C3 Entertainment, Inc. v. Arthur J. Gallagher & Co.

[1024]

Opinion

ARMSTRONG, J.

Summary

This case raises an issue under the one final judgment rule: consistent with that rule, may a trial court enter judgment in favor of one defendant, triggering an appeal, if that judgment is based on an interim ruling against another defendant, which is not yet subject to appeal? We conclude that the court cannot do so.

Discussion

Plaintiffs and appellants C3 Entertainment, Inc., Knuckleheads, Inc., and Earl Benjamin (collectively, C3) bought insurance coverage through respondent Arthur J. Gallagher & Co., an insurance agency. The coverage was with Hartford Casualty Insurance Company. C3 was subsequently sued in federal court in a case referred to by the parties as the

“Howard

Action.” It tendered the case to Hartford, which denied coverage.

C3 then sued Hartford and Gallagher, bringing causes of action against Hartford for insurance bad faith and breach of contract, and against Gallagher for professional negligence. Hartford cross-complained for declaratory relief.

The cause of action against Gallagher alleged that “In the event that Hartford’s contention that its policies do not obligate Hartford to provide a defense to Plaintiffs in the

Howard

Action is upheld, Gallagher . . . breached their duty . . . .” (Italics added.)

C3 moved for summary adjudication against Hartford on the issue of duty to defend in the

Howard

Action. (That action was resolved in a manner which made the question of duty to indemnify irrelevant.) C3 prevailed on the motion: the trial court found that Hartford had a duty to defend in the

Howard

Action. The bad faith cause of action remained, as did a determination of damages.