The petition for writ of certiorari is denied.
605 F.Supp.2d at p. 809.) It determined the exclusion applied to the conversion of funds, but not to the conversion of other types of property. (
Id. at pp. 809-810.)
Westport does not suggest Peerless owed ANI a defense. It is factually distinguishable, and in any event, it cites
Collin favorably and undercuts ANI's position.
2
We are also unpersuaded by ANI's contention that even if the Cuntis action did not claim any "loss of use" within the meaning of the CGL policy, Peerless is equitably estopped from denying coverage on that ground. Peerless always denied coverage on the ground there was no covered "property damage" within the meaning of the CGL policy. To any extent Peerless's denial letters should have expressly mentioned the "loss of use" prong of the "property damage" definition, the estoppel doctrine is inapplicable.
"` "The rule is well established that the doctrines of implied waiver and of estoppel, based upon the conduct or action of the insurer, are not available to bring within the coverage of a policy risks not covered by its terms, or risks expressly excluded therefrom, and the application of the doctrines in this respect is therefore to be distinguished from the waiver of, or estoppel to assert, grounds of forfeiture. . . ." ` "( Aetna Casualty Surety Co. v. Richmond (1977) 76 Cal.App.3d 645, 653 [ 143 Cal.Rptr. 75].) "`[I]t is the general and quite well settled rule of law that the principles of estoppel and implied waiver do not operate to extend the coverage of an insurance policy after the liability has been incurred or the loss sustained. `"( Id. at pp. 652-653; see Miller v. Elite Ins. Co. (1980) 100 Cal.App.3d 739, 755 [ 161 Cal.Rptr. 322] ["Estoppel cannot be used to create coverage under an insurance policy where such coverage did not originally exist."]; Supervalu, Inc. v. Wexford Underwriting Managers, Inc. (2009) 175 Cal.App.4th 64, 77 [ 96 Cal.Rptr.3d 316] ["Supervalu is asserting estoppel to expand coverage under the policies, which is impermissible, rather than to simply avoid a forfeiture of benefits."].) "[T]here is a definite distinction between the waiver of a right to declare a forfeiture, to cancel or to rescind based upon some breach of a condition of the policy on the one hand and the extension of the coverage provided by the policy on the other." ( Insurance Co. of North America v. Atlantic National Ins. Co. (4th Cir. 1964) 329 F.2d 769, 775.)
An exception to the rule is that "`the insurer's unconditional defense of an action brought against its insured constitutes a waiver of the terms of the policy and an estoppel of the insurer to assert such grounds. `"( Miller v. Elite Ins. Co., supra, 100 Cal.App.3d at p. 755.) That is not the scenario here.
ANI's reliance on Spray, Gould Bowers v. Associated Internat. Ins. Co. (1999) 71 Cal.App.4th 1260 [ 84 Cal.Rptr.2d 552], is misplaced. In Spray, the court held summary judgment was improper because the insured raised a triable issue of fact as to whether estoppel applied, specifically whether it detrimentally relied on the insurer's failure to inform it of the policy's 12-month period within which a claim must be made. A regulation imposed on the insurer an affirmative duty to inform the insured of the limitation period. ( Id. at p. 1269.) Through its ruling, the court sought to "help to insure that valid claims will not be lost by an unusually short limitations period." ( Id. at p. 1274.) Spray pertains to a condition of the policy rather than a coverage provision. Here, ANI tries to create coverage through estoppel.
ANI's reliance on Chase v. Blue Cross of California (1996) 42 Cal.App.4th 1142 [ 50 Cal.Rptr.2d 178], in support of its cursory argument Peerless forfeited the "loss of use" coverage defense, is also misplaced. Chase concerns an insurance policy's arbitration clause. The opinion acknowledges that "[¶]orfeiture of a contractual right is not favored in the law," but an insurer may forfeit rights under the policy, such as arbitration rights, if the insurer engaged in "bad faith tactics designed to mislead the insured." ( Id. at p. 1157.) Again, this case concerns the claimed expansion of coverage rather than the forfeiture of a right under the policy.
ANI also relies on Waller, supra, 11 Cal.4th 1, which rejects the notion an insurer waives coverage defenses not raised in its denial letter. The opinion explains: "California courts have applied the general rule that waiver requires the insurer to intentionally relinquish its right to deny coverage and that a denial of coverage on one ground does not, absent clear and convincing evidence to suggest otherwise, impliedly waive grounds not stated in the denial." ( Id. at p. 31.)
The insureds in Waller also argued the insurer was equitably estopped from raising a coverage defense. The insurer initially denied coverage on the ground the underlying complaint was "nothing more than a `shareholder dispute' based on `intentional acts. `"( Waller, supra, 11 Cal.4th at p. 34.) The trial court ruled the insurer wrongfully refused to defend, and on appeal the insurer argued for the first time that it had no duty to defend because its CGL policy did not apply to claims for "economic loss." ( Id. at p. 23.) The court rejected the estoppel argument because the insureds showed no detrimental reliance on the insurer's stated ground for denial. ( Waller, supra, 11 Cal.4th at p. 34.) The court explained the "plaintiffs' alleged detrimental reliance on [the insurer's] initial denial letter could not give rise to a claim for estoppel because plaintiffs never reasonably believed, nor could they reasonably believe, that the . . . policy provided a potential for coverage for [the underlying] lawsuit." ( Waller, supra, 11 Cal.4th at p. 35, italics added.) Waller does not address whether coverage may be established through estoppel.
"A valid claim of equitable estoppel consists of the following elements: (a) a representation or concealment of material facts (b) made with knowledge, actual or virtual, of the facts (c) to a party ignorant, actually and permissibly, of the truth (d) with the intention, actual or virtual, that the ignorant party act on it, and (e) that party was induced to act on it." (13 Witkin, supra. Equity, § 191, pp. 527-528.)
Even if that were arguably the case, however, ANI has not shown any detrimental reliance on Peerless's stated reasons for denial. ANI asserts it relied on Peerless's conduct by accepting a reduced settlement amount, $98,000, from its insurance broker, Marrs Maddocks. ANI's attorney, Mark Ginella, submitted a declaration that states ANI's claim against Marrs Maddocks was based on its failure to secure adequate insurance coverage for employee theft from customers. ANI reasoned that if the court found Peerless's CGL policy provided no coverage for theft, Marrs Maddocks did not protect ANI's interests.
Ginella's declaration acknowledges that at the December 5, 2008 hearing on the summary adjudication motions, Peerless orally raised the "loss of use" coverage defense. In support, Peerless cited Collin, supra, 21 Cal.App.4th 787. In its December 11 ruling, the court rejected Peerless's stated coverage defenses and determined the Cumis action raised a potential for coverage under the "loss of use" provision of the policy. On December 31, Peerless filed a petition for writ of mandate in this court to challenge the court's ruling on the "loss of use" issue.
On January 29, 2009, the parties signed a joint trial readiness report, which states Peerless disputed that "the loss of cash money is `property damage' as that term is defined by the Peerless . . . polic[y]." Ginella signed the document on ANI's behalf. Ginella's declaration states that on January 30, 2009, ANI agreed in an e-mail to the $98,000 settlement with Marrs Maddocks.
Ginella's declaration establishes that in settling its claim against Marrs Maddocks for a reduced amount, ANI did not rely on Peerless's conduct. Rather, ANI relied on the court's erroneous ruling of December 11, 2008, and presumably also on Ginella's settlement recommendation. The declaration states, " Based on the Court's ruling, counsel for Marrs Maddocks and I both recognized that my theories of liability as against Marrs Maddocks, for securing inadequate coverage had been greatly reduced." (Italics added.) The conduct of others does not estop Peerless from raising a valid coverage defense.
Further, "[i]n general, the law `particularly' disfavors estoppels `where the party attempting to raise the estoppel is represented by an attorney at law.' [Citation.] For purposes of analyzing estoppel claims, attorneys are `charged with knowledge of the law in California. `"( Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, 1316 [ 104 Cal.Rptr.3d 195, 223 P3d 57]; see Kunstman v. Mirizzi (1965) 234 Cal.App.2d 753, 757 [ 44 Cal.Rptr. 707]; Tubbs v. Southern Cal. Rapid Transit Dist. (1967) 67 Cal.2d 671, 679 [ 63 Cal.Rptr. 377, 433 P2d 169].) Ginella had actual knowledge of the Collin opinion well before ANI agreed to settle with Marrs Maddocks.
DISPOSITION
The judgment is reversed, and the trial court is directed on remand to enter judgment for Peerless. Peerless is entitled to costs on appeal.
Huffman, J., and Nares, J., concurred.