Procedural Posture
In an insurance coverage suit, plaintiff insureds appealed the judgment of the Los Angeles County Superior Court (California), which granted summary judgment for defendant insurance company and defendant agent on the basis that a prior judgment in an action in federal court precluded plaintiffs’ claim.
Overview
Plaintiffs, facing suit for malicious prosecution, turned to defendant insurer for a defense, having years before instructed defendant agent to duplicate coverage of a policy containing protection for malicious prosecution. The defense was denied because coverage was not in the issued policy, which was later renewed, and plaintiffs sued defendants. The trial court granted summary judgment for defendants, on the basis that the prior judgment in the federal action between plaintiff and prior insurer precluded plaintiffs’ claim. The court reversed, California litigation lawyer finding that because the court of the first instance made its judgment on alternative grounds and reviewing court affirmed on only one of those grounds, declining to consider the other, the second ground was not conclusively established. There was a triable issue of material fact whether defendant agent misled plaintiffs. The statute of limitations for a negligence claim did not begin to run until defendant insurer refused to defend, and for a reformation claim until plaintiffs discovered facts constituting mistake.
Outcome
Judgment was reversed. Because the federal court of the first instance made its judgment on alternative grounds and the reviewing federal court affirmed on only one ground, the second ground was not conclusively established, and prior judgment in federal action between plaintiffs and a prior insurer did not preclude plaintiffs’ state claim against defendants.
