Facts

International Union of Operating Engineers sued Illinois National Insurance Co. in connection with insurance policies defendant issued to the Union.

PLAINTIFF'S CONTENTIONS:
Plaintiff sought coverage for four underlying actions. The plaintiffs in those underlying actions sued the Union, alleging abuses, violation of contracts, violation of the Labor Code, and various other causes of action. However, Illinois National denied coverage, prompting plaintiff to sue. Plaintiff argued that the underlying actions were covered under the insurance policies issued by defendant.

Plaintiff asserted claims for breach of contract for refusal to pay defense costs in one case, breach of contract for denying coverage in two cases, anticipatory breach of contract relating to one case, tortious breach of the implied covenant of good faith and fair dealing, and declaratory relief. Plaintiff moved for summary adjudication on its first cause of action that defendant must pay the defense costs in one action and on its declaratory relief cause of action that defendant owed plaintiff a duty to advance defense costs in the other three actions, even if the policies did not contain a duty to defend.

DEFENDANT'S CONTENTIONS:
Defendant denied plaintiff's allegations, and asserted various affirmative defenses. In addition, Illinois National argued it had no duty to pay defense costs in the underlying actions, which were not covered under the insurance policies. Illinois National argued that the underlying actions were not covered because certain allegations were either related to a prior claim and related lawsuit, and therefore excluded from coverage, or otherwise fell under other exclusions from coverage.

Defendant moved for summary judgment on the pleadings. It also moved for summary judgment or summary adjudication.

Result

The court denied the Union's requested adjudication of its first cause of action. However, the court did grant the Union's requested adjudication that Illinois National owed the Union a duty to advance defense costs with respect to the three other actions. The court otherwise denied the Union's requested adjudication of the duty to advance defense costs. The court then denied defendant's motion for judgment on the pleadings. The court granted in part and denied in part defendant's motion for summary adjudication or for summary judgment. As such, the court granted the motion to summarily adjudicate the Union's first cause of action in favor of Illinois National, but denied it in all other respects.

Other Information

According to plaintiff, this was a case of first impression in a California state court. The court held that the duty to advance defense costs was governed by the same potential for coverage standard that governed the duty to defend.