Elaine Fresch, Linda Wendell Hsu and Peter Dye Score Significant Trial Victory

October 31, 2012

In a bench trial in Santa Clara County, the Judge ruled in favor of Selman Breitman's client Topa Insurance Company, holding its excess policy was not triggered as the primary policies had not been properly exhausted. The case concerned a Construction Defect claim against Topa's insured, a general contractor that, during the course of the litigation, had its corporate status suspended. The primary carrier intervened and then reached a settlement with the property owner to pay the limits of one of two policies under which it had been defending the claims asserted against the insured in exchange for the property owner fully releasing the primary carrier and the GC insured. The release specifically did not apply to the Topa excess policy, and purportedly allowed the claimant to continue the claim against the GC insured and to collect solely from Topa's excess policy.

On behalf of Topa, Selman Breitman filed a declaratory relief claim against the property owner asserting there was no coverage under the Topa policy. Selman Breitman's team of Elaine Fresch, Linda Wendell Hsu and Peter Dye vehemently contested the exhaustion of the primary policies. They first asserted that the primary carrier had, as part of the settlement, actually paid money to release not only the GC insured, but a completely different insured of the primary carrier who was also involved in the litigation, a framer. They asserted that a portion of the settlement had to be allocated to this cross defendant as it was not properly paid under the GC insured's policy. This aspect of the settlement had not been disclosed to Topa; it was only after persistent discovery that Selman Breitman obtained the evidence that the settlement was on behalf of two separate insureds of the primary carrier even though it had been paid out of one insured's coverage. Second, Selman Breitman argued the payment by the primary carrier was not made to satisfy a final judgment against the GC insured nor did it result in a final settlement against the GC insured, and was, therefore, an improper exhaustion per the policy language. Third, Selman Breitman asserted that the other defending primary policy (issued by the same carrier) was applicable and thus the settlement must be allocated pro rata between the two policies. The Court, after conclusion of trial, found in Topa's favor on all of these points as well as finding that the property owner claimant was collaterally estopped from relitigating a prior default judgment Topa had obtained against the primary carrier on the issue of whether the primary policies were properly exhausted. Topa was awarded its costs of over $47,000 against the property owner claimant as well.

Selman Breitman was able to bring a focused team together that joined the firm's construction defect and insurance expertise to bring about this result on behalf of its client.


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