In an action for breach of contract and breach of the covenant of good faith and fair dealing, plaintiff insured appealed a summary judgment of the Los Angeles County Superior Court, California, which was granted in favor of defendant insurer. Appellants were represented by California business law attorneys during civil litigation.
The insurer refused to defend a third-party action against the insured arising out of the failed sale of a home on the grounds the policy excluded indemnity for actions based upon the furnishing of "escrow services," and it refused to pay pre-tender defense costs and settlement costs the insured incurred in connection with defending the underlying action. The insurer argued that, even if the professional services exclusion did not apply, the insured's intentional acts were not covered. The insured contended that the trial court erred in finding the insurer had no duty to indemnify and hence no duty to defend. The instant court concluded that the insured could not recover its pre-tender defense costs in the sum of $ 20,000. The insurer had no duty to indemnify because the underlying action was not within the scope of the commercial general liability policy. All of the claims alleged in this case fell within the professional services exclusion because the alleged wrongful acts were committed during the performance of professional services, namely, the rendering of escrow services. The policy also excluded intentional conduct or acts of the type alleged in the underlying action.
The judgment was affirmed. The insurer was awarded its costs on appeal.
Plaintiff subcontractor appealed summary judgment entered in favor of defendant city by the Superior Court of Riverside County (California), in an action alleging defendant negligently breached a mandatory duty when failing to determine the sufficiency of a surety providing a payment bond under Cal. Civ. Code §§3247, 3248.
Unable to obtain payment under a bond accepted by defendant city when executing a public contract, plaintiff subcontractor sued, alleging defendant breached a mandatory duty when failing to take certain actions before accepting the bond. The trial court granted summary judgment to defendant. The court reversed. Plaintiff did not waive its objection to the bond. Interpreting Cal. Civ. Code §§3247, 3248 in conjunction with the Bonds and Undertakings Law, Cal. Civ. Proc. Code §995.010 et seq., defendant had a mandatory duty to ensure that the subject bond be executed by one of the three categories of insurers identified in Cal. Civ. Proc. Code §995.310. Under Cal. Civ. Proc. Code §995.660 (a)(3), defendant also had a mandatory duty to require the surety to submit a county clerk's certificate showing that it was an admitted surety insurer. Defendant breached those duties, the breach proximately caused plaintiff's losses, and defendant was not immune from liability for that breach. However, plaintiff was not entitled to recover attorney fees from defendant.
Summary judgment for defendant city reversed. Defendant had and breached a duty to plaintiff to require the surety who provided the subject payment bond to be an admitted surety insurer or to confirm the sufficiency of the surety prior to accepting the bond. Defendant's breach of that duty proximately caused plaintiff's damages.
