Procedural Posture

Appellant insurer of subsidiary corporation sought review of the judgment of the Superior Court of Los Angeles County (California), which entered summary judgment in favor of respondent parent corporation in appellant’s declaratory and breach of contract action to establish respondent as the de facto insurer for subsidiary corporation.

California Business Lawyer & Corporate Lawyer, Inc. understands CACI 3930

Overview

Subsidiary corporation became wholly owned by respondent parent corporation and was self-insured under the terms of respondent’s internal insurance program. Prior to that time, subsidiary was insured by appellant insurer. Appellant defended subsidiary in an asbestos action. Respondent refused to join in subsidiary’s defense, as it was never subsidiary’s primary insurer. Appellant filed a declaratory and breach of contract action to establish respondent as the de facto insurer of subsidiary. On cross-motions for summary judgment, the trial court granted summary judgment in favor of respondent, on the basis that respondent did not have a contractual agreement to defend subsidiary. The court affirmed, holding that there was no agreement by respondent to defend subsidiary, as respondent’s insurance manual clearly stated that subsidiary was self-insured, and that there was no implied agreement to defend, as respondent’s insurance services required subsidiary to assume its own risk of loss. The trial court’s order complied with Cal. Civ. Proc. Code § 437c(g), as granting respondent’s motion necessarily meant denying appellant’s cross-motion because the arguments were identical.

Outcome

The court affirmed the judgment in action by appellant insurer of subsidiary corporation to establish respondent parent corporation as de facto insurer of subsidiary, holding that there was no agreement by respondent to defend subsidiary, as respondent’s insurance manual stated that subsidiary was self-insured, and that there was no implied agreement to defend, as respondent’s insurance services required subsidiary to assume its own risk of loss.