Procedural Posture

Appellant insurance agent sought review of a judgment issued by the Superior Court of the City and County of San Francisco (California) in favor of respondent insurer on respondent's claims for indemnity, fraud, and negligence.

 

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Appellant insurance agent, an authorized agent of respondent insurer, wrote insured's home address, rather than the address of the insured property, on an application to insure an apartment building. When insurer discovered that the insured property was not an apartment building as represented, they instructed appellant to cancel the policy. Insured signed a form without a date that appellant had prepared. When insured received another bill from insurer, he believed the site was still insured. When fire destroyed the building, and insurer refused to pay, insured filed an action against appellant and respondent. Respondent settled with insured for $ 1,050,000, then filed suit for indemnity against appellant. The jury found appellant was negligent in filling out the application and found appellant liable for negligent misrepresentation for improperly executing the cancellation form and failing to advise respondent. The court affirmed on appeal. An indemnity claim was permitted because appellant was being held liable not for the insurer's bad faith or for breach of a duty to insured, as he argued, but for his own negligence and misrepresentations to his principal.

 

Outcome

The court affirmed the judgment in favor of respondent insurer. Respondent could seek indemnity because its claims were based on appellant insurance agent's negligence and misrepresentations to respondent, not insurer's bad faith. Public policy did not preclude respondent's claims, because liability was not based on breach of a duty to insured, but on breach of appellant's duty to his principal, which breach caused the principal's loss.