United Pacific Insurance v. McGuire Co.

The McGuire Company and five owners and employees of the company (hereafter insureds) appeal from a declaratory judgment in favor of United Pacific Insurance Company (hereafter Pacific Insurance) exonerating it from the duty to defend the insureds against a wrongful termination action.

The McGuire Company was a family-owned corporation located in San Francisco engaged in the business of distributing and manufacturing furniture. In April 1978, the company hired Dale Burgess as a senior executive under an agreement giving him certain stock ownership rights. After Burgess had worked for the company seven years, the principal stockholders, John and Elinor McGuire, decided to discharge him. At a meeting on June 27, 1986, attended by their legal counsel, they informed Burgess of their decision. The McGuires subsequently sold the company on November 13, 1986, to another company in the furniture business. Burgess filed an action for wrongful termination the next month in San Francisco Superior Court.

Burgess’s second amended complaint alleged nine causes of action: wrongful termination, breach of contract, interference with prospective economic advantage, breach of fiduciary…