Appellant insured sought review of a judgment of the Superior Court of Los Angeles County (California), which favored respondent insurer in appellant’s action to compel coverage under an insurance policy issued to appellant by respondent.
Appellant, an insured, brought an action to compel coverage under an insurance policy issued by respondent insurer. Appellant also sought to recover the cost of a settlement paid by appellant in an action against it for damages caused by rancid oil it sold. The policy provided that respondent was obligated to defend appellant in an action against appellant caused by accidents. On appeal of the judgment for respondent, the court determined that appellant’s sale of rancid oil was an accident within the law applied to the insurance policy in question. The policy was an accident policy, covering the unexpected and unforeseeable results of a voluntary act. An implied warranty created a liability imposed by law, and respondent was obligated to defend appellant in such an action. All of the conditions of the products property damage endorsement in the insurance policy were fulfilled, and the court found respondent improperly refused to defend. This gave appellant the right to make any reasonable and bona fide settlement in an action against it and seek coverage from respondent.
The California class action attorneys represented the parties and their business entities. The court reversed the judgment.
HOLDINGS: -Breaching partners did not discharge their burden to show a nonbreaching partner would have incurred a loss even if they had fully performed where it was their refusal to participate in construction that prevented the real estate development partnership from attaining its goal; -Because the breaching partners failed to prove what losses the nonbreaching partner would have suffered had they fully performed by cooperating with the construction phase of development, a trial court did not err in refusing to reduce the nonbreaching partner’s reliance damages; -Because the breaching partners wielded adverse pressure to procure an agreement that permitted them to allow their own interest to trump that of the partnership, thereby violating their fiduciary duties, the court properly entered judgment for the nonbreaching partner on their claim alleging breach of that agreement.