Westoil Terminals Co. v. Harbor Insurance

J.* — Appellant and plaintiff, Westoil Terminals Co., a California limited partnership (Westoil Partnership), brought suit against respondents and defendants, Continental Insurance Company (Continental) and Harbor Insurance Company (Harbor) for breach of a written contract, tor-tious breach of the implied covenant of good faith and fair dealing, and for *637 declaratory relief. 1 In issue are two insurance policies, one issued by Harbor in effect from July 1, 1970, through October 1, 1973, the liability for which Continental has assumed, and the other issued by Continental in effect from September 1, 1973, to October 1, 1974 (the policies). The trial court granted Continental’s and Harbor’s motion for summary judgment, determining that the policies afforded Westoil Partnership no coverage. Westoil Partnership appeals the ensuing judgment. We reverse.

Factual and Procedural Background

The relevant facts are not in dispute. The policies issued by Continental and Harbor insured Time Oil Co. (Time Oil) and all its allied, affiliated and subsidiary companies. For the purposes of this appeal, respondents concede that Westoil Corporation was affiliated with Time Oil and,…

Dissenting. — As respondent insurers note: “Even in a shell game, there is only one pea.” The respondent insurers contracted to defend and indemnify only one insured. The majority now extends respondents’ duty to a second party, a noninsured. I therefore respectfully dissent. I would hold that the trial court ruled correctly on all issues, and would affirm.

*644 Respondent insurers issued policies insuring only Westoil Corporation. Westoil Partnership is a different legal entity and is not a named insured. Although Westoil Corporation long ago dissolved, it remains subject to suit. (Peñasquitos, Inc. v. Superior Court (1991) 53 Cal.3d 1180 [ 283 Cal.Rptr. 135 , 812 P.2d 154 ].) The Supreme Court in Peñasquitos, in a unanimous decision, expressly noted that a motivation to sue a dissolved corporation could be provided by liability insurance. (Id. at p. 1191.) Hence the named insured, Westoil Corporation, could have been sued at the time that Westoil Partnership was sued, and can still be sued. Respondent insurers hence remain exposed to the possibility of being required to defend and possibly to indemnify Westoil Corporation. Granted, it might appear odd to speak of “indemnifying”…

Appellant and plaintiff, Westoil Terminals Co., a California limited partnership (Westoil Partnership), brought suit against respondents and defendants, Continental Insurance Company (Continental) and Harbor Insurance Company (Harbor) for breach of a written contract, tortious breach of the implied covenant of good faith and fair dealing, and for declaratory relief. [1] In issue are two insurance policies, one issued by Harbor in effect from July 1, 1970 through October 1, 1973, the liability for which Continental has assumed, and the other issued by Continental in effect from September 1, 1973 to October 1, 1974 (the policies). The trial court granted Continental's and Harbor's motion for summary judgment, determining that the policies afforded Westoil Partnership no coverage. Westoil Partnership appeals the ensuing judgment. We reverse.

The relevant facts are not in dispute. The policies issued by Continental and Harbor insured Time Oil Co. (Time Oil) and all its allied, affiliated and subsidiary companies. For the purposes of this appeal, respondents concede that Westoil Corporation was affiliated with Time Oil and, accordingly, covered by the policies. Time…