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Foster-Gardner Inc. v. National Union Fire Insurance Co.8/3/1998
or indemnify a party to the agreement for any costs or expenditures under this chapter.' " (Original italics.)]; ยง 25364; see Jaffe v. Cranford Ins. Co. (1985) 168 Cal.App.3d 930, 933 [insurer agrees to pay damages " `resulting from any claims or suits' "].) Although insureds certainly deserve no less than the benefit of their bargain, insurers should be held liable for no more. (Ray Industries, Inc. v. Liberty Mutual Ins. Co., supra, 974 F.2d at p. 764 ["By limiting its duty to defend to `suits,' [the insurer] unambiguously demonstrated its intention to avoid responsibility for any action that fell outside the traditional and well-recognized meaning of that term. This court will not deprive [the insurer] of the benefit of its bargain by forcing it to insure against the creation of a new type of legal action, a risk for which it was not paid."].)
Foster-Gardner asserts that it is not urging this court to ignore the long-recognized distinction between a "claim" and a "suit." Rather, " he plain meaning of the term `suit' in a standard CGL policy embraces the [DTSC] coercive administrative proceeding -- a proceeding that not only determines liability, but also establishes the amount thereof." The Order "is not a `claim' because it is not a mere threat to initiate legal action, or merely a demand as of right. . . . The [DTSC] is not threatening to institute a legal action to establish Foster-Gardner's alleged liability for response costs, it has done so. . . . ursuant to its order, the [DTSC] will make findings of fact and determinations of law which will determine Foster-Gardner's alleged liability, subject only to the appellate review of a trial court."
As noted earlier, Foster-Gardner's argument has proved of "critical importance" to other courts. (See ante, p. 20.) In our view, however, even if many of the factual predicates for any future lawsuit are determined either prior or in response to the Order, that does not ineluctably lead to the Conclusion that the policies' language must be interpreted to require a duty to defend such an Order. Indeed, in even simpler, more routine insurance claims, information that may prove damaging to the insured is gathered prior to the filing of a lawsuit. For example, " t is well established that an insurer is not required to provide a criminal defense to an insured under a liability policy obligating the insurer to pay `damages' for which the insured is found liable." (Stein v. International Ins. Co. (1990) 217 Cal.App.3d 609, 615; Perzik v. St. Paul Fire & Marine Ins. Co., supra, 228 Cal.App.3d at pp. 1276-1278; Jaffe v. Cranford Ins. Co., supra, 168 Cal.App.3d at p. 934.) Nevertheless, a guilty verdict against the insured in the criminal proceeding may well affect the insured's ability to meaningfully defend any subsequent civil action. The fact that damaging, perhaps even irrefutable, findings will be made does not mean that a duty to defend arises in the criminal proceeding. (See Stein v. International Ins. Co., supra, 217 Cal.App.3d at p. 614.) Similarly, in an automobile accident, medical reports are written, collision experts consulted, and other information obtained often long before the institution of any lawsuit. The fact that the insured's liability will be affected by such information does not alter the language of the insurance contract which does not require a defense until the lawsuit is filed.
Along these lines, Foster-Gardner asserts that "should this Court decide to deprive insureds of their entitlement to defense costs for coercive administrative proceedings, this Court will also be providing the Carriers with an unintended windfall in the form of reduced indemnity obligations. Specifically, an insured in the administrative a
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