Span, Inc. v. Associated International Insurance

Defendant, cross-complainant and appellant Associated International Insurance Company (Associated) appeals the judgment entered after the trial court granted summary judgment in favor of Reynaldo Ledesma (Ledesma), Span, Inc. (Span) and Behavioral Systems Southwest, Inc. (BSSI) in this declaratory relief action. Defendant, cross-complainant and appellant Ledesma has cross-appealed that portion of the summary judgment in favor of Associated.

Summary Statement

Associated issued an excess insurance policy to Span which provided coverage in the event of reduction or exhaustion of an underlying policy written by Union Indemnity of New York (Union), “by reason of losses paid thereunder.” Union became insolvent.

While many foreign jurisdictions have found such language unambiguous, no California case has considered whether a policy containing this specific wording requires an excess carrier to “drop down” upon the insolvency of the primary carrier. The rule in California requires that ambiguity in an insurance policy be interpreted in favor of the insured. (Reserve Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 807-808 [ 180 Cal.Rptr. 628 , 640 P.2d 764 ].) Applying the…