Unified Western Grocers, Inc. v. Twin City Fire Insurance

We must determine whether the Appellants, three related corporate entities and six officers and/or directors of these entities, are entitled to insurance coverage for an underlying litigation brought by the bankruptcy trustee of a former subsidiary of the corporate entities. The district court granted summary judgment to the insurance company based on findings that the trustee’s complaint alleged only willful acts and sought only restitutionary relief uninsurable under California law. We hold that genuine issues of material fact remain as to the resolution of these issues, and we remand to the district court for further factual development.

I

Before May 1996, Hawaiian Grocery Stores, Inc. (“HGS”) was a wholly-owned subsidiary of Appellant Grocers Specialty Corporation, which was itself a subsidiary of Appellant Certified Grocers of California, Ltd., now known as Appellant Unified Western Grocers, Inc. Unified acquired HGS on January 16, 1990 for about $2.3 million and reportedly invested a total of $7 million into the subsidiary from 1990 to 1996. After HGS began to lose money in 1995 and 1996, Unified decided to sell HGS. In May 1996, Unified appointed six corporate officers of…