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Policy approval Trumps exclusive, but also makes the policy redundant for other available coverage



On November 2, 2016, a federal judge in California confirmed that a property-managed policy policy issued to a property manager denied a standard policy exclusion, but also made the policy redundant against other available insurance. In the case, there was a dispute over coverage for a claim involving "animal breeder disease" allegedly caused by the insured's failure to keep pigeons away from a residential complex's rooftop units. The complainant sued property owners, Jerry and Betty Lee, and property manager Sierra Pacific Management Co. Inc. (Sierra Pacific).

Atain Special Insurance Co. (Atain) insured Sierra Pacific and California Capital Insurance Co. (California Capital) insured Lees. California Capital also insured Sierra Pacific as an additional insured. The Sierra Pacific tended its defense to Atain three times; each one was denied. California Capital undertakes the defense and Sierra Pacific granted its rights to Atain to California Capital. California Capital finally paid $ 1

.9 million to settle the underlying goal. Atain did not contribute to the defense or conciliation.

In the subsequent coverage dispute, Atain sought a declaration that it had no obligation to defend or liberate the Sierra Pacific in the underlying case. California Capital sought a contribution from Atain and claims allegations of breach of contract and bad faith for AED's repeated coverage. With regard to appeals for the gathering of the court, the court held with Atain and claimed that it had no obligation to defend or replace as a result of the policy's property management.

The Attain policy contained standard exclusions for professional services, which their face considered to provide coverage for professional real estate management services. But, as the court explained, the property management undermined the approval of Aide's argument for exclusion. The replacement states (additional name) "[w] with regard to your liability arising from your property management that you are the property manager of this insurance is superfluous to any other valid and collective insurance available to you." shows clearly that the parties considered that the Sierra Pacific could suffer from some covered responsibility for their work as a real estate manager.

The note also made Atain an overrun insurance company. The court followed the modern trend and assumed that the policy would be primary unless a preaching condition made it superfluous. Here the predicate state existed – that Sierra Pacific was responsible for its property management -. Thus, California Capital was considered the primary insurer. As such, California Capital had a duty to defend and liberate the Sierra Pacific. On the other hand, Ain's obligations as over-insurers never occurred because California Capital's policies were not exhausted. For that reason, there can be no evil faith of Atain.

The decision illustrates the decisive consequences that the approvals can have on the coverage area and underlines the importance of understanding how all political approvals are related to shaping the final coverage area. Political reviews of experienced insurance directors can help policyholders demolish complex political approvals.

The decision also illustrates the modern trend of "other insurance" regulations, which is to consider the coverage primarily, unless a trigger event converts the policy into surplus. The case is Atain Specialty Ins. Co. v. Sierra Pac. Mgmt. Co. No. 2: 14-cv-00609-TLN-DB, 2016 LEXIS 152874, at * 4, * 18-28, * 33-38 (ED Cal. November 3, 2016). [19659008]
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