The judgment reflects the amount the insured paid for legal representation to defend himself after the insurer declined his tender. Rptr.2d 210, 846 P.2d 792.) Consequently, an insurer's failure to defend a claim can constitute a breach of contract for which the insurer can be liable for the insured's attorney fees, litigation expenses, settlement costs, and the judgment entered against the insured. They are not likely to be in a position to evaluate the financial stability of the insurance company and they have no control over the time at which their claims arise. [The attorney's claim] does not arise out of any insurance policy; instead, it arises out of his contract with [the insurer] for legal services.” (Id. It merely sought to deny access to CIGA's financial resources to third party creditors of an insolvent insurer. 377, 553 P.2d 537.) As CIGA points out, a two-step approach is taken to decide whether CIGA is liable on a claim. There, the insurer issued a workers' compensation policy. He first filed a workers' compensation claim and later filed, relying upon Labor Code section 5814, a petition for a penalty based on the insurer's failure to make timely payments as required by law. In subsequent proceedings, it was conceded CIGA was required to pay the claim for workers' compensation benefits; however, the parties disputed whether CIGA was also liable for the penalty award the workers' compensation judge had issued. Pasich, Los Angeles; Munger, Tolles & Olson and Cary B. The specific issue is whether CIGA is required to pay the claim of an insured of an insolvent insurer when the claim is based upon a judgment the insured obtained against the insurer prior to insolvency for breach of the contractual duty to defend. Persons in such categories are relatively helpless with regard to the insolvency of an insurer. The court concluded the claim was not a covered claim within the meaning of the statutory scheme because the purpose of the law was “to protect policyholders and persons who had claims against the policyholders, not general creditors of insolvent insurance companies. 1259.) We therefore conclude that nothing in our state Legislature's decision to exempt CIGA from liability for pre-insolvency expenses suggests it sought to exempt from CIGA's liability a claim based upon a judgment an insured recovered from the insurer for failing to defend.Law360 provides the intelligence you need to remain an expert and beat the competition. CIGA contended, and the trial court agreed, that it had no obligation to pay based upon subdivision (h) of Insurance Code section 1063.2. Other creditors of the insurance companies, such as attorneys, have an ongoing relationship with the company and can presumably judge its financial position. 697.) The Ohio Court of Appeals reached a similar conclusion in Ohio Ins. CIGA next points to a 1981 amendment of subdivision (h) of section 1063.2. First, the language “incurred by the insolvent insurer” was deleted. 4614.) As so amended, the provision now reads (as set forth earlier in this opinion): “ ‘Covered claims' shall not include any loss adjustment expenses, including adjustment fees and expenses, attorney fees and expenses, court costs, interest, and bond premiums, incurred prior to the appointment of a liquidator.”From this CIGA argues: “[T]he Legislature clearly expressed an intent to exclude from CIGA's obligations any pre-liquidation attorneys' fees and costs regardless of who incurred them (the insolvent insurer, the insured, or anyone else).” We are not persuaded. omitted.) Our conclusion is fortified by applying a venerable principle of statutory construction. The first step is to determine whether the proffered claim is a “covered claim” as defined by section 1063.1, subdivision (c)(1). CIGA relied upon the provision, now found in subdivision (g) of section 1063.2 that a “covered claim” does “not include any judgments against or obligations or liabilities of the insolvent insurer ․ resulting from alleged or proven torts.” The Court of Appeal rejected this argument.The actions were settled when Woodliff agreed to build a children's playground in the apartment complex. The parties filed cross-motions for summary judgment and the trial court agreed with CIGA and issued a ruling explaining its decision as set out in the majority opinion. As pertinent, section 1063.2 states:“(a) The association shall pay and discharge covered claims and in connection therewith pay for or furnish loss adjustment services and defenses of claimants when required by policy provisions․ [¶] ․ [¶]“(h) ‘Covered claims' shall not include any loss adjustment expenses, including adjustment fees and expenses, attorney fees and expenses, court costs, interest, and bond premiums, incurred prior to the appointment of a liquidator.”The majority opinion focuses solely on the phrase “loss adjustment expense” from this section. 493.) The duties include payment of “loss adjustment expenses” in connection with “covered claims,” but excludes from the definition of “covered claim” “loss adjustment expenses, including adjustment fees and expenses ․ incurred prior to the appointment of a liquidator.” (Section 1063.2, subd. It was established pursuant to the Property and Casualty Guaranty Association Act. Instead, the legislative history simply indicates that given that CIGA's purpose is to pay covered claims presented by policyholders and third party claimants and that CIGA has limited financial resources, all pre-insolvency loss adjustment expenses should be treated as general creditor claims to be paid through the liquidation process rather than from CIGA.11. The settlement did not require Woodliff to pay any money to the plaintiffs. 104 [“CIGA's statutory duties can best be defined by examining the contractual duties which were imposed upon the now insolvent insurer either by law or ․ policy provisions”].)On this appeal, CIGA concedes “there is no dispute that the LMI Judgment initially qualifies as a ‘covered claim’ as that term is defined in Insurance Code section 1063.1(c)(1).” That concession is well taken given our decision in Aloha Pacific, Inc. Citing authorities interpreting the term, the majority concludes that the phrase “loss adjustment expense” can only mean attorney fees and costs incurred by a carrier that accepts its duty to defend, not attorney fees and costs incurred by the insured when the carrier refuses to defend. (h), italics added.) The judgment here was rendered prior to the date the liquidator was appointed and reflects attorney fees and costs incurred prior to that date. 144, 514 P.2d 1224.)Reviewing the language of sections 1063..2 together, and in the context of the overall CIGA legislation, the only reasonable conclusion I can draw is that the judgment, reflecting attorney fees, expenses and costs incurred for defense of a covered claim, but prior to liquidation, does not qualify as a “covered claim.” I would affirm the summary judgment in favor of CIGA. All subsequent undesignated statutory references are to the Insurance Code.2. As will be explained later in more detail in the nonpublished portion of this opinion, the judgment was subject to an order that ,188.17 be used to satisfy an outstanding claim for attorney fees Woodliff owed to counsel who had defended him in the two federal actions. The dissent states Woodliff cites and relies upon section 1063.2 for the proposition CIGA has a duty to pay his claim. For instance, Woodliff states: “The central issue on appeal is whether the LMI Judgment which Woodliff obtained as a result of LMI's breach of its contractual obligations to provide a defense is a covered claim under Insurance Code § 1063.1(c)(1) or whether it is excluded under Insurance Code § 1063.2(h).” As noted, CIGA has consistently conceded the claim is a covered claim within the meaning of section 1063.1, subdivision (c)(1), a concession with which the dissent does not take issue.8. Its statutory duty is “to pay obligations of insolvent insurers which come within the act's definition of ‘covered claims.’ ” (Metry, Metry, Sanom & Ashare v. As explained earlier, we need not and do not decide whether CIGA would be required to pay if Woodliff simply presented a bill for attorney services rendered to him. The fact that Woodliff's claim is based upon a final judgment rendered by the trial court predicated upon a finding LMI breached its contractual duty to defend resolves the following “parade of horribles” scenario CIGA has constructed. Law360 (October 17, 2018, PM EDT) -- The Cayman Island-based liquidators of a pair of failed Platinum Partners hedge funds have asked a New York bankruptcy court to compel Schulte Roth & Zabel LLP, the funds’ former attorneys, to hand over documents stemming from before the funds went into bankruptcy.The representatives of Platinum Partners Value Arbitrage Fund and Arbitrage Intermediate Fund Ltd.
In 1981, the statutory language was amended, deleting the words ‘adjustment expense and attorneys' fees incurred by the insolvent insurer’ and inserting the language ‘any loss adjustment expense, court costs, interest and bond premiums incurred.’“Covered claims are not co-extensive with an insolvent insurer's obligations under its policies. I must admit I am at a loss to understand why the majority concludes that section 1063.2 has no application to the case. That provision provides: “ ‘Covered claims' [for which CIGA is liable] shall not include any loss adjustment expenses, including adjustment fees and expenses, attorney fees and expenses, court costs, interest, and bond premiums, incurred prior to the appointment of a liquidator [for the insolvent insurer].” In a nutshell, CIGA's position and that of our dissenting colleague is that because the insured's judgment is to compensate him for attorney fees he incurred before the insurer became insolvent, the judgment and therefore the claim presented to CIGA is the functional equivalent of a claim for loss adjustment expenses for which CIGA is not liable. The insured's judgment against the insurer is not a loss adjustment expense. Further, they are in a position to protect themselves from the serious consequences of an insurance company's insolvency by negotiating appropriate provisions in their contracts regarding the frequency of billing and payment.” (Metry, Metry, Sanom & Ashare v. Second, the definition of loss adjustment expenses was expanded. For one thing, nothing in the legislative history of this amendment supports such a conclusion. “Under the familiar rule of construction, expressio unius est exclusio alterius, where exceptions to a general rule are specified by statute, other exceptions are not to be implied or presumed. As noted earlier, CIGA properly concedes Woodliff's claim meets that statutory definition. It held: “We do not find the fixed percentage assessed by Labor Code section 5814 to be analogous to tort damages in the civil field. omitted.) By a parity of reasoning, Woodliff's judgment against LMI is likewise a covered claim not within any statutory exclusion.