Defendants in a Personal Injury Suit Were Not Covered Under CGL Policy
Los Angeles, CA
WHIC v. Bartlein
On October 19, 2016, the United States District Court for the Central District of California found in favor of Western Heritage Insurance Company (WHIC) following a Bench Trial. The Court agreed with WHIC that none of the defendants were covered with respect to the underlying action arising from an auto accident.
The underlying claimant, Kelly Johnson, was involved in an auto accident with defendant Natalie Mumm in Goleta, California. At the time, Mumm worked for a property management company known as Bartlein & Company. A staffing firm known as Robert Half International Inc. dba Office Team (RHI) furnished Mumm to Bartlein & Company to act as a Property Manager’s Assistant.
On the date of the accident, Mumm had just copied a key for a property owned by the Los Encinos Owners’ Association and was driving away when the accident occurred. The claimant sustained serious injuries. She sued Mumm, Bartlein & Company, its parent Bartlein Group, and RHI in the Santa Barbara Superior Court.
WHIC brought a Declaratory Relief Action in federal court alleging there was no coverage for the auto loss under its auto exclusion. It argued Mumm was a leased worker for Bartlein & Company and thus an insured “employee” within the meaning of the auto exclusion (rather than a non-insured “temporary worker”).
Due to an underwriting error, the WHIC policy only named Bartlein Group and not Mumm’s employer, Bartlein & Company, as an insured. Moreover, WHIC did not believe Bartlein & Company qualified as an insured under the policy as written. Therefore, WHIC offered to stipulate with the defendants that Bartlein & Company qualified as a named insured in accordance with the contracting parties’ intent. The defendants refused, apparently realizing the “auto exclusion” would bar coverage if Mumm was an employee of a named insured.
The parties thus stipulated Bartlein & Company did not qualify as a named insured under the policy as written. They agreed to try the issue of whether, alternatively, Bartlein & Company qualified as an insured “real estate manager” for the named insured, Bartlein Group, under II.2(b). Also at issue was whether Mumm and Bartlein Group were covered vis-à-vis the underlying auto loss.
The parties agreed the duty to defend was not at issue, because Mumm’s personal auto carrier, GEICO, was defending Mumm and the Bartlein entities in the underlying action. Only the duty to indemnify was to be tried.
The case proceeded to a Court Trial on stipulated facts and evidence. WHIC argued Bartlein & Company did not qualify as an insured real estate manager under II.2(b) because the accident did not happen “while” it was acting as a property manager for a property Bartlein Group owned. The parties had stipulated Los Encinos Owners’ Association and not Bartlein Group owned the property in question. Defendants argued Bartlein & Company did qualify as an insured real estate manager under II.2(b) because it managed properties for Bartlein Group, generally speaking.
As for Mumm, WHIC argued she did not qualify as an insured because she was not an employee of the named insured Bartlein Group, but was rather an employee of Bartlein & Company, a non-insured. Mumm agreed she was not an insured, but argued she was entitled to coverage to the extent her employer Bartlein & Company was entitled to coverage.
As for Bartlein Group, WHIC argued the parties stipulated, for purposes of the federal court action, that Mumm was not working for Bartlein Group at the time of the loss. As such, there could be no vicarious liability regarding Bartlein Group and nothing to “indemnify” as a matter of law. Defendants argued that the underlying case was ongoing, and that Bartlein Group could be held liable on some theory. As such, they asserted, it was premature to find Bartlein Group was not covered. Mumm also argued Bartlein Group could be held responsible for any judgment against Bartlein & Company under an “alter ego” theory—an argument WHIC refuted based on cases holding an insurer cannot be responsible for paying a judgment against a non-covered entity under such a theory.
Following a Bench Trial on stipulated facts and evidence, the Court issued Findings of Fact and Conclusions of Law in favor of WHIC on October 19, 2016. In finding for WHIC, the Court essentially adopted WHIC’s arguments as to why none of the defendants were covered under its policy.
WHIC was represented by Alan B. Yuter and Rachel Hobbs of Selman Breitman LLP
Bartlein & Company and Bartlein Group were represented by Michael Cody of MacDonald & Cody LLP
RHI was represented by Michael G. Nardi of Seltzer Caplan McMahon Vitek
Mumm was represented by Timothy Dennis Lake and Dmitry Chapovsky of Tharpe & Howell
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.