Phoenix Insurance v. United States Fire Insurance

Defendants United States Fire Insurance Company (USFIC) and California Insurance Guarantee Association (CIGA) appeal from a judgment entered in a declaratory relief action requiring them to pay plaintiff Phoenix Insurance Company (Phoenix) $500,000 and $360,000 respectively for sums expended by plaintiff to settle a legal malpractice lawsuit. We affirm.

The events leading to the underlying malpractice action are not disputed by the parties. In October 1967, Margaret Jones (client) engaged the law firm of Raskin and Lichtig to represent her in a dissolution proceeding. At the outset, she informed the attorneys that her husband had threatened to loot their considerable community estate.

In February 1968, the attorneys filed a complaint to dissolve the marriage. As usual, the parties entered into certain stipulations and the trial court issued various restraining orders. In March 1971, after the completion of trial, the court took the matter under submission. Then, in mid-1971, when the court was near to rendering its decision, husband, unimpeded by the restraining orders, sold or secreted much of the community assets.

On June 29, 1971, the court appointed a receiver to…