Hartford Accident & Indemnity Co. v. Superior Court

In Diamond Heights Homeowners Assn. v. National American Ins. Co. (1991) 227 Cal.App.3d 563, 582 [ 277 Cal.Rptr. 906 ] (Diamond Heights), we suggested that an excess insurer could stand in the position of a co-obligor on a contract debt and should be permitted to utilize Code of Civil Procedure section 877.6 proceedings to object to a settlement controlled by a primary insurer. Although we approved only defensive use of section 877.6 proceedings, litigants have read Diamond Heights as an invitation to use section 877.6 proceedings offensively to validate settlements and to make them binding upon insurers who have refused to defend the underlying actions.

Other courts have criticized some of the language in Diamond Heights. In this opinion we will clarify that section 877.6 proceedings may not be used offensively against an insurer, who is neither a party to the underlying action nor a joint tortfeasor or co-obligor upon a contract debt for purposes of section 877.6. We will direct issuance of a peremptory writ of mandate to vacate the superior court’s confirmation of the settlement.

I. Facts and Procedures

During the late 1970’s and early 1980’s, William B. and Jessie…