Travelers Property Casualty Co. of America v. Superior Court
215 Cal. App. 4th 561
Cal. Ct. App.2013Background
- Joy Investment Group obtained a $4.5 million construction loan and was required to maintain builder's risk and related insurance naming the lender as loss payee.
- Joy obtained a condominium HOA policy through Koram with Travelers, and 80% occupancy/sold thresholds were referenced for coverage; property was largely vacant.
- Joy defaulted, Braum purchased the note and Foreclosed; the property remained vacant and occupancy remained under the threshold.
- A February 2009 loss occurred at the vacant property; Braum submitted a claim to Travelers which denied coverage under a vacancy exclusion.
- Braum sued Travelers and Koram for breach of contract and professional negligence; the trial court granted summary judgment in favor of Travelers and Koram, which writ petitions challenged.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does vacancy limitation bar coverage for vandalism/theft? | Braum argues exclusion is not conspicuous or applicable. | Travelers asserts vacancy limitation applies to loss because property was vacant for >60 days prior to loss. | Vacancy limitation applies; no coverage for vandalism/theft |
| Did Koram owe Braum a duty in procuring insurance? | Nowlon-like theory extends duty to potential victims of insured. | Koram owed duty only to Joy/HOA, its clients; no duty to Braum as loss payee. | Koram owed no duty to Braum; no professional negligence claim |
| Can Braum recover for professional negligence under Nowlon or similar theory? | Braum seeks duty owed to him as loss payee/value recipient. | Nowlon limited; Braum not within protected class; no negligence per se rely. | Nowlon not extendable to this tort; no duty to Braum |
Key Cases Cited
- TRB Investments, Inc. v. Fireman’s Fund Ins. Co., 40 Cal.4th 19 (Cal. 2006) (vacancy definitions and construction-related exclusions)
- Nowlon v. Koram Ins. Center, Inc., 1 Cal.App.4th 1437 (Cal. App. 1991) (negligence per se extending broker duty to potential victims)
- Pacific Rim Mechanical Contractors, Inc. v. Aon Risk Ins. Services West, Inc., 203 Cal.App.4th 1278 (Cal. App. 2012) (broker duties limited to insured clients absent special circumstances)
- Belgrade v. National American Ins. Co., 204 Cal.App.2d 44 (Cal. App. 1962) (plain meaning and conspicuousness of exclusions)
- Haynes v. Farmers Ins. Exchange, 32 Cal.4th 1198 (Cal. 2004) (conspicuousness and clarity required for exclusionary language)
- Palmer v. Truck Ins. Exch., 21 Cal.4th 1109 (Cal. 1999) (contractual interpretation governs insurance policy terms)
- Molko v. Holy Spirit Assn., 46 Cal.3d 1092 (Cal. 1988) (summary judgment standard and evidentiary burdens)