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American States Insurance Co. v. Castillo2/27/2003
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.
Appellants Gail Castillo and Paul Castillo appeal a summary judgment in favor of respondent American States Insurance Company in respondent's declaratory relief action seeking an adjudication of its rights and obligations under its insurance policy. The issue presented in this appeal is whether respondent is liable for prejudgment interest on a $15 million stipulated judgment in favor of appellants entered into by respondent's insured without respondent's consent after respondent had undertaken a defense of the underlying liability action. We conclude that, pursuant to the policy's "no-action" clause, respondent is not bound by the stipulated judgment and is, therefore, not liable for the prejudgment interest awarded on that judgment.
Background
In March 1997, Gail Castillo suffered a severe brain injury in an automobile accident resulting from the negligence of respondent's insured, Leroy Griffith Construction, Inc. (hereafter Griffith). In September 1997, respondent determined that Griffith was 100 percent liable for the accident. In October 1997, appellants filed a personal injury action against Griffith and others, seeking damages as well as prejudgment interest and costs. Respondent retained Attorney Christopher Beeman for Griffith, and Griffith retained Attorney Frank Enright as independent Cumis counsel.
At the time of the accident, Griffith was insured by respondent under a commercial automobile policy with a combined single limit of $1 million. Section II.A. of the policy states, in relevant part: "Coverage [ ] We will pay all sums an `insured' legally must pay as damages because of `bodily injury ' or `property damage' to which this insurance applies, caused by an `accident' and resulting from the ownership, maintenance or use of a covered `auto.' " Section II.A.2. of the policy states in relevant part: "Coverage Extensions [ ] a. Supplementary Payments. In addition to the Limit of Insurance, we will pay for the `insured:' [ ] . . . [ ] (5) All costs taxed against the `insured' in any `suit' we defend. [ ] (6) All interest on the full amount of any judgment that accrues after entry of the judgment in any `suit' we defend; but our duty to pay interest ends when we have paid, offered to pay, or deposited in court the part of the judgment that is within our Limit of Insurance." Section IV.A.3. contains the following "no-action" clause: "Legal Action Against Us [ ] No one may bring a legal action against us under this Coverage Form until: [ ] a. There has been full compliance with all the terms of this Coverage Form; and [ ] b. Under Liability Coverage, we agree in writing that the `insured' has an obligation to pay or until the amount of that obligation has finally been determined by judgment after trial. No one has the right under this policy to bring us into an action to determine the `insured's' liability."
In March 1999, pursuant to Code of Civil Procedure section 998, appellants served on Griffith offers to compromise all claims for approximately $2 million. When respondent failed to respond to the offers to compromise within 30 days, the offers were deemed rejected. (Code Civ. Proc., ยง 998, subd. (b); Wilson v. Wal-Mart Stores, Inc. (1999) 72 Cal.App.4th 382, 387.)
Multiple settlement conferences were held in this matter. In May 1999, respondent's claims specialist, Marvin Wenograd, re
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