The California Court of Appeal has held that in a “continuous and progressive injury” case, the presence of other available insurance relieved the California Insurance Guarantee Association of any duty to contribute toward a judgment against the insured. ( Stonelight Tile, Inc. v. California Ins urance Guarantee Association (2007) 150 Cal.App.4th 19)
Facts
Stonelight Tile, Inc. operated a tile manufacturing business. Beginning in 1988, Diversified Recycling Services, Inc. operated a recycling business at an adjacent property. Over the next six years, Diversified’s recycling generated significant amounts of dust, which interfered with Stonelight’s business operations and caused health problems to Stonelight’s personnel.
In July 1994, Stonelight and its president David Anson filed suit against Diversified for nuisance, negligence, battery, trespass to land, and intentional and negligent infliction of emotional distress. Prior to trial, the trial court issued a ruling that restricted Stonelight and Anson to proof of events within the applicable statutes of limitations. As a result, Stonelight and Anson were not allowed to offer evidence of (1) nuisance or trespass claims or damages arising before July 1991 or (2) personal injury tort claims or damages arising before July 1993. Following trial, the jury returned a general verdict totaling approximately $1.2 million in favor of Stonelight and Anson and against Diversified. The judgment was affirmed on appeal.
During the period of time for which damages were awarded (i.e., July 1991 through July 1994), Diversified had general liability coverage through four insurers: Superior National Insurance Company, Transamerica Insurance Company, CIGNA Property and Casualty Company and Continental Insurance Company. The first insurer (Superior National) became insolvent and its claims were taken over by the California Insurance Guarantee Association (CIGA). The remaining three insurers (Transamerica, CIGNA and Continental) all remained solvent.
After the underlying action was concluded, Stonelight and Anson brought a “direct action” action against Diversified’s three solvent insurers and CIGA in an effort to collect the underlying judgment. Stonelight and Anson later settled with the three solvent insurers for amounts which neither exhausted the solvent insurers’ policies nor completely satisfied the underlying judgment. CIGA then moved for summary judgment asserting that since the three solvent insurers had each been obligated to pay the full amount of the underlying judgment, there was “other insurance” available to satisfy the judgment and, hence, no “covered claim” that CIGA could pay. The trial agreed and granted summary judgment in favor of CIGA.
Holding
The Court of Appeal affirmed. It reasoned that under California’s “continuous injury” trigger of coverage, each insurer that covers a continuing or progressive loss claim has an independent obligation to respond to the loss in full. Thus, each of the three solvent insurers had been obligated to cover the full amount of the underlying judgment. Accordingly, because there was “other insurance” available to satisfy the underlying judgment, the underlying judgment did not qualify as a “covered claim” (see Ins. Code § 1063.1(c)(9), and CIGA was thus prohibited from paying it. Under such circumstances, Stonelight and Anson could not recover the unsatisfied portion of the underlying judgment from CIGA.
Comment
It appears that Stonelight and Anson as judgment creditors may have settled “too cheaply” when they accepted amounts which were less than the solvent insurers’ policy limits and which did not cover the full amount of the underlying judgment. Since the three solvent insurers had in fact been obligated to pay the full amount of the underlying judgment, Stonelight and Anson could not rely on CIGA to make up the difference.