National Casualty Co. v. Coastal Development Services Foundation

MEMORANDUM **

Coastal Development purchased a directors and officers insurance policy from National Casualty and an excess liability insurance policy from Carolina Casualty, both with a one-year term from October 23, 2001 to October 23, 2002. In January 2002, Capitol People First and others filed a class action suit against Coastal Development and others in a California state court. The class action sought a number of equitable remedies, but no monetary damages apart from the plaintiffs’ attorney’s fees and costs.

National Casualty asserts that the insurance policy it issued does not indemnify Coastal Development against any plaintiffs attorney’s fees and costs when a suit otherwise seeks only equitable relief. National Casualty concedes that the policy it issued does cover up to $100,000 of Coastal *682 Development’s costs of litigating the class action. Carolina Casualty denies it currently has any liability to pay for either the class action plaintiffs’ attorney’s fees and costs or Coastal Development’s litigation costs because the $5 million liability coverage under the insurance policy issued by National Casualty has not yet been exhausted.

National Casualty filed a…

I respectfully dissent with respect to National Casualty. The National Casualty policy is not ambiguous, the district court got it right, and its judgment should be affirmed.

The policy provides different coverages according to whether the claim is for “damages” or “non-monetary relief.” The claim in the underlying litigation is for a declaratory judgment and an injunction. Those are precisely what has long been understood as “non-monetary relief.” The distinction drawn by the policy would have no meaning if such traditional forms of “ancillary” relief as attorney’s fees and costs are treated as converting a claim for non-monetary relief into one for damages.

The policy definition of DAMAGES could not be more clear. First, the majority’s erroneous interpretation is the result *687 of parsing the policy in the exact manner the California Supreme Court says not to. In MacKinnon v. Truck Insurance Exchange, 1 the California Supreme Court states that it is “a basic fallacy,” that “the meaning of policy language is to be discovered by citing one of the dictionary meanings of the key words.” 2 Here, the majority, contrary to California law, uses the American Heritage College…