Facts

RSUI Indemnity Co. sued Discover P&C Insurance Co. and Discover-Re Managers Inc., involving an insurance coverage dispute.

PLAINTIFF'S CONTENTIONS:
Plaintiff contended that defendants issued South Tahoe Refuse Co., the insured, a primary commercial automobile liability policy. It then issued an excess auto liability to the insured. In 2006, South Tahoe was involved in an automobile accident, resulting in injuries to Kimberly Abbott. Abbott then sued South Tahoe. Defendants defended the Abbott lawsuit pursuant to its policy. However, defendants refused to accept Abbott's demand to settle her claim even though her demand was within defendant's primary policy limits. Ultimately, Abbott settled with defendants in an amount in excess of the primary policy. As a result, plaintiff had to pay more than #3.5 million under its excess policy.

Plaintiff then sued defendants, alleging breach of duty to the insured. Plaintiff alleged that defendants had a duty to effectuate the settlement with Abbott within its policy limits. As a result, plaintiff was entitled to indemnity from defendants.

DEFENDANTS' CONTENTIONS:
Defendants moved to dismiss plaintiff's complaint, arguing that its claim was barred because the issue had already been decided.

Result

Ultimately, the court dismissed plaintiff's subrogation claim with prejudice.

Other Information

The case is currently pending an appeal to the 9th Circuit Court of Appeals.