Pruyn

Plaintiff and appellant Wilhelmina B. Pruyn (plaintiff) appeals from a judgment which dismissed her complaint brought against multiple insurance companies under the “direct action” provisions of the Insurance Code. (Ins. Code, § 11580, subd. (b)(2).) The trial court sustained the objections to plaintiff’s pleading by the defendant and respondent insurers without leave to amend.

Plaintiff filed this action against the defendant insurers to enforce a stipulated judgment entered in her favor after she had settled a claim for damages which she had previously asserted in the underlying action against the insured Rolling Hills Community Association of Rancho Palos Verdes (RHCA). The settlement included a covenant not to execute on the judgment against RHCA. The defendant insurers contend that such a judgment may not be enforced against them as a matter of law.

We disagree and hold that when, as plaintiff alleges happened here, a liability insurer wrongfully denies coverage or refuses to provide a defense, then the insured is free to negotiate the best possible settlement consistent with his or her interests, including a stipulated judgment accompanied by a covenant not to…