Advanced Network, Inc. v. Peerless Insurance
190 Cal. App. 4th 1054
Cal. Ct. App.2010Background
- ANI's policy dispute arises from a theft of cash by an ANI employee from Mission Federal Credit Union (Mission Federal).
- Cumis insured ANI under a CGL policy with Peerless; the Cumis action sought equitable subrogation, breach, and negligence against ANI.
- The underlying claim sought replacement value for stolen cash, not a loss-of-use damages, and ANI settled related claims with Cumis and others.
- The trial court initially accepted that the Cumis action could involve “loss of use” damages under Peerless's policy, and Peerless paid some defense costs.
- The trial court ultimately held there was coverage under the loss-of-use theory, but the appellate court reversed, holding loss of use does not cover permanent loss through conversion, vacating the judgment and remanding for entry of judgment for Peerless.
- The Supreme Court denied review after this reversal, leaving Peerless with no duty to indemnify or defend ANI
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether loss of use covers a permanent loss of cash | ANI: loss of use includes permanent loss via theft | Peerless: loss of use is not applicable to permanent conversion | No coverage; loss of use excludes permanent loss from conversion |
| Whether the Cumis action triggered a defense obligation | ANI: Cumis action potential could trigger defense | Peerless: no potential coverage under CGL | No duty to defend/indemnify given no covered property damage |
| Whether Collin governs the duty to defend in loss-of-use analyses | ANI relies on Collin to support loss-of-use interpretation | Peerless: Collin controls; loss-of-use not applicable to theft | Collin governs; loss-of-use interpretation not applicable to this theft/conversion |
| Whether estoppel or waiver shield ANI from denying non-coverage | ANI: estoppel due to miscommunication | Peerless: estoppel cannot create coverage | Estoppel cannot extend coverage or create coverage where none exists |
Key Cases Cited
- Collin v. American Empire Ins. Co., 21 Cal.App.4th 787 (Cal.App.4th 1994) (loss of use not interchangeable with loss; conversion not property damage)
- Dynamic Concepts, Inc. v. Truck Ins. Exchange, 61 Cal.App.4th 999 (Cal.App.4th 1998) (supports Collin on loss of use vs. loss after conversion)
- Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1 (Cal.4th 1995) (insurance policy interpretation; insurer defenses and coverage)
- Montrose Chemical Corp. v. Superior Court, 6 Cal.4th 287 (Cal.1993) (duty to defend vs. duty to indemnify; broad vs. narrow)
- Ray v. Valley Forge Ins. Co., 77 Cal.App.4th 1039 (Cal.App.4th 1999) (interpretation of contract terms in coverage context)
- Brandt v. Superior Court, 37 Cal.3d 813 (Cal.1985) (attorney fees; Brandt fees concept in coverage)
- Griffin Dewatering Corp. v. Northern Ins. Co. of New York, 176 Cal.App.4th 172 (Cal.App.4th 2009) (Brandt fees; indemnity related fees)
- Spray, Gould & Bowers v. Associated Internat. Ins. Co., 71 Cal.App.4th 1260 (Cal.App.4th 1999) (estoppel/forfeiture principles in coverage)
- Chase v. Blue Cross of California, 42 Cal.App.4th 1142 (Cal.App.4th 1996) (forfeiture and arbitration rights context in coverage)