Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc.

In this case we hold when an insurance company seeks to provide a defense in pending litigation for a corporation that has been suspended for nonpayment of its taxes, the insurance company must intervene in the action to protect its own interests and those of its insured. The insurance company may not answer and litigate the lawsuit in the name of the suspended corporation without intervening in the case. Here, because its insured is barred from exercising corporate powers, rights, and privileges (Rev. & Tax. Code, § 23301) and the insurance company is not a party, the insurance company’s failure to intervene barred any application for fees and costs, even though the insurance company and insured were successful in persuading Kaufman & Broad Communities, Inc., to dismiss its lawsuit. We shall dismiss this appeal.

FACTUAL AND PROCEDURAL BACKGROUND

After it was sued by homeowners in a construction defect case, Kaufman & Broad Communities, Inc. (Kaufman), filed a cross-complaint against Performance Plastering, Inc. (Performance Plastering). In its cross-complaint, Kaufman sued Performance Plastering for contractual and equitable indemnity, breach of contract, and…