California Capital Insurance Company V. Employers Compensation Insurance Company

• Published date: 08 June 2023
• Subject Matter: Insurance, Insurance Laws and Products
• Law Firm: Lewis Brisbois Bisgaard & Smith LLP
• Author: Mr Michael Velladao, Monica Kalunian and Aaron Knapp

(General Liability Insurer's Contribution Lawsuit Against Workers' Compensation and Employers' Liability Insurer Fails as It Did Not Insure Same Risk)

(June 2023) - In California Capital Ins. Co. v. Employers Compensation Ins. Co., 89 Cal.App.5th 638 (March 20, 2023), the California Fourth District Court of Appeal reversed the trial court's entry of judgment in favor of general liability insurer California Capital Insurance Company ("California Capital") against Employers Compensation Insurance Company ("ECIC") in connection with incurred defense costs and indemnity amount paid to settle an underlying personal injury lawsuit. The parties' dispute arose out of an automobile accident, wherein both the driver of the vehicle, Asia Torres, and the plaintiff passenger, Byron Remeyer, worked for La Sirena Grill ("La Sirena"). On the night of the accident, Torres and Remeyer had drinks at La Sirena and then left to go to a party around 10:00 p.m. Subsequently, Torres, who was intoxicated, drove his vehicle into a tree. As a result, Remeyer sustained traumatic brain injuries.

Remeyer filed a lawsuit against La Sirena and Torres for negligence. He alleged that Torres was a cook at La Sirena and got drunk on the job on the night of the accident. He also alleged that drinking on the job was a common occurrence at La Sirena. He further alleged that La Sirena provided Torres the alcohol on the night of the accident. In addition, he alleged that La Sirena was well aware that Torres was drunk on the night of the accident, but did not prevent Torres from driving. Lastly, Remeyer alleged that Torres was acting within the course and scope of his employment at the time the accident occurred and that La Sirena provided Torres with the vehicle involved in the accident.

La Sirena tendered the defense to California Capital, which agreed to defend the lawsuit subject to a reservation of rights based on the workers' compensation exclusion in its policy. Discovery conducted in the lawsuit established that Remeyer was also an employee of La Sirena and that both parties had been off the clock for several hours before the accident occurred.

Subsequently, the plaintiff made a policy limits demand to California Capital to settle the lawsuit for $2 million. However, California Capital continued to defend the lawsuit and also tendered the defense to ECIC. In response, ECIC denied coverage for the lawsuit. Ultimately, California Capital settled the lawsuit for $2 million and filed a...