Facts

On Feb. 12, 2013, plaintiff Rodolfo Gonzalez was walking when he was struck by defendant's insured. Defendant refused to defend the insured on the grounds that he was six days late in making a premium payment between February 6 and Feb. 12, 2013. As a result of the failure to defend the insured a default judgment was taken against the insured in the amount of $208,443 on July 8, 2014.

Defendant continued to refuse to defend or indemnify the insured and an action was brought under Insurance Code section 11580 and for breach of the implied covenant of good faith and fair dealing.

PLAINTIFF'S CONTENTIONS:
Plaintiff claimed that defendant has waived its right to declare a forfeiture of the policy by continuing to accept late premium payments and that the cancellation notice was ineffective for failing to advise the insured that there had been a lapse in coverage. The insured had a long history of making late premium payments that were always accepted.

DEFENDANT'S CONTENTIONS:
Defendant claimed that they never waived their right to timely premium payments and that the policy was not in force because the policy had been canceled pursuant to statutory 10-day notice of Feb. 6, 2013 and was not reinstated until Feb. 13, 2013.

Settlement Discussions

Defendant offered $15,000 at mediation held before Michael J. Roberts of ADR Services.

Result

After the jury had decided in the first phase of trial, that defendant had waived its rights to declare a forfeiture, the court indicated that plaintiff was not entitled to recover the underlying excess judgment in excess of the policy limits of $15,000 without an assignment from the insured. This was so even though plaintiff was a judgment creditor of the insured. Based on that ruling, the parties entered into a stipulated settlement of $110,000.

Other Information

FILING DATE: Oct. 1, 2014.