3250 Wilshire Boulevard Building v. Employers Insurance

[1279]

Opinion

KLEIN (Brett), J.

*

Plaintiff the 3250 Wilshire Boulevard Building, a limited partnership, appeals from an order of dismissal, entered June 23, 1993, after a demurrer was sustained, without leave to amend, to the claims pleaded in its first amended complaint against respondents Employers Insurance of Wausau and Wausau Underwriters Insurance Company. (A co-plaintiff, Housing Affiliates, Inc., pleaded unrelated claims and is not a party to this appeal.) We affirm.

The facts stated in this opinion are based entirely on the allegations of plaintiff’s first amended complaint, supplemented by pleadings filed in an underlying action, of which judicial notice can properly be taken. Plaintiff owned an office building on Wilshire Boulevard in Los Angeles. Attorney Garo Mardirossian was a tenant in the building. In the underlying action, plaintiff sued Mardirossian for breaches of the lease, including failure to pay $27,000 in rent. Mardirossian counterclaimed for damages for breach of the lease, alleging plaintiff had conspired with a more highly prized tenant to try to relocate Mardirossian to less desirable quarters in the building. Mardirossian’s answer contained similar allegations as defenses.

Plaintiff was an additional named insured under a business liability policy issued by defendants. Plaintiff tendered the defense of Mardirossian’s counterclaim. Defendants accepted the tender, and eventually settled Mardirossian’s counterclaim by paying him $50,000. Plaintiff demanded that defendants, as a condition of the settlement, “obtain a release of Mardirossian’s Affirmative Defenses.” Defendants refused to do so.

Plaintiff then demanded that defendants provide it with “a defense to” Mardirossian’s defenses. Defendants refused. Plaintiff prosecuted its claims against Mardirossian to a successful conclusion, incurring $59,000 in legal fees in the prosecution of those claims after the counterclaim was settled. The lease contained a legal fees provision, and plaintiff obtained a costs award against Mardirossian for legal fees, in an amount plaintiff considered unsatisfactory.

Plaintiff alleged defendants’ refusal to “defend it” against Mardirossian’s defenses was a breach of the insurance contract and of the implied covenant of good faith and fair dealing.