Judge: Robert S. Draper, Case: 21STCV12256, Date: 2023-05-09 Tentative Ruling
Case Number: 21STCV12256 Hearing Date: May 9, 2023 Dept: 78
Department 78, Stanley Mosk
May 9, 2023
21STCV12256
Motion by Plaintiff Safeguard Insurance Company for Summary Adjudication of the Third Cause of Action of the First Amended Complaint
DECISION
The motion is denied.
Moving party to provide notice and to file proof of service of such notice within five court days after the date of this order.
Discussion
Plaintiff has not met its initial burden with respect to the third prerequisite delineated in Blue Ridge Insurance Company v. Brigitte Jacobsen (2001) 25 Cal.4th 489 in order for an insurer to seek reimbursement for noncovered claims included in a reasonable settlement payment.
The third prerequisite requires that an insurance company inform an insured that if the insured does not believe a proposed settlement to be reasonable, then the insured may assume their own defense.
Plaintiff does not address this prerequisite in its initial moving papers. In Plaintiff’s reply, Plaintiff cites to the following statement of the third prerequisite that is contained in the Blue Ridge opinion: that the insurance company must make “an express offer to the insureds that they may assume their own defense when the insurer and insureds disagree whether to accept the proposed settlement.” (Id. at 502.)
Plaintiff contends that since Defendant agreed to the settlement at issue here, this prerequisite is satisfied.
However, Plaintiff interprets this prerequisite too narrowly. In the Blue Ridge case, the insured was informed of their right to assume its own defense. “Blue Ridge strikes a balance between the rights of insurers and insureds, by allowing insurers to seek reimbursement for settlements of uncovered claims, but also requiring insurers to first offer their insureds at least two options:1) to agree to the settlement-and thereby avoid incurring any legal costs, but risk liability for reimbursement; or 2) to assume their own defense-and thereby control the litigation and settlement, but also take on the legal costs.” (Allstate Ins. Co. v. Baglioni 2012 WL 683075 at *2 (Central District CA.) The court in Allstate went on to conclude that Blue Ridge requires an express offer of the option to assume the defense.
The fact that the Ninth Circuit Court of Appeals memorandum of disposition of the appeal of the Allstate matter which affirmed the decision and reasoning of the district court stated that the insurer there accepted the settlement without the insured’s consent does not change the analysis of the district court which focused on the Blue Ridge requirement that insureds be expressly informed of their choices.
Plaintiff does not meet its burden of showing that this prerequisite was met. Defendant, moreover, contends that it was never informed of the right to assume its own defense. (Declaration of George Eshaghian at Para. 21.) Defendant further contends that it believed that the only way to settle the case was to agree to the settlement agreement as opposed to the option of assuming its own defense and seeking other settlement terms. (Id. at Para 25.)
