California Insrance Guarantee Ass'n v. Argonaut Insurance

California Insurance Guarantee Association (CIGA) appeals from the judgment of dismissal entered after the trial court sustained Argonaut Insurance Company’s (Argonaut) demurrer without leave to amend. CIGA sought a declaration that it owed no duty to reimburse Argonaut for amounts Argonaut paid in workers’ compensation benefits to an injured employee. CIGA became involved in the proceedings after a tortfeasor’s insurer became insolvent. Although Insurance Code section 1063.1 provides that claims by an insurer and claims by right of subrogation are not “covered claims” which CIGA is required to pay, the trial court felt bound by the decision in Burrow v. Pike (1987) 190 Cal.App.3d 384 [ 235 Cal.Rptr. 408 ], which created an exception for workers’ compensation benefits. We disagree with the Burrow decision and reverse the judgment.

Factual and Procedural Background

The underlying facts are not in dispute. Since this is the review of the sustaining of a demurrer, we take the facts from the allegations in the complaint. (Perdue v. Crocker National Bank (1985) 38 Cal.3d 913, 922 [ 216 Cal.Rptr. 345 , 702 P.2d 503 ].) In January of 1984 John McNabb, an employee of Hexadyne…