Clark v. California Insurance Guarantee Ass'n
133 Cal. Rptr. 3d 1
Cal. Ct. App.2011Background
- Clark obtained a judgment against Scheffler’s insured; CIGA paid the damages but not costs or prejudgment/ postjudgment interest.
- Reliance Insurance, Scheffler’s insurer, was insolvent; CIGA assumed handling of its claims.
- Policy included a supplemental payments provision: costs taxed against the insured, prejudgment interest, and postjudgment interest, payable by the insurer and not reducing policy limits.
- Clark filed a direct action under Insurance Code §11580 to recover remaining costs and interest from CIGA up to the statutory cap.
- The trial court granted summary judgment for CIGA under San Diego Housing, which held third-party judgment creditors cannot recover costs or interest under §11580.
- Clark’s judgment was partially satisfied in 2003; Clark later sought the remaining costs and interest, which the court again treated under San Diego Housing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a third-party judgment creditor may recover costs and interest via §11580. | Clark argues costs/interest are recoverable under supplemental payments. | CIGA relies on San Diego Housing that third parties cannot recover these costs. | No; third-party cannot recover costs/interest under §11580. |
| Whether San Diego Housing governs despite the insurer defending the underlying action. | Clark contends defenses are applicable to the supplemental payments. | San Diego Housing controls regardless of whether defense was provided. | San Diego Housing applies; costs and interest may not be recovered by Clark. |
| Whether an assignment from the insured could allow direct recovery. | Clark implies assignment could enable recovery of supplemental payments. | Assignment is unavailable under the statute for CIGA claims. | Not available; no assignment to pursue these rights against CIGA. |
Key Cases Cited
- San Diego Housing Comm. v. Industrial Indemnity Co., 95 Cal.App.4th 669 (Cal. App. Dist. 4th 2002) (third-party cannot recover costs/interest under §11580; supplemental payments linked to defense duty)
- Murphy v. Allstate Ins. Co., 17 Cal.3d 937 (Cal. 1976) (judgment creditor cannot enforce implied good-faith/fair-dealing duties benefiting insured)
- Prichard v. Liberty Mutual Ins. Co., 84 Cal.App.4th 890 (Cal. App. 4th Dist. 2000) (supplementary payments reflect insurer’s defense obligation)
- Baxter Healthcare Corp. v. California Ins. Guarantee Ass'n, 85 Cal.App.4th 306 (Cal. App. 2d Dist. 2000) (assignment/covered claims context for CIGA)