Barnett

In late 1996 and early 1997 MedPartners, Inc. (MedPart-ners), and a different entity, Southern California Medical Corporation (SCMC), filed lawsuits against appellants Albert E. Barnett, Gloria Mayer (G. Mayer) and Thomas Mayer (T. Mayer) (the underlying action). In the underlying action, MedPartners and SCMC alleged appellants engaged in a variety of misconduct, including making disparaging remarks about them. Appellants tendered the defense of the underlying action to respondent Fireman’s Fund Insurance Company (Fireman’s), asserting they were additional insureds under a comprehensive general liability policy (the CGL policy) issued by Fireman’s to MedPartners. Fireman’s rejected the tender.

In the present lawsuit, appellants alleged Fireman’s refusal to defend and indemnify them in the underlying action breached its obligations under the CGL policy. Fireman’s demurrer to the complaint argued appellants were not entitled to a defense or indemnity because (1) there was no possibility appellants were acting in an insured capacity when they committed the conduct alleged in the underlying action and (2) the conduct alleged in the underlying action was not covered by the…