Broker Also Liable To Insured for Fees Under Tort of Another, But Matter Had To Be Reconsidered Given Reversal Of Judgment In Favor Of Insured And Against Insurer.
De La Torre v. Century Surety Co., Case No. D061028 (4th Dist., Div. 1 Feb. 24, 2014) (unpublished) was tripartite litigation involving insured versus insurer, and insurer cross-complaining against insurance broker who was claimed to have made false statements leading to issuance of the policy. The case involved a restaurant insured’s bad faith denial claim against an insurer after insured sustained property loss from a fire breaking out in a back kitchen when a pot of oil was left unattended over an open flame burner. Insurer denied the claim based on the argument that restaurant did not have an automatic fire extinguishing system over the back cooking area as required by the policy terms and conditions. Although a trial court made some interim rulings and a jury returned a verdict in favor of insured, the appellate court reversed the judgment against insurer on various grounds. Broker was found liable for misrepresentation under insurer’s cross-complaint. Both plaintiffs and insurer were awarded attorney’s fees as against broker.
Broker’s separate appeal did not change the result, because the tort of another doctrine was found applicable as a basis for the fee recovery, as damages, by both insurer and plaintiff. (Gray v. Don Miller & Associates, Inc., 35 Cal.3d 498, 504 (1984); Third Eye Blind, Inc. v. Near North Entertainment Ins. Services, LLC, 127 Cal.App.4th 1311, 1325 (2005).) In trying to defeat insurer’s fees recovery, broker argued that CCP § 1021.6 (fee recovery in implied indemnity actions) applied to the tort of another doctrine—a contention rejected because insurer had no implied indemnity claims. (Burger v. Kuimelis, 325 F. Supp.2d 1026, 1041-1043 (N.D. Cal. 2004).) However, because the insurer was ultimately found not liable, the fee award to insured had to be reversed to determine if the broker was still on the hook for them on remand.
BLOG OBSERVATION—This one brings back interesting teenage memories for co-contributor Mike, whose sister caused substantial property damage to the kitchen stove when she failed to monitor a pot of popcorn oil being heated up while she was applying her makeup in a bathroom down the hall. Mike’s mom was not happy when she came home from work, dryly observing “I can’t believe it, she burned up my stove.”
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