Rohr Industries, Inc. v. First State Insurance

An insurance company appeals from orders confirming good faith settlements between its insured and two other insurance companies. The settlements purported to bar other claims, present and future, against the settling companies. We conclude the trial court’s orders were not authorized by statute and in addition were beyond the court’s equitable powers. Accordingly, we reverse the orders barring the nonsettling insurer from asserting future claims against the settling insurers for equitable contribution or indemnity or related claims and remand with directions.

Facts and Proceedings Below

This is an insurance dispute between the liability insurers of Rohr Industries, Inc. (Rohr), an aircraft equipment manufacturer. First State Insurance Company (First State) is one of its insurers. First State issued three consecutive one-year excess liability policies to Rohr covering the period from August 1, 1982, until August 1, 1985. Several government agencies and *1483 private parties sued or cited Rohr for dumping toxic waste on two parcels of land known as the Stringfellow Hazardous Waste Disposal Site (String-fellow Site), and its manufacturing facility located in Riverside,…

I concur and write separately to accentuate the statutory shortcomings pertaining to good faith settlement procedures prescribed by Code of Civil Procedure sections 877 and 877.6. Whether these sections apply in the context of insurers seeking contribution, indemnity or other relief inter se has perplexed the courts for a considerable period of time. The judicial history of the conflicting Court of Appeal decisions on the issue is well developed in this opinion. I am convinced that our decision in Pacific Estates, Inc. v. Superior Court (1993) 13 Cal.App.4th 1561 [ 17 Cal.Rptr.2d 434 ] gives us proper guidance for resolution of the contentions in this matter relative to Code of Civil Procedure sections 877 and 877.6.

However, the question of whether insurance carriers should be included as “joint tortfeasors or co-obligors on a contract debt” when settling litigation on behalf of an insured so situated is a question which the Legislature should address. I urgently invite the Legislature to revisit Code of Civil Procedure sections 877 and 877.6 and consider passage of legislation which resolves the conflicting decisions and views of the Court of Appeal as highlighted in this…

Smith, Brennan & Dickerson, Philip E. Smith, Joseph G. Harraka, Jr., Michael W. Ellison and Caroline McIntyre for Cross-defendant and Appellant.

No appearance for Cross-complainant and Respondent.

Sonnenschein, Nath & Rosenthal, Michael A. Barnes, John Leland Williams and Gregory L. Smith, Morris, Polich & Purdy, Steven M. Crane and Douglas J. Collodel for Cross-defendants and Respondents.

OPINION

JOHNSON, Acting P.J.

An insurance company appeals from orders confirming good faith settlements between its insured and two other insurance companies. The settlements purported to bar other claims, present and future, against the settling companies. We conclude the trial court's orders were not authorized by statute and in addition were beyond the court's equitable powers. Accordingly, we reverse the orders barring the nonsettling insurer from asserting future claims against the settling insurers for equitable contribution or indemnity or related claims and remand with directions.

This is an insurance dispute between the liability insurers of Rohr Industries, Inc. (Rohr), an aircraft equipment manufacturer. First State Insurance Company (First State) is one of its insurers. First…