CALIFORNIA SUPREME COURT TO CONSIDER "MADE-WHOLE" DOCTRINE AND DUTY TO DEFEND ACTS OF SELF DEFENSE

The California Supreme Court has recently granted review in 21st Century Insurance v. Superior Court (Quintana), No. S154790, and three other cases (Interinsurance Exchange v. Superior Court (Montpetit), S154822; Wawanesa General Insurance v. Superior Court (Aimaq), S154781; and Allstate Insurance v. Superior Court (Delanzo), S154815) involving application of the "made whole" doctrine.

"An insurer that pays benefits to its insured under a first party policy is generally entitled to reimbursement from funds paid by the third party wrongdoer for the covered losses. One exception to this rule is the common law 'made-whole' doctrine, which provides that an insurer is not entitled to these funds unless the insured has been made whole by the recovery from the tortfeasor and any other source." Whether an insured has been made whole is determined by comparing the insured's total damages resulting from the third party's tortious conduct with the total amount the insured recovered in compensation for those damages." (Allstate Ins. Co. v. Superior Court (2007) 151 Cal.App.4th 1512, 1517, review granted Sept. 25, 2007, No. S154815.) The issue before the Supreme Court will be whether, in determining if the insured has been made whole, "the insured's total recovery amount must be reduced by the insured's attorney fees and costs incurred to obtain the compensation from the third party tortfeasor." (Ibid.)

The California Supreme Court has also granted review in Delgado v. Interinsurance Exchange, S155129. Delgado will decide whether claims of unreasonable and negligent self-defense in an action for assault create a potential for coverage, and thus a duty to defend the insured under a policy providing bodily injury coverage for an "occurrence," defined as an "accident."

For more information about these cases, contact David Axelrad at (818) 995-0800 or daxelrad@horvitzlevy.com.

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