Policyholders Positively Fluor-ed By The California Supreme Court's About-Face On Anti-Assignment Clauses In Insurance Policies
Overruling a "landmark" decision that had placed California at odds with several other jurisdictions and contravened its own statutory law, the California Supreme Court in Fluor Corporation v. Superior Court of Orange County, 2015 WL 4938295 (Aug. 20, 2015), ruled that a liability insurance policy's anti-assignment clause is not enforceable with regard to a claim arising from loss, injury, or damage that, at the time of the assignment, already has occurred. In its prior decision in Henkel Corp. v. Hartford Accident & Indemnity Co., 290 Cal. 4th 934 (2003), the California Supreme Court had held that an insured's assignment of its rights under a policy, without the insurer's consent, would be effective only if the claim had been reduced to a sum of money due under the policy, e.g., a settlement or judgment. Henkel, 29 Cal. App. 4th at 944. In reaching that conclusion, however, the Henkel court did not consider the applicability of an 1872 statute, California Insurance Code Section 520, which expressly renders void any agreement not to assign, post-loss, an insured's claim against an insurer under the policy. In Fluor, the California Supreme Court determined that Section 520 controlled, ruling that insurer consent was not necessary to assign a right of insurance coverage under a third-party liability policy for a loss that already has occurred. In 2000, Fluor Corporation undertook a corporate restructuring known as a "reverse spin-off," whereby, among other things, the original Fluor Corporation created a new subsidiary that retained the name "Fluor Corporation." The original Fluor Corporation transferred and assigned its assets, including its insurance policies, and its rights and liabilities to the new Fluor Corporation without requesting or receiving consent from its insurance carrier, Hartford Accident & Indemnity Corporation ("Hartford"). Hartford later denied coverage for the new Fluor Corporation's insurance claims arising from pre-assignment losses, contending that the original Fluor Corporation's presumed assignment of its insurance coverage claims to the new Fluor Corporation violated the Hartford policy's anti-assignment provision. Hartford filed an action for declaratory relief regarding the new Fluor Corporation's right to insurance coverage under the policies. The trial court denied Fluor Corporation's motion for summary judgment, reasoning that the California Supreme Court's 2003 decision in Henkel was decisive and that it was...
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