Gemini Insurance v. Delos Insurance

Opinion

ARMSTRONG, J. Appellant Delos Insurance Company appeals from the judgment entered in favor of respondent Gemini Insurance Company after Gemini’s motion for summary judgment was granted. We affirm.

[721]Summary

A restaurant’s insurance policy included an additional insured endorsement which made the restaurant’s landlord an additional insured with respect to the landlord’s liability arising from the restaurant’s acts undertaken in the course of the restaurant’s operations on the leased premises. The insurance policy also had an exclusion for claims or suits between insureds.

The tenant negligently started a fire on the leased premises. The fire damaged the landlord’s property, and the landlord sought to recover from the restaurant for the damages.

This case poses a single question: Was the tenant covered for the landlord’s claim, or was coverage barred by the interinsured exclusion? In this opinion, we hold that the interinsured exclusion did not bar coverage for the landlord’s claim against the tenant.

Facts

Delos insured a restaurant called Bobby’s Focsle and its owners, Helen and Bobby Boyett (hereafter Bobby’s). Bobby’s was located in the Loch Lomond Marina in San Rafael, and its landlord was San Rafael Marina, LLC, doing business as Loch Lomond Marina (hereafter Loch Lomond).

A fire at Bobby’s caused damage to Loch Lomond’s property, and to another business located in the marina, Arena Yacht. Both Arena Yacht and Loch Lomond were insured by Gemini for property damage.

Arena Yacht and Loch Lomond made claims on their property insurance. Gemini paid Arena Yacht $65,088 and paid Loch Lomond $288,259 for the damage caused by the fire, then filed an action in subrogation against Bobby’s, alleging that Bobby’s negligence caused the fire. Delos defended Bobby’s in that action.

The case settled. Bobby’s and Gemini entered into a stipulated judgment for the total which Gemini had paid to its insureds. Delos paid $65,088 of the judgment, that is, the amount Gemini paid to Arena Yacht. Gemini agreed that it would not execute against Bobby’s for the remainder, and Delos and Gemini agreed to further litigate Delos’s obligations.