The City and County of San Francisco and the State of California brought claims against apartment building owners Zoriall, LLC, and its principals for violating the San Francisco Rent Stabilization Ordinance by harassing tenants and seeking to evict them under false pretenses. Various tenants also sued the Zoriall parties for damages and penalties based on the same allegations. The Zoriall parties tendered defense of the tenants’ claims to their general liability insurer, Starr. Starr defended the actions and settled one of them under a reservation of rights. Another one of the tenants’ actions went to verdict, resulting in a judgment of $2.7 million (including punitive damages). Starr declined to indemnify the Zoriall parties for the judgment. As established by extensive findings in the City’s action against the Zoriall parties, the Zoriall parties’ conduct was “willful” under Insurance Code section 533 (section 533) and therefore uninsurable as a matter of law. The Zoriall parties sued Starr for coverage and bad faith; Starr countersued for a declaration it owed no duty to defend or indemnify.
After a bench trial on which Horvitz & Levy consulted for Starr, the court concluded that Starr did owe a defense and was therefore not entitled to reimbursement of the defense and settlement costs it paid, but the court agreed with Starr that the $2.7 million judgment was uninsurable as a matter of public policy and that Starr therefore owed no indemnity. The trial court further held, in connection with further motion practice with which Horvitz & Levy assisted, that because Starr was vindicated on its position that it owed no indemnify for the tenants’ claims, it could not be liable to the Zoriall parties for bad faith failure to settle those uncovered claims.
The Zoriall parties appealed, but failed to file a civil case information sheet and timely designate the record. The Court of Appeal issued a default notice to the Zoriall parties for failure to file the civil case information sheet. The Zoriall parties took no action, and the appeal was dismissed. The remittitur issued about two months later. The Zoriall parties then moved to recall the remittitur and reinstate their appeal based on an attorney declaration of fault. Horvitz & Levy opposed the motion to recall the remittitur, arguing that attorney fault is not a basis to recall a remittitur in a civil case and that the declaration of fault was inadequate and incredible. The Court of Appeal denied the Zoriall parties’ motion.
