Pacific Employers Insurance v. Superior Court

On April 17, 1981, Pacific Employers Insurance Company (PEIC) issued a “claims made” Professional Life Underwriters Insurance liability policy to Richard M. Rausch, an insurance salesman. Pursuant to the terms and limitations of the policy, liability coverage was to be afforded in the amount of $5 million during the period March 15, 1981 through March 15, 1983.

The insuring agreement obligated PEIC to pay on behalf of the insured “all sums which the insured shall become legally obligated to pay as damages because” of any claim made against the insured and reported, in writing,- to PEIC during the policy period.

On November 5, 1982, Richard Rausch died. Immediately thereafter, his widow, Elizabeth Ann Rausch (Rausch) retained Kenneth A. Krekorian of the law partnership of Newman, Aaronson, Krekorian & Vanaman (Krekorian) to represent her in the probate of her husband’s estate.

Prior to December 31, 1982, Elizabeth Rausch tendered the PEIC insurance policy to Krekorian.

In early 1983, Rausch received notice of various creditors’ claims which were being made against the estate. These claims eventually led to the August 1983 filing of certain creditors’ suits against the…