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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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In a significant victory for Horvitz & Levy’s client, Hartford Fire Insurance Company, the California Court of Appeal upheld an insurer’s right to investigate a third party’s claim of additional insured status without being charged with breach of the duty to defend.

Plaintiff Kmart Corporation tendered a two-year-old lawsuit to Hartford just two weeks prior to trial. Kmart asserted that it was an additional insured under a policy Hartford had issued to Intradeco Apparel, Inc. Because the underlying complaint alleged no facts tying the product to Hartford’s insured, and Kmart presented no evidence that it qualified as an additional insured under Intradeco’s policy, Hartford undertook an investigation to determine whether Kmart qualified as an additional insured. During that investigation, Kmart unilaterally settled the case without any notice to or consent from Hartford.

Kmart sued Hartford for breach of contract and bad faith, and sought reimbursement of the amount Kmart paid to settle the underlying lawsuit. A jury found Kmart was barred from seeking coverage because Kmart violated the “voluntary payment” provision of the policy. On appeal, Kmart claimed Hartford could not assert the voluntary payment provision of the policy because it did not immediately accept the defense in the underlying suit. The Court of Appeal agreed Hartford was entitled to reasonably investigate whether Kmart qualified as an insured and that Kmart could not unilaterally settle the underlying case during the investigation and expect Hartford to pay for the settlement.

The Court of Appeal further concluded that Hartford should have prevailed on its cross-complaint for equitable reimbursement of the post-tender defense costs it paid.