A federal appeals court on Wednesday overturned a lower court ruling in favor of a Markel Corp. unit that sought to recover a $1 million settlement from a policyholder in a car death.
The case was referred back to the lower court for further investigation.
Markel unit United Specialty Insurance Co. issued a car dealer’s policy to San Jose, Calif.-based Bani Auto Group Inc. and Sia Bani & Co. LLC, 2016, according to the complaint in United Specialty Insurance Co. v. Siavosh Banihashemi, aka Sia Bani, and Bani Auto Group Inc. et al.
In 2016, San Jose-based Club Sportiva Inc., which promotes exotic car tours, leased a Ferrari for a tour. David Wright was driving the car when he lost control and was fatally injured.
Mr. Wright̵7;s family sued Club Sportiva, Bani Auto Group and Siavosh Banihashemi, United Specialty accepted Bani Auto and Mr. Banihashemi’s defense, rights reserved.
United Specialty settled the case for $1 million and then sued Bani Auto Group, Mr. Banihashemi and others, seeking rescission of the policy and repayment of its defense and indemnity payments, stating that they had not sought coverage for the lease, loan or rental of any vehicles.
The U.S. District Court in San Jose ruled in favor of the insurer in November 2021, stating that United Specialty had no duty to indemnify the underlying Wright lawsuit and that Bani Auto, Club Sportiva and Mr. Banihashemi would jointly and severally reimburse United Specialty for the $1 million settlement, plus prejudgment interest.
Mr Banihashemi and the Bani Auto Group appealed the decision, which was overturned by a three-judge court panel.
“On the record before the district court, United Specialty was not entitled to summary judgment under California law. … The burden of proof for allocation rests “entirely on insurers asserting claims for compensation,” the ruling said, citing a previous case.
“Although a finding of joint and several liability may ultimately be appropriate for all three Bani defendants, the record before us reflects the existence of a material issue of fact regarding the distribution of the settlement amount among the insureds,” the ruling said., by reversing the district court’s judgment on summary judgment in United Specialty’s favor and remanding the case for further proceedings.
Attorneys in the case did not respond to requests for comment.