CD Investment Co. v. California Insurance Guarantee Ass'n

In prior litigation, a money judgment was entered against the plaintiffs in this action. To pay the judgment, plaintiffs looked to their insurers, two of which had become insolvent. With respect to those two, plaintiffs sought recovery from the California Insurance Guarantee Association (CIGA), which is required by statute to pay a “covered claim” on behalf of an insolvent insurer, up to a maximum of $500,000. CIGA refused to make any payments, and this action followed.

CIGA contends that there is no “covered claim” because the payments made by the solvent insurers ($1.5 million) exceed its $500,000 cap. We hold that, under the CIGA statutes, the insureds have a “covered claim” under each of the five successive policies issued by the insolvent insurers and that CIGA’s statutory cap applies separately to each policy. We also hold that the payments by the solvent insurers do not offset the amount CIGA is obligated to pay under the policies of the insolvent insurers.

Background

In 1982, CD Investment Company designed and built a three-story parking garage for the City of Anaheim. In August 1988, Anaheim filed an action against CD Investment, alleging property damage…