Previews, Inc., a Corporation, Cross-Appellant v. California Union Insurance Company, a Corporation, Cross-Appellee

California Union Insurance Company appeals from a summary judgment order in favor of its insured, Previews, Inc. Previews cross appeals from the denial of attorneys’ fees. We affirm the district court judgment as modified.

Cal Union issued a Realtor’s Professional Liability Policy to Previews, indemnifying it up to $1,000,000 for liability-causing acts, errors and omissions resulting from professional services. In 1976 a class action was filed against Previews in state court (the Dickinson action). Dickinson alleged damages for a breach of Cal. Bus. & Prof. Code § 10146 . Cal Union offered to defend Previews, but told Previews that the $5,000 deductible clause applied to every member of the class. Previews employed its own attorneys to defend the Dickinson action. This action for indemnity followed.

The district court made four rulings which are challenged on appeal:

This diversity case is governed by California law. The correct standard of review on summary judgment is whether any genuine issue of material fact exists. Fed.R.Civ.P. 56(c); Adickes v. Kress & Co., 398 U.S. 144, 157 , 90 S.Ct. 1598, 1608 , 26 L.Ed.2d 142 (1970); St. Paul Fire & Marine Ins. Co. v. Weiner, 606 F.2d…