Appellant construction company appealed the judgment of the Superior Court of Los Angeles County, California, entered against it and in favor of respondent insurer, following a court trial on the construction company’s complaint for breach of contract arising out of the insurer’s refusal to indemnify the construction company for costs it incurred defending a lawsuit.
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Overview
The construction company contended the ruling denying indemnity for pre-tender defense costs was erroneous because: (1) Cal. Ins. Code § 554 precluded the insurer from objecting to the belated tender of the claim; (2) the insurer’s denial of coverage barred it from invoking a “no-voluntary-payments” provision as a defense; and (3) the insurer was required to establish it was prejudiced by the construction company’s late tender. The appellate court reviewed the matter and held as follows. Without a legitimate reason, the construction company delayed in tendering its claim to the insurer. Therefore, the no-voluntary-payments provision precluded the insurer from recovering his pre-tender expenses. Since the construction company sought reimbursement only for pre-tender expenses and incurred no expenses after it tendered the claim, § 554 did not preclude the insurer from denying liability. Sufficient evidence supported the finding that the insured’s pre- tender payments were voluntary and that the belated tender was a ruse to exact defense costs on an uncovered claim.
Outcome
The judgment was affirmed.
