Certain Underwriters At Lloyd's of London Subscribing to Policy No. E&o 14 10873 A v. Gen. Star Indem. Co.

339 F. Supp. 3d 930
CourtDistrict Court, E.D. California
DecidedSeptember 12, 2018
DocketNo. 2:18-cv-00508-JAM-KJN
StatusPublished
Cited by2 cases

This text of 339 F. Supp. 3d 930 (Certain Underwriters At Lloyd's of London Subscribing to Policy No. E&o 14 10873 A v. Gen. Star Indem. Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Certain Underwriters At Lloyd's of London Subscribing to Policy No. E&o 14 10873 A v. Gen. Star Indem. Co., 339 F. Supp. 3d 930 (E.D. Cal. 2018).

Opinion

JOHN A. MENDEZ, UNITED STATES DISTRICT JUDGE

*931This case involves two insurers disagreeing over which one was responsible for providing more than $865,000 ($1 million) in fire insurance coverage to third-party Dr. Janak Mehtani ("Mehtani") after his residential care facility burned down in 2013. After Mehtani was denied $1 million in fire insurance coverage under his insurance policy with Defendant General Star Indemnity Company ("General Star" or "Defendant"), he sued Defendant and his insurance brokers Ophelia Riego and Riego Insurance and Financial Services ("Riego"). Compl., ECF No. 1, ¶¶ 5-11. Defendant settled with Mehtani for $135,000. Id., ¶ 15. Plaintiff Certain Underwriters at Lloyd's of London Subscribing to Policy No. E & O 14 10873 A ("Underwriters" or "Plaintiff") defended Riego in that lawsuit under an errors and omissions insurance contract Riego had with Plaintiff (the "Underwriters E & O Policy") and subsequently paid Mehtani $1 million under the Underwriters E & O Policy to cover the fire damage. See id., ¶¶ 12-16.

Plaintiff claims Defendant should have paid Mehtani the full $1 million he sought under his fire insurance policy. See id., ¶¶ 20-21. As a result, Plaintiff has brought this lawsuit against Defendant alleging a claim for equitable indemnity. See Compl. Defendant has moved to dismiss with prejudice and Plaintiff opposes. Mem., ECF No. 8-1; Opp., ECF No. 10. For the reasons explained below, the Court grants Defendant's motion with prejudice.1

I. FACTUAL AND PROCEDURAL BACKGROUND

On or around July 10, 2013, a fire damaged a residential care facility owned by Mehtani. Compl. ¶¶ 5, 9. After Defendant denied Mehtani coverage under his $1 million fire insurance policy, Mehtani brought a bad faith insurance lawsuit in October 2015 against Defendant, Riego, and others in Mehtani v. The AHBE Group, et al., Case No. 34-2015-00185527 in Sacramento County Superior Court (the "Underlying Action"). Id., ¶ 11; Def. Req. for Judicial Notice ("RJN"), ECF No. 8-3, Exhs. 2, 3. Mehtani brought claims against Defendant for breach of the insurance contract and breach of the covenant of good faith and fair dealing. RJN, Exhs. 2, 3.

Plaintiff provided Riego a defense in the Underlying Action under the Underwriters E & O Policy. Compl., ¶ 14. Though the fire damage exceeded $1 million, Defendant paid Mehtani only $135,000 to settle his claim against it. Id., ¶ 15. After Defendant settled with Mehtani, Plaintiff paid Mehtani $1,000,000 under Riego's Underwriters E & O Policy. Id., ¶ 16. Plaintiff alleges Defendant should have been paid this amount. Id., ¶ 16. As a result, Plaintiff has brought the immediate equitable indemnity claim against Defendant to recover the more than $865,000 that it paid to Mehtani. See Compl.

II. OPINION

A. Analysis

Defendant argues Plaintiff's claim for equitable indemnity fails as a matter of law because Plaintiff has failed to allege facts showing General Star owed Mehtani a tort duty of care. Mem. at 3-4. The Court agrees.

*932The doctrine of equitable indemnity applies only to defendants who are jointly and severally liable to the underlying plaintiff. BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc., 119 Cal. App. 4th 848, 852, 14 Cal.Rptr.3d 721 (2004) (internal citation and quotation marks omitted); Leko v. Cornerstone Building Inspection Service, 86 Cal. App. 4th 1109, 1115, 103 Cal.Rptr.2d 858 (2001). Joint and several liability in the equitable indemnity context can apply to acts that are concurrent or successive, joint or several, so long as they create a detriment caused by several actors. Id. There must be some basis for tort liability against the proposed indemnitor and it is generally based on a duty owed to the underlying plaintiff. BFGC Architects, 119 Cal. App. 4th at 852, 14 Cal.Rptr.3d 721. In the absence of any such duty owed by the third-party defendant to the underlying plaintiff, the claim of defendant and third-party plaintiff for equitable indemnity fails as a matter of law. Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical Grp., 143 Cal. App. 4th 1036, 1041-42, 1044, 49 Cal.Rptr.3d 609.

Plaintiff argues that Mehtani's underlying bad faith claim against Defendant gives rise to tort liability and equitable indemnity applies as a result. Opp. at 5-6. Plaintiff reasons that Defendant violated the covenant of good faith and fair dealing implied in every contract, including insurance policies, and this gives rise to tort liability. Id. at 6. In support of this argument, Plaintiff cites Wilson v. 21st Century Ins. Co., 42 Cal. 4th 713, 720, 68 Cal.Rptr.3d 746, 171 P.3d 1082 (2007) ; Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566, 573, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973) ; Chateau Chamberay Homeowners Ass'n v. Associated Int'l Ins. Co., 90 Cal. App. 4th 335, 346, 108 Cal.Rptr.2d 776 (2001) ; Brandwein v. Butler

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Bluebook (online)
339 F. Supp. 3d 930, Counsel Stack Legal Research, https://law.counselstack.com/opinion/certain-underwriters-at-lloyds-of-london-subscribing-to-policy-no-eo-14-caed-2018.