Plaintiff insured appealed the San Francisco City and County Superior Court’s (California) grant of summary judgment in favor of defendant insurers, in a suit to determine whether the first-publication exclusion in the insurance policy barred any potential coverage for the defamation claims in the underlying lawsuits against plaintiff. The parties were represented by California business and employment lawyer.
Table of Contents
Overview
In granting defendant insurers’ motion for summary judgment, the trial court held that the first-publication exclusion (exclusion) in the insurance policy barred any potential coverage for the defamation claims asserted in the underlying lawsuits against plaintiff insured. Plaintiff appealed. The appellate court construed the exclusion broadly to bar coverage for allegedly defamatory utterances or publications of material whose first publication took place before the inception of the insurance policy, and determined that the exclusion applied specifically to bar coverage of the underlying defamation claims in this case. Thus, defendants had no duty to defend or indemnify plaintiff, and were not required to participate in the settlement. Moreover, even if defendants breached their duty to defend, they were not liable to plaintiff for damages because plaintiff was adequately protected by other insurers, and defendants’ withdrawal from plaintiff’s defense neither enhanced plaintiff’s defense liability nor increased its defense costs. Consequently, the summary judgment was affirmed.
Outcome
The summary judgment was affirmed. Defendant insurers had no duty to defend or indemnify plaintiff insured with respect to the underlying lawsuits, and were not required to participate in their settlement, because the first-publication exclusion in the insurance policy applied specifically to bar coverage of the underlying defamation claims.
Procedural Posture
Plaintiff general contractor sued defendant subcontractor for the amount in excess of the subcontractor’s bid that the general contractor had to pay a substitute subcontractor. After a bench trial, the Superior Court of San Diego County, California, awarded damages to the general contractor on promissory estoppel claims, but found for the subcontractor on breach of contract and bond claims. The subcontractor appealed the denial of attorney fees.
Overview
The court of appeal held that a promissory estoppel claim was not a claim “on a contract,” for purposes of Civ. Code, § 1717, subd. (a), and therefore the general contractor’s success on that claim was irrelevant to the prevailing party determination under § 1717. A plaintiff who prevailed on a promissory estoppel claim but recovered nothing on a breach of contract claim (or other claim involving a contract) in the same action was not the party prevailing on the contract entitled to recover under the attorney fees clause in the alleged contract. Instead, a defendant who defeated a breach of contract claim but lost on a promissory estoppel claim was the party prevailing on the contract and was entitled to recover attorney fees reasonably incurred in defeating the breach of contract claim, when the alleged contract provided that the prevailing party in any dispute between the parties would recover such fees. Thus, the subcontractor in the current action, having defeated the general contractor’s only contract claims, was the party prevailing on the contract under § 1717 as a matter of law. The trial court had no authority to deny entirely its request for fees.
Outcome
The court reversed the trial court’s order and remanded for further proceedings to determine the amount of attorney fees reasonably incurred in defending against the contract claims at trial and in prosecuting the appeal, and to enter an order awarding that amount.
