Woodliff

I dissent.

The facts are uncontradicted and accurately reflected in the majority opinion. I briefly summarize the pertinent facts.

Appellant, Arch Woodliff (Woodliff), seeks to collect from the California Insurance Guarantee Association (CIGA) the monetary value of a judgment he obtained against his insurance carrier, LMI Insurance Company (LMI). In 1995, LMI refused a tender of defense by Woodliff on a claim admittedly *1709 covered by a policy of insurance issued by LMI to Woodliff. As a result, Woodliff personally incurred attorney fees and costs to defend the claim. Woodliff sued LMI and in 1999 obtained the judgment for breach of contract in the amount of $47,386 plus interest, which represents the attorney fees and costs incurred by Woodliff as a result of LMI’s failure to defend. In 2000, before satisfying the judgment, LMI declared insolvency and a liquidator was appointed.

Woodliff tendered his judgment to CIGA which denied the tender. It contended that the attorney fees and costs reflected in the judgment were incurred prior to insolvency of LMI and were thus not “covered claims” as defined within Insurance Code section 1063.2. 1 Woodliff filed suit against CIGA…

*1694 Opinion

INTRODUCTION

This appeal raises a question of the first impression about the obligation of the California Insurance Guarantee Association (CIGA). The specific issue is whether CIGA is required to pay the claim of an insured of an insolvent insurer when the claim is based upon a judgment the insured obtained against the insurer prior to insolvency for breach of the contractual duty to defend. The judgment reflects the amount the insured paid for legal representation to defend himself after the insurer declined his tender.

CIGA contended, and the trial court agreed, that it had no obligation to pay based upon subdivision (h) of Insurance Code section 1063.2. 1 That provision provides: “ ‘Covered claims’ [for which CIGA is liable] shall not include any loss adjustment expenses, including adjustment fees and expenses, attorney fees and expenses, court costs, interest, and bond premiums, incurred prior to the appointment of a liquidator [for the insolvent insurer].” In a nutshell, CIGA’s position and that of our dissenting colleague is that because the insured’s judgment is to compensate him for attorney fees he incurred before the insurer became insolvent, the…