USDC Should Have Considered the Intentional Act Statute
Barry Zalma
Nov 24, 2023
Read the full article at https://lnkd.in/gPNCydH4 and see the full video at https://lnkd.in/gbjtcMMU and at https://lnkd.in/gHVKDFnS and at https://zalma.com/blog plus more than 4700 posts.
California State Grange (“Grange”) brought this action as a judgment creditor of non-party Chico Community Guilds (“Guilds”) seeking to recover from Guilds’ insurer Carolina Casualty Insurance Company (“Carolina Casualty”) damages awarded by the state court. The underlying judgment followed a lawsuit quieting title to real and personal property wrongfully converted by Guilds. Grange appealed the district court’s grant of Carolina Casualty’s motion to dismiss without leave to amend based on its conclusion that the underlying claims were not covered under the policy.
In California State Grange v. Carolina Casualty Insurance Company, No. 22-16169, United States Court of Appeals, Ninth Circuit (November 13, 2023) the Ninth Circuit Agreed to the District Court’s ruling in part and sent the case back to the court to another part of the case.
FACTS
Grange sued Guilds in Butte County Superior Court over the assets of Chico Grange No. 486 in which Grange brought several causes of action including cancellation of deed and quiet title, slander of title, and conversion. On February 25, 2021, the state court entered a ruling granting summary judgment to Grange on all claims. The judgment awarded in relevant part:
-
the cancellation of the unauthorized deed recorded by Guilds in 2017;
-
$23,167.50 in attorney’s fees related to the slander of title claim;
-
“damages for conversion” of bank accounts in the amount of $80,697.68 plus $9,307.87 in prejudgment interest; and
-
$1,945.49 in costs.
Grange sued Carolina Casualty in the USDC seeking a declaration that Carolina Casualty has a duty to indemnify Guilds under the policy to collect on the judgment for all monies awarded. The district court dismissed Grange’s suit without leave to amend.
ANALYSIS
The district court did not err in dismissing Grange’s claim for indemnification as to the conversion damages and prejudgment interest awarded by the Butte County Superior Court as restitution not covered under the policy. In the state court’s ruling on summary judgment, the Butte County Superior Court noted that Grange was not seeking title to the other personal property items identified in the complaint, but rather, only sought the converted funds totaling at least $80,697.69 in Guilds’ bank accounts, which, in turn was the exact amount awarded.
The relevant insurance policy explicitly excepts disgorgement or restitution from the definition of damages covered under the policy. Because the conversion damages and prejudgment interest awarded by the Butte County Superior Court was restitution not covered under the policy, the district court’s dismissal as to that claim was affirmed.
The USDC failed to consider whether the attorney’s fees awarded pursuant to the slander of title claim may have been covered under the policy where a wrongful act is defined as including any “error, misstatement, [or] misleading statement.” Slander of title involves the publication of a false statement that could be negligent.
The district court also failed to consider whether such coverage would implicate California Insurance Code § 533. Carolina Casualty argued that under such an interpretation – if slander of title is a wrongful act because it includes a misleading statement – coverage is barred under California Insurance Code § 533 because such an action would be purposeful.
Despite Carolina Casualty’s contention to the contrary, a willful act does not include negligent misrepresentations within the meaning of section 533. Bearnaise Butte County Superior Court made no finding as to whether Guilds’ actions were done with the requisite “willfulness” the applicability of section 533 is thus not readily apparent on the face of the record before the Ninth Circuit. Because the district court failed to consider the available, alternative basis for coverage under the policy that may be vulnerable to the argument that coverage was barred by section 533, the district court should reconsider the interpretive question.
The district court’s dismissal of Grange’s claim for attorney’s fees was vacated and remanded for reconsideration consistent with the opinion.
Because the issue for which the case is now being remanded was not considered by the district court because it would be futile, the district court did not err by denying California State Grange leave to amend.
ZALMA OPINION
The Ninth Circuit, trying to help a plaintiff to recover from an insurer when coverage is questionable, sent the case back to the District Court to determine if the acts of the Guilds were sufficiently intentional to bring into effect California Insurance Code Section 533 or not. If the USDC finds it willful then Carolina Casualty will owe nothing and if not it will owe a few dollars more. In so doing the Ninth Circuit makes the litigation a punishment of the insurer who was required to deal with a suit and an appeal on a policy that probably owed nothing but it will cost more to succeed than to pay off the plaintiff.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Follow me on LinkedIn: http://www.linkedin.com/comm/mynetwork/discovery-see-all...
Daily articles are published at https://zalma.substack.com.
Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to substack at https://lnkd.in/gcZKhG6g
Go to Newsbreak.com https://lnkd.in/g8azKc34 Go to Barry Zalma videos at Rumble.com at https://lnkd.in/gV9QJYH; Go to the Insurance Claims Library – https://lnkd.in/gwEYkxD.
Convicted Criminal Seeks to Compel Receiver to Protect his Assets
Post number 5291
See the video at and at and at https://www.zalma.com/blog plus more than 5250 posts.
The Work of a Court Appointed Receiver is Constitutionally Protected
In Simon Semaan et al. v. Robert P. Mosier et al., G064385, California Court of Appeals, Fourth District, Third Division (February 6, 2026) the Court of Appeals applied the California anti-SLAPP statute which protects defendants from meritless lawsuits arising from constitutionally protected activities, including those performed in official capacities. The court also considered the doctrine of quasi-judicial immunity, which shields court-appointed receivers from liability for discretionary acts performed within their official duties.
Facts
In September 2021, the State of California filed felony charges against Simon Semaan, alleging violations of Insurance Code section 11760(a) for making...
When There are Two Different Other Insurance Clauses They Eliminate Each Other and Both Insurers Owe Indemnity Equally
Post number 5289
In Great West Casualty Co. v. Nationwide Agribusiness Insurance Co., and Conserv FS, Inc., and Timothy A. Brennan, as Administrator of the Estate of Pat- rick J. Brennan, deceased, Nos. 24-1258, 24-1259, United States Court of Appeals, Seventh Circuit (February 11, 2026) the USCA was required to resolve a dispute that arose when a tractor-trailer operated by Robert D. Fisher (agent of Deerpass Farms Trucking, LLC-II) was involved in a side-impact collision with an SUV driven by Patrick J. Brennan, resulting in Brennan’s death.
Facts
Deerpass Trucking, an interstate motor carrier, leased the tractor from Deerpass Farms Services, LLC, and hauled cargo for Conserv FS, Inc. under a trailer interchange agreement. The tractor was insured by Great West Casualty Company with a $1 million policy limit, while the trailer was insured by Nationwide Agribusiness Insurance Company with a $2 million ...
Opiod Producer Seeks Indemnity from CGL Insurers
Post number 5288
Read the full article at https://lnkd.in/guNhStN2, see the full video at https://lnkd.in/gYqkk-n3 and at https://lnkd.in/g8U3ehuc, and at https://zalma.com/blog plus more than 5250 posts.
Insurers Exclude Damages Due to Insured’s Products
In Matthew Dundon, As The Trustee Of The Endo General Unsecured Creditors’ Trust v. ACE Property And Casualty Insurance Company, et al., Civil Action No. 24-4221, United States District Court, E.D. Pennsylvania (February 10, 2026) Matthew Dundon, trustee of the Endo General Unsecured Creditors’ Trust, sued multiple commercial general liability (CGL) insurers for coverage of opioid-related litigation involving Endo International PLC a pharmaceutical manufacturer.
KEY FACTS
Beginning as early as 2014, thousands of opioid suits were filed by governments, third parties, and individuals alleging harms tied to opioid manufacturing and marketing.
Bankruptcy & Settlements
Endo filed Chapter 11 in August 2022; before bankruptcy it ...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lost the ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah. Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being. Jews believe the force we call G_d created the entire universe and everything in it. Jews feel G_d is all seeing and knowing and although we can’t see Him, He is everywhere and in everyone.We understand...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
Read the full article at https://www.linkedin.com/pulse/passover-americans-barry-zalma-esq-cfe-5vgkc.
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lostthe ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah.
Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and ...
You Get What You Pay For – Less Coverage Means Lower Premium
Post number 5275
Posted on January 30, 2026 by Barry Zalma
See the video at and at
When Experts for Both Sides Agree That Two Causes Concur to Cause a Wall to Collapse Exclusion Applies
In Lido Hospitality, Inc. v. AIX Specialty Insurance Company, No. 1-24-1465, 2026 IL App (1st) 241465-U, Court of Appeals of Illinois (January 27, 2026) resolved the effect of an anti-concurrent cause exclusion to a loss with more than one cause.
Facts and Background
Lido Hospitality, Inc. operates the Lido Motel in Franklin Park, Illinois. In November 2020, a windstorm caused one of the motel’s brick veneer walls to collapse. At the time, Lido was insured under a policy issued by AIX Specialty Insurance Company which provided coverage for windstorm damage. However, the policy contained an exclusion for any loss or damage directly or indirectly resulting from ...
