold that it does.”

“Mid-Century promised only to defend and to pay $15,000 for a permissive user accident, regardless of the number of insured persons.”

[1785]

Opinion

PREMO, Acting P. J.

— Plaintiff Hartford Casualty Insurance Company (hereafter, Hartford) appeals from the judgment entered after a court trial on stipulated facts. Hartford sued Mid-Century Insurance Company (hereafter, Mid-Century) contending it was equitably entitled to indemnity for settlement costs of $35,000 and defense costs of $26,500 in the underlying action. The trial court found that Hartford was not entitled to indemnity from Mid-Century. The underlying action, Haines v. Edwards (Super.Ct. Santa Clara County, No. 636559), was one for personal injuries arising out of an automobile collision. We affirm.

Facts and Procedural Background

On February 19, 1987, Robert Edwards was driving a 1965 CMC truck while acting in the course and scope of his employment with Azonic Technology, Inc. (hereafter, Azonic). The truck belonged to Stuart Solomon, who was also employed by Azonic, and who had lent it to his employer. Solomon had auto insurance on the truck with Mid-Century. While Edwards was driving, he rear-ended a car driven by Thomas Haines, injuring Haines. Haines sued Solomon and Edwards for negligence, and later added Azonic as a Doe defendant.

It is undisputed that Solomon’s insurance policy with Mid-Century provided primary coverage to Solomon, Edwards, and Azonic, and that Hartford provided excess coverage to Azonic and Edwards. Mid-Century’s policy limits were $100,000 for bodily injury to each person, and $300,000 for each occurrence.

Mid-Century settled with Haines for $15,000, on Solomon’s behalf only, and Haines dismissed with prejudice as to Solomon only. Initially Edwards’s own insurer, State Farm, afforded him a defense. It filed an answer for him. State Farm withdrew its defense several months later, however, and Edwards proceeded in proprio persona.

After Azonic was served as a Doe defendant, Hartford provided a defense both for Azonic and Edwards. Hartford tendered the further defense and indemnity of Azonic and Edwards to Mid-Century, in January 1990. Mid-Century rejected the tender.

In May 1990, Hartford, on behalf of Edwards and Azonic, agreed to settle the Haines action for $35,000, additional to the $15,000 Mid-Century had

Hartford Casualty Insurance v. Mid-Century Insurance

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