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Horvitz & Levy is a solutions-based firm focused on appellate success. We are distinguished by our commitment to responsive service and on-going innovation in the areas of civil appellate litigation, amicus curiae support, and trial strategy consultation.

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August 7, 2012

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In this insurance coverage dispute, Horvitz & Levy LLP persuaded the California Court of Appeal to reverse a $6 million judgment against our client, American States Insurance Company. 

Hector LaBastida bought a commercial auto policy from American States for his construction business. The policy provided limited coverage: it covered only specifically listed autos. LaBastida declined the opportunity to purchase expanded coverage. Over the years, he added and subtracted vehicles from the list of covered vehicles, but never listed his personal vehicle, a Hummer.

LaBastida drove his Hummer while intoxicated and caused an accident that resulted in serious injuries. He asked American States to defend him in the ensuing personal injury lawsuit, but American States declined because the Hummer was not covered under the policy.

The personal injury action resulted in a $6 million judgment against LaBastida. The plaintiffs in that action agreed not to enforce the judgment in exchange for an assignment of rights. Then they sued American States for breach of contract and bad faith. After a bench trial, the trial court ruled that American States breached its contract; according to the trial court, American States sent an ambiguous cover letter with its policy that could have led a reasonable insured to believe the policy covered any vehicle driven by a company employee for business purposes. The trial court further ruled that because American States declined a reasonable settlement offer within policy limits, it was liable for the entire $6 million judgment.

American States retained Horvitz & Levy to pursue an appeal. The Fourth Appellate District, Division Two, reversed the judgment in a 2-1 decision and directed the trial court to enter a new judgment in favor of American States. The majority concluded that the policy was unambiguous and provided no coverage for the Hummer. The majority held as a matter of law that no reasonable insured could believe that the cover letter was part of the policy. Moreover, the majority ruled that even if the cover letter was part of the policy, the cover letter could not reasonably be construed as providing coverage for the Hummer.