Successor Liability
California Court of Appeal Upholds Henkel and Determines Insurance Code Section 520 Was Not Enacted with Liability Insurance in Mind PDF Print
Successor Liability
Written by CBM   
Thursday, 06 September 2012 06:57

 

In Fluor Corp. v. Sup. Ct. of Orange County, et al., No. G045579 (Cal. Ct. App. Aug. 30, 2012), the Fourth District Appellate Court held Insurance Code section 520 (stating that an agreement not to transfer the claim of the insured against the insurer after a loss has happened is void if made before the loss), does not apply to liability insurance policies, and thus has no impact on the California Supreme Court’s analysis in Henkel Corp. v. Hartford Accident & Indemnity Co. 29 Cal.4th 934 (2003) (holding that except in certain situations consent-to-assignment clauses prohibit the assignment of rights under a policy to an independent company without the consent of the insurer). 

Attachments:
 Fluor Opinion[ ]162 Kb
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California Court of Appeal terminates policy as a matter of law based on policy language PDF Print
Successor Liability
Written by CBM   
Tuesday, 10 February 2009 16:00


In Kwok v. Transnation Title Insurance Co., No. B207421, 2009 WL ____ (Cal. Ct. App., February 10, 2009) the Second District of California’s Courts of Appeal held that a title insurance policy issued to an LLC terminated as a matter of law when the LLC voluntarily transferred the property to a revocable inter vivos family trust, even though the two trustees who received the property were also the sole members of the LLC.  This case serves as fair warning that courts may observe form over substance. As the court stated: “We do not rewrite any provision of any contract, including an insurance policy, for any purpose.” 

Attachments:
 Kwok Opinion[ ]514 Kb
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Consent to Assignment Required by Hawaii and Indiana Supreme Courts PDF Print
Successor Liability
Written by G. David Godwin   
Friday, 21 November 2008 13:53

Two recent state Supreme Court decisions follow the national trend toward enforcing no-assignment clauses in liability policies. One bars a successor corporation from recovering under its predecessor’s insurance for environmental losses. The other bars recovery for silica bodily injuries. Significantly, both cases involve damage or injury that began before the assignment of insurance rights. Despite this fact, the Courts held that consent must be obtained from the insurer in order for the assignment to be valid. The holdings reject the reasoning of Northern Insurance and find that policy benefits are not transferred by operation of law. Instead, they uphold standard contract interpretation principles that enforce the no-assignment clause. Finally, one Court concludes that a contingent claim is not a transferrable chose in action until the claim is actually made.

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California Bill Proposes to Limit Asbestos Liability of Successor Corporations PDF Print
Successor Liability
Written by Robert Binion   
Tuesday, 01 April 2008 16:00

The California Senate Judiciary Committee is scheduled to consider SB 166, a bill introduced in February 2008.  If successful, the bill will cap asbetsos claims paid by a successor corporation as a result of a merger or consolidation with another corporation at the fair market value of the total gross assets of the transferor at the time of merger or consolidation.  The fair market value would be subject to an annual increase based on the prime rate plus one percent continuing until the date the adjusted value is first exceeded by the liabilities paid. 

The bill leaves open the possibility that liability insurance may be included in the total gross assets to be considered but does not address how the insurance would be valued.  Also, the bill does not change the law on successor tort liability or assignment of insurance assets.

The bill is already facing strong opposition from labor unions and plaintiffs' firms.  Thus, it is questionable whether the bill will ultimately pass in a form that actually effectively limits successor liability.