In football as in life, the best defense is often a good crime. But that proverb does not always work well in trials. In Riddell, Inc. v. Superior Court no. B275482, 2017 WL 3614305 (Cal. App. Aug. 23, 2017), the California Court of Appeal blew the fan on such a tactic, claiming that an insurer could not use discovery tools in a dispute with his policyholder to impair the policyholder's defense in an underlying trial.
Sports assistance law and long-term personal injuries are subject to increasing in recent years. The football helper manufacturer Riddell, Inc., along with several other manufacturers, is responding to a number of such lawsuits submitted by former professional football players who claimed prolonged neurological damage from repeated head injuries from their use of Riddell football helmets. Riddell looked at his insurers to defend and replace these trials. While some insurance companies agreed to defend while reserving rights, others refused, and none of them agreed to replace Riddell. Consequently, Riddell filed a separate trial against the insurers seeking a declaratory judgment covered by the lawsuit and alleged breach of contract and breach of the implied union of good faith and fair trade.
The insurance protection measure continued in parallel with the football players' underlying personal injury trials. In the insurance coverage, the insurers sought the discovery of what Riddell knew about the health risks of playing football while wearing the helmets, and when Riddell became aware of these risks. The insurance companies sought that information, because if Riddell had such knowledge when selling the helmets, it could create an insurance cover for damages arising from these risks.
However, the problem was that this discovery overlap significantly with the discovery sought in the players' trials, which also attempted to prove Riddell's knowledge. Riddell argued that his insurance company could not pursue the discovery in the insurance cover to prove that Riddell was aware of the risks, while fulfilling his duty to defend Riddell in the underlying trials against the players' similar claims. In fact, this tactic in the insurance companies' play books has long been convicted by California courts, with the risk of prejudice it creates for the insured. These courts have realized that an insurer cannot use the insured's objection to use an insurance protection measure as a forum to test actual problems affecting the insured's liability in an underlying process. Instead, these courts have called a time-out and stopped detection in the coverage measure pending the assessment of the underlying debt.
In the Riddell case, the California Court of Appeal adopted this approach and rejected the insurers' argument that the discovery was not so related that it would warrant a stay. Indeed, the Court declared that if the actual issues to be resolved in the insurance business and in the underlying debt measure overlap, a residence stay is mandatory .
Riddell ] gives some important lessons for policyholders who at the same time treat coverage disputes alongside an underlying responsibility. In this context, insurance companies can make gigs that actually increase their policyholder's risk of liability in the underlying trial, and these tactics may not always be easy to detect. Policyholders should be vigilant about the potential prejudices and, if appropriate, seek residence permits or the need to respond to the prejudice. In addition, policyholders should not be so quick to accept the insurer's claim that the problems do not overlap significantly. Like football, momentum in coverage conflicts can be shifted rapidly, and the resulting prejudices may not be immediately apparent.