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Amato v. Mercury Casualty Co.9/29/1993
COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT DISTRICT, DIVISION FOUR
No. B063712.
1993.CA.42121 ; 23 Cal. Rptr. 2d 73; 18 Cal. App. 4th 1784
Decided: September 29, 1993.
ANTHONY CHARLES AMATO ET AL., PLAINTIFFS AND APPELLANTS,
v.
MERCURY CASUALTY COMPANY, DEFENDANT AND APPELLANT.
Superior Court of Los Angeles County, No. EAC77226, William J. McVittie, Judge.
Kinkle, Rodiger & Spriggs and Guillermo W. Schnaider for Defendant and Appellant.
Curtis L. Gemmil and Jerry L. Rowley for Plaintiffs and Appellants.
Opinion by Woods A. M., P. J., with Vogel C. S., J., and Conway, J., Concurring.
Woods
Appellant Mercury Casualty Company issued an auto policy which covered a Renault automobile. The policy stated that it did not provide liability coverage for bodily injury sustained by an insured. The policy defined insureds to include permissive users of an owned automobile and resident relatives of permissive users, including those related by marriage. Cross-appellant Anthony Charles Amato negligently caused an accident while driving the Renault with the permission of its owner. The accident injured his mother-in-law, cross-appellant Jacqueline Sutton, who was a passenger in the Renault. She sued Amato, and Amato requested appellant to defend him. Appellant denied the request on the ground that the policy did not cover Sutton's claim because she was the resident relative of Amato. At the time of this denial appellant was aware of facts which, if true, indicated that Amato was not residing with Sutton.
After resolution of the underlying case in Sutton's favor, Amato and Sutton filed this action for bad faith breach of insurance contract against appellant. A jury found that Sutton was residing with Amato at the time of the accident. The trial court nonetheless found that appellant breached its duty to defend Amato pursuant to two well-established rules of law: (1) the rule that an insurer must defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy (Gray v. Zurich Insurance Co. (1966) 65 Cal. 2d 263, 277 [54 Cal. Rptr. 104, 419 P.2d 168]), and (2) the rule that the duty to defend is determined by the information possessed by the insurer at the time it refuses to defend, not by information subsequently obtained. (CNA Casualty of California v. Seaboard Surety Co. (1986) 176 Cal. App. 3d 598, 605 [222 Cal. Rptr. 276]; Mullen v. Glens Falls Ins. Co. (1977) 73 Cal. App. 3d 163, 173 [140 Cal. Rptr. 605].)
Appellant contends in this appeal that the former rule does not apply under the facts of this case. Alternatively, appellant contends the trial court erred in awarding damages in the amount of the judgment in the underlying suit.
In a cross-appeal, Amato and Sutton contend the trial court improperly instructed the jury on the meaning of "residence," erred in precluding evidence on the issue of punitive damages, and erred in concluding the policy was not ambiguous. Additionally, cross-appellants contend that the exclusionary clause upon which appellant based its refusal to defend is unenforceable due to overbreadth.
After review, we conclude the rule of Gray v. Zurich Insurance Co. applies to this case and suppo
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