... ON "NO DUTY TO DEFEND, THEREFORE NO BAD FAITH" ARGUMENTS BY INSURANCE COMPANY: SUMMARY JUDGMENT DENIED.
In McMillin Construction Services, L.P. v. Arch Specialty Insurance Co., 2012 WL 243321 (S.D. Cal. January 25, 2012), Download McMillin Constr. Servs, L.P. v. Arch Spec. Ins. Co. (S.D. Cal. Case No. 10cv2592, Order Denying Def's MPSJ Filed Jan. 25, 2012) PUBLIC ACCESS, two of the Insurance Company Defendants filed a Motion for Partial Summary Judgment. They both argued two grounds for the Motion: First, that they had no Duty to Defend under their Additional Insured Endorsement, and second, that Exclusions barred all Coverage including a Duty to Defend anyway. Since they had no Duty to Defend, they argued, they could not in turn be guilty of Insurance Bad Faith as a matter of law. See id. at *1 - *3.
The Federal Court in this case held that the Additional Insured Endorsement relied on by both of the Insurance Companies joining in the Motion at bar was "ambiguous" about a Duty to Defend. Their Motion for Partial Summary Judgment was denied on that first ground accordingly. Id. at *3.
The Federal Judge next turned to the Defendants' argument based on certain Exclusions (Exclusions j(5) and j(6) concerning in pertinent part "ongoing operations"). In this Court's eyes, these Defendants did not meet their Burden of Proof that the Exclusions apply in this particular case. In pertinent part, potential Insurance Coverage for the Damages alleged in the underlying complaint against the Insured, if proven, would not have been excluded by these two Exclusions in any case. "Defendants have not met that burden here, and thus they are not entitled to summary judgment based on the exclusions." Id. at *3.
When moving for Summary Judgment, it is often wise to consider how the Court will read the documents involved in the case -- here, the documents involved were the Additional Insured Endorsement and the underlying complaint -- compared to the Duty to Defend which, after all, is not always the ultimate exposure faced by a Liability Insurance Company in the ordinary case. Even after such consideration is factored into the Insurance Coverage analysis in a given case, sometimes an appropriate motion to highlight one or more issues may be worth pursuing in that particular case, regardless of the results of such consideration.
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