Opinion
Fireman’s Fund Insurance Company (Fireman’s) appeals from an order dismissing its complaint after summary judgment was entered in favor of respondent Maryland Casualty Company (Maryland). 1 Fireman’s suit against Maryland sought reimbursement for some or all of the funds Fireman’s had advanced to settle a lawsuit by a third party. Fireman’s contended Maryland improperly settled a construction defect case by misallocating its “primary” policy proceeds, and as a result Fireman’s was required to pay, under its “excess” policy, $2,453,000 to a third party.
The trial court granted summary judgment in Maryland’s favor on numerous grounds. We must synopsize this sprawling litigation before examining Fireman’s contentions.
I
Background
A. The Parties
Fireman’s and Maryland were the liability insurers for certain parties (collectively referred to as Kelly) who developed a condominium complex. Maryland issued the “primary” policies to Kelly for six successive years, from 1979-1980 to 1984-1985. During this period various insurers provided “excess” coverage to Kelly. One of these “excess insurers” was Fireman’s, whose policy was in effect for one year: 1984-1985.
B. The Original Lawsuits
1. The Litigation
The original litigation began as a homeowners association lawsuit against Kelly and numerous subcontractors for defective construction. Kelly later cross-complained against Maryland, as primary insurer for the relevant years *1592 (1979 to 1985), claiming Maryland wrongfully failed to defend and indemnify for the liabilities. Maryland later filed a separate declaratory relief action against Kelly and other insurers for Kelly, including Fireman’s, seeking a declaration of its obligations regarding Kelly’s liabilities and seeking reimbursement from the other potentially liable insurers. The homeowners association cross-complained in Maryland’s action, alleging nonpayment of insurance proceeds, and named Fireman’s among its cross-defendants. All of these actions, along with others, were consolidated into a single action.
2. The Settlement
After years of litigation, which included entry of a judgment in favor of the homeowners association and against Kelly, most of the parties reached a settlement agreement (hereafter called the Maryland settlement). However, Fireman’s was not among the settling parties. The settling parties moved to confirm the good faith nature of the Maryland settlement under Code of Civil Procedure 2 section 877.6. Fireman’s opposed the motion. The court granted the motion and entered its order confirming the settlement to be a “good faith” settlement within the meaning of section 877.6. 3
Certain terms of the Maryland settlement are significant. First, the settling parties purported to “allocate” Maryland’s contribution (amounting to $3,550,000) to the four policies in effect from March 1981 through March 1985. No contributions were made from Maryland’s earlier policies—those in effect in 1979-1980 and 1980-1981.
Second, under the Maryland settlement the homeowners association released Maryland, and further covenanted it would not seek any additional recovery on its judgment from Kelly, but would seek any additional recovery on its judgment only from Fireman’s. Kelly in turn released all claims it had against Maryland, including those for bad faith.
C. The Current Lawsuit
1. Fireman’s Claims
Shortly after the Maryland settlement was confirmed, Fireman’s also settled with and paid the homeowners association. Thereafter, Fireman’s sued Maryland in this action, seeking reimbursement for Fireman’s payments. Fireman’s alleged that the damages suffered by the homeowners *1593 association were manifest during all six years that Maryland’s primary policies were in effect; that Maryland was therefore obliged to pay its policy limits for all six years; that Maryland wrongfully failed to exhaust all of the primary policies in settling the claim, Maryland having paid no moneys attributable to the 1979-80 or 1980-81 policies; and that as a result of Maryland’s wrongful refusal to pay, Fireman’s was obligated to pay the homeowners association. Fireman’s sought to recover its payments under theories of equitable subrogation and breach of the implied covenant of good faith and fair dealing, and asserted a claim for declaratory relief.
2. The Summary Judgment
Maryland’s first summary adjudication motion was directed solely at Fireman’s equitable subrogation claim. Maryland argued Fireman’s could not recover because it could not demonstrate two essential elements of an equitable subrogation action by an excess insurer. First, Maryland argued an excess insurer’s payment to the third party must be to discharge a liability of the insured, pointing out that the insured here had already been released by the third party. Second, Maryland argued the claim asserted by the excess insurer must be one which the insured could have asserted, noting that the insured here had already released Maryland from any claims. The trial court agreed and granted summary adjudication based on both arguments. 4
Maryland subsequently moved for summary judgment, seeking to extinguish the remaining claims for declaratory relief and “breach of the implied covenant of good faith.” It argued the declaratory relief action should be dismissed because Fireman’s had already paid the money, and hence its claim (if any) had “crystallized” into a cause of action for money damages. 5 Maryland argued the “breach of the implied covenant” claim should be dismissed because there was no triable issue of fact that the insured had released Maryland from such claim, extinguishing any right by Fireman’s to pursue such claim. Maryland also argued the order on the good faith settlement motion collaterally estopped Fireman’s from relitigating the issue *1594 of whether the settlement agreement was in bad faith. 6 The trial court agreed with all three contentions and granted summary judgment in Maryland’s favor.
D. The Current Appeal
Fireman’s first argues on appeal that the Maryland settlement was collusive and unfair to Fireman’s because (1) it improperly allocated damages to policy periods during which Fireman’s provided coverage, when in fact damages had manifested in earlier policy periods; and (2) it improperly obtained Kelly’s release of its claims against Maryland for bad faith, thereby cutting off Fireman’s equitable subrogation rights. Second, it argues this collusive settlement violated an independent duty owed by Maryland to Fireman’s, the breach of which is actionable.
We conclude summary judgment on Fireman’s claim for equitable subrogation was properly granted because several elements of such a claim are absent here. We also conclude a primary insurer’s obligation of good faith is ordinarily owed to its insured, not to an excess insurer, and that Kelly’s release of Maryland is therefore fatal to Fireman’s claim. 7
*1595 II
Analysis
A. Standard of Review
The purpose of summary judgment is to resolve litigation when there are no triable issues of material fact.
(Tollefson
v.
Roman Catholic Bishop
(1990)
On appeal, this court must conduct de novo review to determine whether there are any triable factual issues.
(Pearl
v.
General Motors Acceptance Corp.
(1993)
B. Summaiy Judgment Was Proper on Fireman’s Equitable Subrogation Claim
We first examine whether Fireman’s equitable subrogation claim was viable. 8 The specific question is: Was Fireman’s entitled to pursue Maryland, to obtain repayment of the amounts Fireman’s paid the homeowners association, under a claim for equitable subrogation?
Equitable subrogation permits a party who has been required to satisfy a loss created by a third party’s wrongful act to “step into the shoes”
*1596
of the loser and pursue recovery from the responsible wrongdoer.
(Self-Insurers’ Security Fund.
v.
ESIS, Inc.
(1988)
In
Troost
v.
Estate of DeBoer
(1984)
The undisputed facts show that neither the third nor fourth element is present.
9
First, Kelly expressly released Maryland from all claims, including bad faith. Accordingly, there was no existing cause of action which Kelly could have assigned or asserted on its own behalf against Maryland. Since the subrogated insurer stands in the shoes of its insured, the insurer has no greater rights against the third party than did the insured
(Continental Mfg. Corp.
v.
Underwriters at Lloyds London
(1960)
The effect of a release was examined in
Continental Mfg. Corp.
v.
Underwriters at Lloyd’s of London, supra,
The third essential element of a claim under equitable subrogation (i.e., that the insured have an existing assignable cause of action against the third party) is unquestionably absent here, because the insured clearly released Maryland, the party against whom Fireman’s equitable subrogation action is targeted. 10
The fourth element (i.e., the insurer suffered damages
caused
by the act or omission upon which the liability of the party to be charged depends) is also absent, because Maryland did nothing to cause Fireman’s to make any payment. The effect of the Maryland settlement agreement, at least insofar as Fireman’s was concerned (since both Maryland and Kelly were free of all further claims), was to narrow the remaining issues to one: Did Fireman’s have any liability to the homeowners? Fireman’s disclaimed responsibility by asserting the damages had manifested before Fireman’s policy became effective, a contention which, if factually correct, rendered Fireman’s non-liable. (See
Fireman’s Fund Ins. Co.
v.
Aetna Casualty & Surety Co.
(1990)
*1598
Since Fireman’s payment was as a volunteer, 12 equitable subrogation is unavailable. (See generally, 11 Witkin, Summary of Cal. Law (9th ed. 1990) Equity, § 171, pp. 851-853.) We perceive this also to be the equitable result, because permitting recovery would be unfair to Maryland. Maryland paid, and the homeowners accepted, $3,550,000 to extinguish Maryland’s liability for damages manifested during Maryland’s tenure. If Fireman’s were permitted to recover from Maryland, Fireman’s would effectively be permitted to obviate the release, to which Fireman’s was not a party, and deprive Maryland of the benefit of the bargain it struck with the homeowners. Accordingly, since Fireman’s had no obligation, actual or potential, to pay a discharged debt, Fireman’s is a volunteer that cannot seek equitable subrogation.
*1599 C. Summary Judgment Was Proper on Fireman’s Purported Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing
Fireman’s attempted to pursue recovery on an entirely separate basis: for breach of the implied covenant of good faith and fair dealing. Fireman’s argues that Maryland, as primary insurer, owed a duty of good faith and fair dealing to Fireman’s, as excess insurer, which duty Maryland breached by misallocating policy benefits to maximize the liability of Fireman’s. We reject Fireman’s argument, because there is no evidence of any contractual relationship between Fireman’s and Maryland, and hence Maryland owes no independent duty of good faith directly to Fireman’s. Instead, an excess insurer may sue a primary insurer for breach of the implied covenant only by way of subrogation to the insured’s rights. Such rights were released here, and therefore Fireman’s purported claim for breach of the implied covenant fails.
“The prerequisite for any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the contract.”
(Smith
v.
City and County of San Francisco
(1990)
The evidence here disclosed only two contracts: one between the insured and Maryland for primary coverage; and the other between the insured and Fireman’s for excess coverage. There was no evidence that Fireman’s and Maryland had any direct contractual relationship, and so we must evaluate whether any alternative basis exists for Fireman’s claim against Maryland.
One basis urged by Fireman’s is that an excess insurer is a third party beneficiary of the primary policy who can sue the primary insurer for breach of the implied covenant. Certainly a noncontracting party is entitled to sue an insurer for breach of the implied covenant
if
that noncontracting party is a third party beneficiary of the insurance contract. (See
Cancino
v.
Farmers Ins. Group
(1978)
There is no evidence here that Fireman’s qualifies as a third party beneficiary of Maryland’s policy. To qualify as a third party beneficiary, the contract must be made
expressly
for the benefit of the third person.
(Thompson
v.
Cannon
(1990)
Fireman’s alternatively urges that a primary insurer owes a duty of good faith to the excess insurer independent of the contract. However, the California cases which have upheld an excess insurer’s right to sue a primary insurer have concluded such right devolves by subrogation to the insured’s rights against the primary carrier, rather than by reason of some independent duty. In
Commercial Union Assurance Companies
v.
Safeway Stores, Inc.
(1980)
Subsequent California cases have reiterated that the excess insurer’s ability to sue for breach of the implied covenant rests on equitable subrogation principles, not on any independent duty owed to the excess carrier.
13
(See
Continental Casualty Co.
v.
Royal Ins. Co.,
supra;
Walbrook Ins. Co.
v.
Liberty Mutual Ins. Co.
(1992)
Fireman’s relies principally on two cases for the proposition that an excess insurer can sue a primary insurer for breach of the implied covenant. One of those cases, however, is
Commercial Union Assurance Companies
v.
Safeway Stores, Inc., supra,
Kaiser prevailed, and North Star appealed. Kaiser argued, in essence, that “it [was] none of North Star’s business how Kaiser and Lloyd’s allocate losses as far as policy periods are concerned.”
(Kaiser Foundation Hospitals
v.
North Star Reinsurance Corp., supra,
at p. 790.) Rejecting that contention, the
Kaiser
court stated: “Kaiser’s contention that it and Lloyd’s have the exclusive power to [allocate claims], however detrimental such determination may be to the excess insurer, simply does not square with the covenant of good faith and fair dealing . . . . [fl] There can be no question that in this case the duty of good faith and fair dealing was owed to the excess insurer both by Kaiser, the excess-insured, as well as by Lloyd’s, the primary insurer. That precise question was decided in
Northwestern Mutual Ins. Co.
v.
Farmers’ Ins. Group
(1978)
Fireman’s seizes upon the above passage to assert that an excess insurer does owe a duty of good faith independent of the insurance contract. However, we initially note the quoted passage—at least insofar as it deals with a primary insurer’s duty—is dictum, because it purported to pronounce the obligations of Lloyd’s, when in fact the only parties to the appeal were Kaiser and North Star, and the only issue was whether the insured owed a duty of good faith to the excess insurer. Thus statements of what duties were owed by the primary insurer were dicta.
Furthermore, the
Kaiser
court cited
Northwestern Mut. Ins. Co.
v.
Farmers’ Ins. Group
(1978)
Since the only basis for Fireman’s to sue for breach of the implied covenant is by way of equitable subrogation to the insured’s rights, and the insured released Maryland from all claims of bad faith, Fireman’s claim for breach of the implied covenant is without vitality.
Disposition
The judgment is affirmed.
Todd, Acting P. J., and Huffman, J., concurred.
Appellant’s petition for review by the Supreme Court was denied May 25, 1994.
Notes
Fireman’s also purported to appeal from the orders granting summary adjudication of the individual causes of action and summary judgment. Although such orders are nonappealable
(Avila
v.
Standard Oil Co.
(1985)
All statutory references are to the Code of Civil Procedure unless otherwise specified.
In a related appeal, which we hear and decide concurrently with this appeal, Fireman’s challenges the propriety of the trial court’s order confirming the good faith settlement.
The court also granted summary adjudication, under section 437c, subdivision (b), because Fireman’s failed to identify which material facts were disputed or undisputed.
On appeal, Fireman’s failure to argue or cite authority in support of revival of its declaratory relief cause of action suffices to dismiss further consideration of this issue.
(Tan
v.
California Fed. Sav. & Loan Assn.
(1983)
We caution that the issue litigated on summary judgment was not whether the statutory bar of section 877 applied to Fireman’s “breach of the implied covenant” claim; that is, the court did not decide that the “good faith order” statutorily barred Fireman’s action as one for indemnity among “joint tortfeasors or co-obligors on a contract.” Instead, the issue litigated and decided below was whether Fireman’s was collaterally estopped from claiming the settlement was in “bad" faith when it had previously been found to be in “good" faith. In that we conclude Fireman’s bad faith claim was properly dismissed for other reasons, we need not decide whether the trial court was correct in using collateral estoppel as an additional basis for summary judgment.
This court had also requested supplemental briefing from the parties to evaluate whether Maryland and Fireman’s were “joint tortfeasors or co-obligors on a contract” to whom the prior “good faith determination” might apply as a bar to future claims, and whether the bar would apply to the type of claims asserted here. We are cited no authority holding a primary insurer and an excess insurer are “joint tortfeasors,” and at least one court has concluded an excess insurer is
not
a joint tortfeasor within the ambit of section 877. (See
Pacific Estates, Inc.
v.
Superior Court
(1993)
Maryland correctly notes that Fireman’s opening brief on appeal contains no argument expressly directed toward demonstrating how the equitable subrogation claim is viable. Failure to argue a point in a brief permits us to deem such point abandoned.
(Elster
v.
Friedman
(1989)
Maryland also argues the first element (i.e., the insured suffered a loss for which the party to be charged is liable) is absent, because the subrogor (Kelly) was released by the homeowners association as part of the Maryland settlement and suffered no actual or potential loss. However, Kelly was not
released
by the homeowners association. Instead, Kelly received a “covenant not to execute” which protects the insured but does not discharge the insurer from liability. (See, e.g.,
Samson
v.
Transamerica Ins. Co.
(1981)
At trial, Fireman’s argued the release was “void” because it violated the Fireman’s policy clause prohibiting the insured from doing anything to prejudice Fireman’s subrogation rights. While breach of a policy provision might provide an insurer grounds to deny payment of a claim (see Liberty Mut. Ins. Co. v. Altfillisch Constr. Co., supra, 70 Cal.App.3d at pp. 796-798 [insured’s release harmed insurer’s subrogation rights and excused insurer from payment of policy benefits]), we are unaware of any authority suggesting the release is void ab initio, an argument Fireman’s does not resurrect on appeal.
The entire thrust of Fireman’s contention of nonliability was that the damages to the condominium project were “manifested” in earlier policy years, and hence the insurers in those earlier years (not Fireman’s) were liable. To the extent the damages were in fact covered by Fireman’s policy, Fireman’s payment would of course not be “voluntary” but it also would not be recoverable from Maryland. We therefore examine whether Fireman’s was a “volunteer” on the assumption that Fireman’s correctly contended the damages had manifested during earlier policy years.
We recognize that an insurer will not be deemed a volunteer if it denies coverage but still pays on the good faith, reasonable belief it
might
be liable to the subrogor. (See, e.g„
Pines of La Jolla Homeowners Assn.
v.
Industrial Indemnity
(1992)
We are aware of only one California case recognizing an independent duty flowing from the primary to the excess insurer:
Transit Casualty Co.
v.
Spink Corp.
(1979)