Court Opinion

ID: 9540604
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:18:07.364977+00
Date Added: 2024-06-11T15:00:04.312436
License: Public Domain

KENNARD, J.
I concur in the majority opinion. I write separately to state my understanding of one aspect of the court’s decision.
When an insured calls upon a liability insurer to defend a third party action, the insurer as a general rule may not escape the burden of defense by obtaining a declaratory judgment that it has no duty to defend. Were the rule otherwise, the insured would be forced to defend simultaneously against both the insurer’s declaratory relief action and the third party’s liability action. Because the duty to defend turns on the potential for coverage, and because coverage frequently turns on factual issues to be litigated in the third party liability action, litigating the duty to defend in the declaratory relief action may prejudice the insured in the liability action. To prevent this form of prejudice, the insurer’s action for declaratory relief may be either stayed (see California Ins. Guarantee Assn. v. Superior Court (1991) 231 Cal.App.3d 1617, 1626-1627 [283 Cal.Rptr. 104]) or dismissed (see General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 471 [65 Cal.Rptr. 750]).
There are at least two exceptions to the general rule barring declaratory relief on the insurer’s duty to defend. First, declaratory relief is available if the insurer can establish lack of coverage by means of facts that the insured does not dispute. Second, declaratory relief is available if the insurer’s defense to coverage hinges on factual issues that are unrelated to the issues in the third party liability action. (See State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co. (1970) 9 Cal.App.3d 508, 527 [88 Cal.Rptr. 246].) In each of these situations, the duty to defend can be determined without forcing the insured to litigate issues that may arise in the third party action.
The general rule and its exceptions shape the insurer’s burden of proof on a motion for summary judgment in the declaratory relief action. An insurer *306moving for summary judgment must demonstrate an absence of coverage without engaging in litigation that could prejudice the insured’s interests in the third party action. It can do so either by relying on undisputed facts or by adducing evidence of facts unrelated to the issues in the liability action. If the trial court determines that the facts on which the insurer relies are disputed and may be litigated in the liability action, the court should deny summary judgment and stay or dismiss the declaratory relief action. If the trial court determines that the facts on which the insurer relies are undisputed, the trial court should proceed to decide whether those facts establish lack of coverage, and grant or deny the motion for summary judgment accordingly. If the trial court determines that the facts on which the insurer relies, although disputed, will not be litigated in the liability action, the trial court should proceed to consider the motion for summary judgment. If there are no triable issues of fact, the court may determine coverage, and hence the duty to defend, by summary judgment. If there are triable issues of fact, then the court should deny summary judgment and permit the declaratory relief action to proceed to trial.
Of course, the insurer may have more than one defense to coverage. In that event, the trial court will need to consider each defense separately to decide whether it can be determined without prejudice to the insured and whether it is amenable to resolution by summary judgment or summary adjudication.
With the understanding that the foregoing is consistent with the court’s holding, I join the majority opinion.