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Neil Selman and Meka Moore Obtain Appellate Victory Affirming Judgment Valued At $8,300,000

Neil Selman and Meka Moore recently achieved a significant victory on behalf of Selman Breitman's insurance company client, wherein the Second Appellate District ruled an umbrella carrier had the sole duty to drop down and defend a mutual insured. The insured had been sued by the United States Department of Justice for alleged discriminatory acts violating the Fair Housing Act 42 U.S.C. §3604 et seq. The Department of Justice sought to enjoin the alleged discriminatory conduct and other interference with rights under the Fair Housing Act, including monetary damages for those who allegedly suffered discrimination. The insureds tendered the matter to its primary insurer, which provided a defense. Although the umbrella insurer initially agreed to defend the matter under a reservation of rights, it unilaterally withdrew, leaving Selman Breitman's client to defend the insured on its own. Ultimately, over $5,200,000 was spent to defend the matter, and $1,000,000 in indemnity. The umbrella insurer had paid approximately $316,000 in defense fees and costs prior to its withdrawal.

Later, in the contribution action between the insurers, the umbrella insurer sought reimbursement of its $316,000. Selman Breitman's client, on the other hand, sought reimbursement of over $6,200,000. The primary insurer successfully asserted that its policy had no obligation to defend at all, because the umbrella carrier had explicit discrimination coverage and the sole obligation to drop down and function as a primary insurer. Although the umbrella insurer claimed that the suit included common law theories for "wrongful eviction" and "invasion of the right of private occupancy", both the trial court and Court of Appeal vehemently disagreed. In affirming the trial court's judgment, the Court of Appeal noted that the United States jurisdiction under 42 U.S.C. §3614(a) is the enforcement of the anti-discrimination provisions of the Fair Housing Act, which does not extend to common law landlord tenant disputes. To that end, the Court of Appeal found that the United States had no right of occupancy, and was not a victim of any violation of property rights. Instead, it sought only to enforce an anti-discrimination statute to deal with a "pattern of practice" of discrimination. As such, the Court of Appeal found that because the underlying action was based on discrimination and only the umbrella policies provided coverage for discrimination claims, the umbrella coverage "dropped down" to fill the gap in the primary policy and provided primary coverage in the underlying action.


Selman Breitman provides this information for educational purposes. Case results depend upon a variety of factors unique to each case. Case results do not guarantee or predict a similar result in any future case. This information should not be construed or relied on as legal advice or to create a lawyer-client relationship.