Harris v. Sequoia Ins. Co. CA2/6

Filed 1/21/14 Harris v. Sequoia Ins. Co. CA2/6 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

GLENN HARRIS, 2d Civil No. B247972 (Super. Ct. No. 56-2012-00410577- Plaintiff and Appellant, CU-BC-VTA) (Ventura County) v.

SEQUOIA INSURANCE COMPANY,

Defendant and Respondent.

Glenn Harris appeals a judgment of nonsuit and an order denying his motion for summary adjudication against Sequoia Insurance Company (Sequoia) for breach of a settlement agreement, tortious breach of the implied covenant of good faith and fair dealing, and fraud by false promise. We affirm. FACTUAL AND PROCEDURAL BACKGROUND Harris is an officer and owner of Southern California Gold Products, Inc. (SCGP). SCGP provides armor solutions for military-type vehicles. Sequoia insured SCGP from 2007 to 2009 under a business insurance policy (the Policy). The Policy was later rescinded by agreement as explained below. In 2007, Frederick Reva was struck and killed by a support vehicle during the 2007 Baja 1000 off-road automobile race. Harris participated in the race and one of his team members drove the support vehicle that killed Reva.

In an unrelated case that same year, American Defense Systems, Inc. sued SCGP for misappropriation of trade secrets. (American Defense Systems, Inc. v. Southern California Gold Products, Inc. (C.D.Cal. Feb. 21, 2008, No. CV 07-7134-CAS (AJWx) [nonpub. opn.] ("the ADSI case").) After investigating that claim, Sequoia concluded that SCGP had misrepresented the nature of its business activities in its insurance application when it described SCGP's only business as retail "Automobile Parts & Supplies Stores." On May 11, 2009, Sequoia notified SCGP of its decision to deny defense in the ADSI case and reserved its right to rescind the Policy based on material misrepresentation. We refer to the resulting coverage litigation as "the Zurich action." (Southern California Gold Products, Inc. v. Zurich-American Insurance Group (Super. Ct. Ventura County, No. 56-2009-00353066-CU-IC-VTA.) On May 22, 2009, Frederick Reva's family sued SCGP, Glenn Harris, Daniel Wreesman, Cameron Thieriot, and others for wrongful death. (Reva v. Wreesman (Super. Ct. Sonoma County, No. SCV 243311 ("the Reva action").) The Reva family sued Harris, both as an officer of SCGP and in his individual capacity. They alleged that Harris and SCGP organized and financed the race team. Sequoia and Harris now agree that Harris's involvement in the race was actually social and did not arise out of any business activities of SCGP. The team was owned and organized by Harris's friend, Cameron Thieriot. Sequoia accepted the defense of SCGP and Harris in the Reva action with a reservation of rights. The reservation of rights letter stated, "Under the terms of the Business Liability coverage, that coverage is triggered where there is a claim for damages made against an insured in an insured capacity." Harris was not insured by Sequoia in his individual capacity. The Policy defined the insureds to include SCGP's executive officers and directors, "but only with respect to their duties as [SCGP's] officers or directors." Sequoia retained attorney Dwight Bishop to defend SCGP and Harris in the Reva action. A Sequoia representative testified at trial that Sequoia provided incidental defense of the claims against Harris in his individual capacity until it settled all potentially