March 24, 2023

California Capital Insurance Co. v. Employers Compensation Insurance Company

Plaintiff was injured while driving to a party with his drunk coworker.  Plaintiff sued the driver’s employer—the restaurant where both the driver and plaintiff worked—alleging that the restaurant provided the driver with alcohol and a vehicle and then failed to prevent him from driving drunk, and that the driver was in the course and scope of his employment at the time of the accident.  The complaint did not mention that plaintiff was also an employee of the restaurant. 

The restaurant tendered the defense of plaintiff’s action to its general liability insurer, who accepted the defense but reserved its rights to deny coverage under an exclusion for bodily injuries arising out of the plaintiff’s employment.  After learning during discovery that plaintiff was an employee of the restaurant, the general liability carrier demanded the restaurant’s workers’ compensation carrier contribute to the defense and settlement of the case, but the workers’ compensation carrier refused. 

The general liability carrier settled the passenger’s suit and then sued the restaurant’s workers’ compensation carrier for equitable contribution. The trial court awarded contribution, holding that there was a potential for coverage under the workers’ compensation policy given that it was a close question whether the coworkers were in the course and scope of their employment when the accident occurred. 

The Court of Appeal reversed, holding that the general liability carrier was not entitled to equitable contribution.  Equitable contribution applies only between insurers who cover the same risk at the same level.  The general liability policy excluded coverage for workers’ compensation claims and the workers’ compensation policy covered only those claims.  The policies thus covered mutually exclusive, not coextensive, risks.  Further, the workers’ compensation policy did not include a duty to defend to the same extent as the general liability policy, since workers’ compensation exclusivity would have barred the worker’s lawsuit.