Venture

The principal question presented by this case is whether insurance liability coverage for a claim of malicious prosecution, even though expressly promised in the policy, is precluded by the provisions of Insurance Code section 533 which bars indemnity for “wilful acts” of an insured.

Plaintiffs, appellants and cross-respondents, Richard Posell (Posell), Mitchell Shapiro and Ruth Shapiro (Shapiro) and The Downey Venture, a limited partnership (Downey) (collectively, the Downey plaintiffs), seek reversal of a declaratory judgment determining that section 533 bars indemnity for a claim for malicious prosecution which had been asserted against the Downey plaintiffs in the underlying action. Defendant, respondent and cross-appellant, LMI Insurance Company (LMI), had issued to Downey a comprehensive general liability policy which expressly promised coverage for a claim of malicious prosecution. LMI cross appeals from the trial court’s determination that its claim for reimbursement of funds advanced to settle the underlying action may be reduced by an amount found to be allocable to defense costs which LMI “saved” by entering into the settlement.

We conclude that the public…