199 Cal. App. 4th 1196
Cal. Ct. App.2011Background
- Western Heritage Insurance Company defended its insured GHC and Reyes in an action arising from a September 23, 2008 automobile accident where Reyes, acting in the course of her employment, allegedly negligently caused the collision and decedent later died.
- Plaintiffs alleged Reyes’s negligence and negligent hiring by GHC, including misrepresentations about Reyes’s competence and background checks.
- Reyes’s discovery responses were unsworn and she failed to appear for deposition; her answer was stricken and default entered.
- Western Heritage sought to intervene to protect its interests under Insurance Code section 11580(b)(2), arguing it could defend liability and damages, not only damages.
- The trial court limited Western Heritage to contesting damages only, prompting Western Heritage to seek writ relief; the court granted intervention but narrowed its scope.
- This California Court of Appeal granted the writ, holding intervening insurers may contest both liability and damages, not merely damages, and remanded for a broader intervention.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the intervening insurer may contest liability as well as damages | Western Heritage argues intervention grants liability and damages defenses. | Parks argue the insurer is bound by Reyes’s default to only damages. | Intervenor may litigate both liability and damages. |
| Whether an intervening insurer is bound by the insured's procedural defaults | An intervener is not bound by the insured’s default; it may pursue its own defenses. | Default controls and limits insurer’s rights to damages. | Intervenor is not bound by the insured’s default and may litigate its own defenses. |
| Whether the insurer’s reservation of rights affects its intervention scope | Reservation of rights should not limit the insurer’s ability to litigate liability. | Reservation of rights could create conflicts and limit the defense. | Reservation of rights does not defeat the insurer’s intervention rights; liability and damages may be litigated. |
| Whether Kaufman & Broad limited the insurer’s rights to stand in the insured’s shoes | Kaufman & Broad requires insurers to stand in the insured’s shoes for subrogation. | Kaufman & Broad language is inapplicable to this direct-intervention context. | Kaufman & Broad does not bar independent intervention; insurer need not be bound to the insured’s postures. |
Key Cases Cited
- Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc., 136 Cal.App.4th 212 (Cal. Ct. App. 2006) (intervenor may pursue defense when insured is barred; subrogation context discussed)
- Clemmer v. Hartford Insurance Co., 22 Cal.3d 865 (Cal. 1978) (insurer may intervene when insured defaults; insurer can pursue liability)
- Reliance Insurance Co. v. Superior Court, 84 Cal.App.4th 383 (Cal. App. 2000) (intervention permitted to protect insurer’s interests when insured suspended)
- Adams Mfg. & Eng. Co. v. Coast Centerless Grinding Co., 184 Cal.App.2d 649 (Cal. App. 1960) (nondefaulting codefendants may benefit from others’ success; joint liability context)
- Deutschmann v. Sears, Roebuck & Co., 132 Cal.App.3d 912 (Cal. App. 1982) (intervener not bound by other party’s procedural defaults)
- Jade K. v. Viguri, 210 Cal.App.3d 1459 (Cal. App. 1989) (insurer may intervene and vacate default in certain circumstances)
- Gray v. Begley, 182 Cal.App.4th 1509 (Cal. App. 2010) (intervention rights not defeated by reservation of rights to dispute coverage)
- Truck Insurance Exchange v. Superior Court, 60 Cal.App.4th 342 (Cal. App. 1997) (codified requirements for nonparty intervention)
- Diaz v. Carcamo, 51 Cal.4th 1148 (Cal. 2010) (limits on employer liability in vicarious liability contexts)
- Garamendi v. Golden Eagle Ins. Co., 116 Cal.App.4th 694 (Cal. App. 2004) (insurer bound by judgment on insured’s liability issues if it refuses to defend)