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September, 1996 |
| PPG & Transamerica In Court Over Liability Coverage Trial Documents Involve 1986 Colorado Suit Against Solaglas PPG INDUSTRIES, INC. v. TRANSAMERICA
INSURANCE COMPANY PPG is the successor in interest to Solaglas, California, Inc., having purchased its stock in 1987. Solaglas was in the business of installing replacement windshields. Solaglas, doing business in Colorado, had installed a replacement windshield in a truck subsequently driven by George Joseph Miller during a collision in Colorado. The windshield popped out and Miller was ejected through the opening and instantly rendered a quadriplegic. Miller brought a lawsuit in Colorado against Solaglas, seeking compensatory and punitive damages. Two insurance policies issued by Transamerica with combined coverage of $1.5 million per occurrence covered Solaglas for the relevant period. Solaglas was also insured under a $9 million excess liability policy issued by Industrial Indemnity Company. Solaglas gave timely notice of the Miller action to Transamerica. Transamerica agreed to defend Solaglas in the Miller lawsuit, under a reservation of rights, and appointed independent counsel to conduct Solaglass defense. Settlement negotiations in the Miller lawsuit were unsuccessful. Miller offered to settle the action for $1.5 million, the policy limits. Independent counsel recommended that Transamerica offer $750,000 to settle the action. Transamerica offered only $250,000. In 1986, the Miller lawsuit was tried to a jury and resulted in a verdict in favor of Solaglas. The judgment was reversed on appeal. After the first trial, Miller reduced his settlement demand to $1 million, and Transamerica reduced its offer to $100,000. Solaglas consistently demanded that Transamerica settle within policy limits. A second jury trial was held. This trial resulted in a plaintiffs verdict. Judgment was entered against Solaglas and PPG awarding Miller $5.1 million compensatory damages and $1 million punitive damages. On October 7, 1993, the judgment was affirmed on appeal. (Miller v. Solaglas California, Inc. (Colo. App. 1993) 870 P.2d 559, cert.den. 1994.) The basis of the award of punitive damages was Solaglass installation of the replacement windshield without a urethane seal. Solaglas had failed to use urethane seals as a matter of policy, despite a General Motors manual and industry publications, conventions and safety regulations discussing and requiring the use of urethane seals. Solaglas charged 2.8 hours of labor for installation of a windshield, even though the installation took only 30 minutes if urethane seals were not used. Transamerica paid its policy limits of $1.5 million and an additional $1,277,094.88 as costs and interest on the Miller judgment. Industrial Indemnity paid the remainder of the compensatory damages, leaving PPG to pay the punitive damages. On June 27, 1994, PPG brought this action against Transamerica for breach of the covenant of good faith and fair dealing. PPG alleged that Transamerica had failed to effectuate a reasonable settlement of the Miller lawsuit and was therefore liable for the punitive damage award PPG was required to pay. On October 28, 1994, Transamerica filed its motion for summary judgment on the ground that it had no obligation to indemnify PPG for any punitive damages awarded in the Miller action. Transamerica based its motion on the single legal issue that an insurer is not obligated to indemnify its insured for punitive damages awarded after the insurer unreasonably failed to settle the case within policy limits. On September 27, 1995, the trial court entered summary judgment in favor of Transamerica. PPG filed a timely notice of appeal. CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FIVE.
PPG INDUSTRIES, INC., Plaintiff and Appellant, v. TRANSAMERICA INSURANCE COMPANY, Defendant and Respondent. B097260 (Super. Ct. No. BC107689) APPEAL from a judgment of the Superior Court of Los Angeles County. Frances Rothschild, Judge. Affirmed. Troop, Meisinger, Steuber & Pasich, Kirk A. Pasich and Lori M. Yankelevits for Plaintiff and Appellant. Haines & Lea, John R. Brydon, James G. Boedecker and James E. Gibbons for Defendant and Respondent. Plaintiff and appellant PPG Industries, Inc. appeals from the summary judgment entered in favor of defendant and respondent Transamerica Insurance Company in this bad faith insurance action for refusal to reasonably settle a third party action. The sole issue on appeal is whether consequential damages for breach of an insurers duty to reasonably settle a third party action can include punitive damages imposed against the insured in the third party action. We conclude that punitive damages awarded against an insured in a third party action cannot be passed on to the insurer as consequential damages for breach of the duty to reasonably settle. We therefore affirm. FACTS AND PROCEDURAL BACKGROUND Two insurance policies issued by Transamerica with combined coverage of $1.5 million per occurrence covered Solaglas for the relevant period. Solaglas was also insured under a $9 million excess liability policy issued by Industrial Indemnity Company. Solaglas gave timely notice of the Miller action to Transamerica. Transamerica agreed to defend Solaglas in the Miller lawsuit, under a reservation of rights, and appointed independent counsel to conduct Solaglass defense. Settlement negotiations in the Miller lawsuit were unsuccessful. Miller offered to settle the action for $1.5 million, the policy limits. Independent counsel recommended that Transamerica offer $750,000 to settle the action. Transamerica offered only $250,000. In 1986, the Miller lawsuit was tried to a jury and resulted in a verdict in favor of Solaglas. The judgment was reversed on appeal. After the first trial, Miller reduced his settlement demand to $1 million, and Transamerica reduced its offer to $100,000. Solaglas consistently demanded that Transamerica settle within policy limits. A second jury trial was held. This trial resulted in a plaintiffs verdict. Judgment was entered against Solaglas and PPG awarding Miller $5.1 million compensatory damages and $1 million punitive damages. On October 7, 1993, the judgment was affirmed on appeal. (Miller v. Solaglas California, Inc. (Colo. App. 1993) 870 P.2d 559, cert. den. 1994.) The basis of the award of punitive damages was Solaglass installation of the replacement windshield without a urethane seal. Solaglas had failed to use urethane seals as a matter of policy, despite a General Motors manual and industry publications, conventions and safety regulations discussing and requiring the use of urethane seals. Solaglas charged 2.8 hours of labor for installation of a windshield, even though the installation took only 30 minutes if urethane seals were not used. Transamerica paid its policy limits of $1.5 million and an additional $1,277,094.88 as costs and interest on the Miller judgment. Industrial Indemnity paid the remainder of the compensatory damages, leaving PPG to pay the punitive damages. On June 27, 1994, PPG brought this action against Transamerica for breach of the covenant of good faith and fair dealing. PPG alleged that Transamerica had failed to effectuate a reasonable settlement of the Miller lawsuit and was therefore liable for the punitive damage award PPG was required to pay. On October 28, 1994, Transamerica filed its motion for summary judgment on the ground that it had no obligation to indemnify PPG for any punitive damages awarded in the Miller action. Transamerica based its motion on the single legal issue that an insurer is not obligated to indemnify its insured for punitive damages awarded after the insurer unreasonably failed to settle the case within policy limits. On September 27, 1995, the trial court entered summary judgment in favor of Transamerica. PPG filed a timely notice of appeal. The judgment is affirmed. PPG is to pay Transamericas costs on appeal. |
source: California State Court of Appeal |