Traub Lieberman Attorneys Robert D. Dennison and Neal Kojima Obtain Summary Judgment For A Liability Insurer In Breach of Contract and Bad Faith Action

Traub Lieberman Straus & Shrewsberry LLP partner Robert D. Dennison and associate Neal Kojima recently obtained summary judgment for a liability insurance carrier client in a San Diego County Superior Court case sited in downtown San Diego, California. The coverage case involved claims by a construction company, its principal and the principal’s wife against three separate insurers. The principal and his wife owned a residential lot on which the insured construction company constructed improvements that allegedly encroached on a neighboring lot. The plaintiffs were sued in an underlying civil action involving the purchaser of the subject residential lot and the neighboring landowner. After denial by the three insurer defendants of plaintiffs’ tenders of defense and indemnity, the plaintiffs sued each of the three insurers for breach of contract and bad faith.

The coverage action was protracted, first being removed to federal court then subsequently being remanded back to state court on the eve of a hearing on a second round of motions to dismiss. During the course of the coverage action, the underlying case went to trial and resulted in a jury verdict and judgment against the insured’s principal. In preparing cross-motions for summary judgment/adjudication in the coverage action, the parties stipulated to an approximately 650 page set of common exhibits. Each party also had individual declarations and exhibits specific to their individual client’s issues.

In its motion for summary judgment, the firm argued that the alleged encroachment was not an “accident” as required by the definition of an “occurrence” in the firm’s client’s liability insurance policy. The plaintiffs argued in opposition and in their own cross-motion that there were claims of defective construction in the underlying action that fell within the definition of an “occurrence.” The court found in favor of the firm’s client, holding that the insurer carried its burden on summary judgment to show the construction of the improvements was not an “accident” and that the evidence did not support the contrary contentions made by plaintiffs.